A Call for Prudence

India has been importing almost $1.25bn of rough diamonds a month of late.

That figure is down over a fifth on the April to September 2022 period, which is no surprise, given the global slowdown, together with the lab grown price crash.

But what will October's figure reveal when it is published next week by the industry body GJEPC (Gem and Jewellery Export Promotion Council)?

It has called for a voluntary ban on rough purchases for two months, from 15 October, to "better manage the balance between demand and supply".

But how will its 9,500 members respond?

Sabyasachi Ray, executive director of the GJEPC, says the appeal issued at the end of September and affecting an estimated million diamond workers, is only "advisory", aimed at ensuring the economic health of the diamond sector.

"The entire purchase of rough diamonds is with finance from banks," he tells us. "Most of the members are highly leveraged and exports are falling, prices are volatile, and there is inflation.

"We have called for prudence in the current situation if you have a lot of stock of rough diamonds and goods are not moving forward."

India's gross exports of polished diamonds for April to September were down 28.8 per cent year-on-year (at $8.7bn). That's a far bigger drop than the 20.8 per cent decline in rough imports, and is evidence of a significant build-up of stock.

"So we have called for prudence," says Ray. "There are enough stocks for manufacture for the next two months, based on the supply demand scenario.

"Not only that, but traditionally the Indian manufacturing sector goes on a holiday for one month during Diwali (12 November). It would automatically have closed then, so that's nothing new.

"We have also met all the miners and tried to assess the situation. We have also told them that we also think that at the end of the day we should show prudence so that there is no bankruptcy in the sector, the sector remains healthy, and there is not too much inventory choking up the supply line.  It makes economic sense."

The GJEPC, which is calling for the voluntary ban together with the Surat and Bharat bourses, the Mumbai Diamond Merchants Association and the Surat Diamond Association, says it will review the situation in early December.

It issued the appeal for a "voluntary halt to the import of rough diamonds, while allowing diamond manufacturing factories to continue their operations without interruption".

It also said it was calling for "measures to be taken to support the artisans during this period, thereby ensuring that there is no adverse impact on their livelihoods."

The letter to members said: "This appeal solely aims to voluntarily halt the import of rough diamonds, while allowing diamond manufacturing factories to continue their operations without interruption.

"Additionally, we urge for measures to be taken to support the artisans during this period, thereby ensuring that there is no adverse impact on their livelihoods."

Will the manufacturers comply, I ask. "We do not measure the reaction from our members," says Ray. The GJEPC issues many advisories, on tax, policy, markets and more, he says though he accepts this one has provoked more interest than most.

"Nobody writes to us to say whether it will be done or not," he says. "But of course before doing this we have done consultation after consultation with small, medium and large members to assess the situation and try to understand exactly what their condition is."

Have a fabulous weekend