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India:Price increase in rough diamonds squeezes profits |
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2004-12-9
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Rising prices of rough diamonds and cut and polished diamonds have led to shrinking margins for the country''s gem and jewellery export industry.
Reasoning out on the issues, Bakul Mehta, Chairman, Gem and Jewellery Export Promotion Council (GJEPC) said 15 percent rise in the price of rough diamonds over the last six months however have not been passed on to the consumer.
This could impact profitability margins of many diamond exporting companies, he stated.
Weakening dollar has also taken away some glitter off the industry, which is into imports and exports. He explained that it affected profit margins as import is on cash-term basis while export is on due-term basis.
Anticipating none too spectacular rise in the demand for roughs the scenario has prompted the industry tap virgin markets such as the Commonwealth Independent States (CIS) countries.
Meanwhile, exports of cut and polished diamond rose by 25 percent to Rs 27,483 crore (Rs 21908 crore) in rupee terms for the April-October period. In dollar terms, they stood at $6051.38 million ($4731.27 million).
The total basket of gem and jewellery exports moved up by 34 per cent to $8,100 million during April-October from $6,049.31 million last year.
Imports during this period moved up by 25.35 per cent to $5632.83 million ($4493.80 million).
Stagnant demand from the US continues, however post-war situation in the West Asian region and SARS had impacted buying especially in the US.
Mehta perceived China as “a very serious threat to our industry,” due to its sheer workforce and legendary discipline backed adequately by its government policies and financial assistance.
Here, Mehta pointed out that China lacked entrepreneurs but added that they could import them, too!
Listing major advantage over China, he said India has better expertise in cutting certain kinds of diamonds. |
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