The Indian diamond industry has finally taken a sensible step to cope with the current crisis situation it is in. The Gem & Jewellery Export Promotion Council (GJEPC) has asked its members not to import rough for a month from November 25. This is a heartening acknowledgement of the fact that the diamond industry should take responsibility for itself in the way it conducts business.
Despite the fact that De Beers no longer has a monopolistic stranglehold on world rough diamond supplies — and hasn’t had for some years now — the cutting and polishing industry is in a mess largely due to the fact that it has gone on functioning as though the old order is still relevant. The current situation is not entirely the outcome of the global financial meltdown. Cutting and polishing firms have cast common sense to the winds and overbid each other for increasingly scarce rough despite the fact that the global consuming markets were unwilling to pay higher prices for polished diamonds. They were in a profitability squeeze long before the global financial crisis hit.
Until very recently, the Indian diamond industry didn’t want to do anything about its own situation and instead bleated along with the World Federation of Diamond Bourses (WFDB) for mining companies to take the hit and stockpile their rough instead of selling it in the market. Though it is very doubtful whether this move will help prevent many job losses and the eventual closure of many cutting units, this is a move in the right direction. It is finally coping with reality.
Pasted below is the GJEPC’s official press release.
GJEPC TAKES STEPS TO STRENGTHEN DIAMOND INDUSTRY
Mumbai, November 14, 2008: The Global financial situation is causing a strain on the players throughout the diamond value chain. In order to protect the interest of the industry at large the Indian Diamond Industry has decided to curtail import of rough Diamonds. This will also send signal to the banking system that the diamond industry will not increase its indebtedness at the time when our downstream colleagues continue to meet consumer demand – a demand heightened by the inherent value which consumers attach to our product.
Therefore, The Gems & Jewellery Export Promotion Council has asked its members to cease the imports of rough diamonds for a month from November 25. Such import stoppage will help the industry face the challenge that has arisen out of turmoil in the global financial market.
Mr. Vasant Mehta, Chairman, GJEPC, observed “Our members have sufficient rough diamonds in stock to minimize the impact on our labour force”. Mr. Mehta added “Our move will basically cause fewer rough to enter the diamond pipeline and the producer companies will thus indirectly share in the financing burden and contribute to a faster restoration of normalcy in an otherwise healthy business”.
