GJEPC Holds Meeting to Discuss Pressing Diamond Trade Issues

(IDEX Online News) – India's Gems and Jewellery Export Promotion Council (GJEPC) has formed a committee of experts to suggest measures for the country's diamond industry due to the difficulty facing it in light of the decline of the rupee against the US dollar in recent months and other financial issues.

The rupee has fallen by more than 15 percent against the dollar since May. It is currently trading at around 63 to the dollar, having previously fallen to around 68 to the American currency.

The GJEPC convened a meeting last week in Mumbai on September 23 of industry stakeholders, including Diamond Trading Company (DTC) and Rio Tinto sightholders from Surat and Mumbai.

The new panel aims “to equip and allow for better understanding and develop appropriate responses to the challenges faced in the cutting and polishing of rough diamonds, that have been recently affecting the profitability and overall growth and business prospects of the industry,” the GJEPC said in a statement.

GJEPC Chairman Vipul Shah said, “Rising prices of rough diamonds, currency fluctuations and limited finance options with banks having become very stringent on financing have recently had a severe impact on diamond businesses. This phenomenon has assumed critical proportions calling for austerity measures amongst the trade fraternity with the view to balance the equation between manufacturing and exports.

“We are hoping that by gathering inputs from the various trade and industry partners, we will be able to develop strategic solutions that will enable diamantaires to deal with the current crisis, set out short-term and long-term goals and thereby steer the industry to growth and prosperity in the years ahead.”

Feedback from prominent large and medium-size diamond manufacturers indicated that the sustained absence of profitability of cut and polished diamonds below 30 points is of major concern. “The industry has been severely affected by high rough diamond prices that are being maintained by primary producers through 2012 and 2013, liquidity pressures from rupee volatility, as well as slowdown in demand.”

However, most manufacturers said they had already reacted to the challenges they face by reducing their production over the last quarter. “Production over the next three months is expected to be 30-50 percent below normally prevalent levels at this time of the year. This will ensure that the industry manages its inventory levels optimally which does not exacerbate the liquidity concerns. Manufacturers have also indicated that such voluntary production cuts might continue, and even intensify in 2014, if they do not see a return of sustained profitability in the polishing of rough diamonds.

“The GJEPC urges all industry stakeholders to conduct their businesses responsibly in the current scenario and ensure that their actions do not precipitate any long-term damage to the diamond industry in India,” the statement added.