Diwali Shutdown To Give Industry Time To Reflect On State Of Market
October 05, 14
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In Surat, the country's main diamond manufacturing center, more than 4,000 diamond factories will close for at least three weeks. According to media reports from the sub-continent, the majority of smaller firms aim to extend the Diwali vacation to a full month.
The closedown is expected to give the country's diamond manufacturing industry time to reflect on the state of the trade which is facing ever-tighter liquidity problems and a weak rupee which is making rough imports even more expensive at a time when polished prices are declining somewhat, said the representative of one Indian diamond and jewelry manufacturing firm.
"There could be a silver lining in this in that we are seeing a great deal of polished goods on the market, so you could argue that the vacation helps by not adding to the stocks already available. Polished prices are fragile. We saw the price resistance at the Hong Kong fair last month.
"There are many companies that were forced to sell in order to move stocks out and raise funds. You cannot sit on polished goods as a long-term strategy. So, at least there won't be even more goods produced.
"On the other hand, of course, we are facing our usual costs and overheads while our factories sit empty for several weeks. But this is a cost we are used to and is built into our business," he added.
The Indian rupee declined by 2.1 percent last month, its worst monthly decline since an 8.8 percent drop in August last year. The rupee has strengthened by more than 11 percent since it dropped to a record low of 68.85 to the dollar in August 2013 when election jitters battered the Indian currency.
The rupee gained after the election of pro-business Narendra Modi as prime minister in May, however the rupee has been hit in recent months, along with other currencies, by a strengthening of the US dollar on the back of improving economic data in the United States.