The middle market is turning out to be an increasingly important place to be in. India’s Gem & Jewellery Export Promotion Council (GJEPC) and its chairman Sanjay Kothari realized this some years ago and began pushing the Indian government to change its policies and rules to allow the development of India – now pretty much the undisputed diamond manufacturing base of the world – into a complete gem and jewellery trading hub.
Recently, the GJEPC happily acknowledged that India had taken an important step towards realizing this goal when the finance minister announced in parliament that the import of polished diamonds would now be completely duty free. “This,” an elated Kothari told me, “is very significant. It now means diamonds that aren’t available in the Indian market can now be brought in to set into jewellery. Previously, that jewellery couldn’t be manufactured in India because you didn’t have those specific diamonds.”
As the cover story of the latest issue of Solitaire International states, Mumbai has served the global industry a free trade starter.
On the face of it, the development of a trading hub seems to fly in the face of the current wisdom of mining companies like De Beers, who say the pipeline is going to be shortened pretty much to just one step between mine and market. According to this wisdom, the middle market is on its way to extinction.
Actually all the signs point the other way. It’s pretty obvious when you look at Dubai’s diamond trade statistics — $3.93 billion in 2006 – that it is well on its way to achieving its stated goal of developing itself into a “gateway to the Middle East”. The really interesting thing about Dubai is that without any real roots in the diamond manufacturing pipeline, it traded fully half of the world’s annual rough production (that’s counting both imports and exports — and funnily enough, it exported more rough than it imported) of some 160 million carats in 2006.Investment guru Warren Buffet too sees a future in the middle market, acquiring two of the largest jewellery suppliers in the US. Cheryl Kremkow pointed this out when she wrote about the Man In The Middle in her blog.
Take a good look around. Middle markets and trading hubs more than justify their added costs by offering an infinite variety of assortments for the specific needs of the world’s increasingly complex consumer markets, flexibility in aggregation and shipments as well as the options for facilitating low-cost offshore production. There’s a very strong case for middle markets and trading hubs.
