Diamond industry fights to bring back its sparkle

Diamond industry fights to bring back its sparkle
Courtesy: Olivier Polet/Corbis Historical via Getty Images

With January sales 14% higher than the same month a year ago, the heavyweight players in India are getting their plans together to capitalize on an upward trend which, till a year ago, had witnessed a slump.

The diamond trade in India has seen a significant drive upwards and this coincides with the upturn of the Indian economy which has been fighting its way through the effects of the pandemic.

De Beers India has been the first to endorse the upturn in the industry and stated that sales in January were 14% higher than the same month a year ago. Heavyweights like Malabar Gold & Diamonds and NAC Jewellers also endorsed the movement for diamonds saying that they expected the trend to continue this month as well.

Analysis shows that it is the millennials who are leading the charge in the purchase of diamonds as economic activity reverses itself against the fall in Covid-19 infection rates against the nationwide vaccination drive.

Upturn started last October

Engineering the upturn. Workers stand in queues maintaining social distance before entering a diamond manufacturing unit in Surat.
Engineering the upturn. Workers stand in queues maintaining social distance before entering a diamond manufacturing unit in Surat.Courtesy: ANI

Diamond sales actually recorded an upturn last October and this was put down to festival season activities. It is expected that the industry will now be recording 70-85 per of last year’s sales.

Given these encouraging trends the Forevermark brand of De Beers Group in India is showing its bullish face via the announcement of expansion plans. It boasted of 260 stores before the pandemic and they intend to raise this number to at least 270 while also extending their networks and city touch points which currently stands at 66 in India.

Recognising that this was the ideal time for De Beers to establish some sustainability goals in India plans have now been put into place towards the formation of ‘Building Forever Goals’ that will focus on four pillars –

• leading ethical practices across industry
• partnering for thriving communities
• protecting the natural world
• accelerating equal opportunity.

There is also the effort towards becoming a carbon neutral company by 2030 and committing to bringing in equality within the organisation communities they work with and stress on ethical practices in the business.

Fighting back from a twin strike

People wearing masks work at a diamond factory. The labour force struggled to make ends meet with salaries falling by at least 50% against a gems and jewellery export drop of 38%.
People wearing masks work at a diamond factory. The labour force struggled to make ends meet with salaries falling by at least 50% against a gems and jewellery export drop of 38%.Courtesy: ANI

The diamond industry in India suffered a twin strike during the coronavirus last year – export orders disappeared coupled with a shortage of labour due to a nationwide lockdown to thwart the virus’s infection rates. The labour force struggled to make ends meet with salaries falling by at least 50% against a gems and jewellery export drop of 38% to $1.36 billion as movement of cut and polished diamonds nosedived according to (GJEPC). Hit particularly hard was the city of Surat, the world’s largest diamond polishing hub where nearly 90% of global diamonds are given their sparkle. Surat hosts at least 10,000 diamond units where the previous stone is polished and cut.

Duties cut on gold and silver

In a move that could infuse a fresh lease of oxygen into the diamond and gold industry the Indian government has cut import duties on gold and silver in a move that industry officials say could boost retail demand and curtail smuggling in the world’s second-biggest bullion consumer.

Reuters has observed that a higher demand for gold from India could support global prices, which hit a record high last year, although that could increase India’s trade deficit and weigh on the ailing rupee. India cut import duties on gold and silver to 7.5% from 12.5%, but imposed a 2.5% cess – a separate tax – on the imports in Finance Minister Nirmala Sitharaman 2021-2022 annual budget. After the changes, gold imports would effectively attract 10.75% tax against 12.5% earlier. According to the World Gold Council (WGC) up to 120 tonnes of gold was smuggled into India in 2019.

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