The industry considered clamping down on imports, but decided against it as “as the workforce in factories will be the first priority for the trade.”
At present, the Indian diamond polishing industry is facing a major challenge due to low demand and stock hangover of polished inventory and increasing rough diamond prices.
The industry has been trying to bring “discipline” in the purchase of rough diamonds so that prices do not skyrocket out of their range. It is also facing the problem of the mixing of synthetic or lab-grown diamonds with the natural stuff.
To make matters worse, recent bankruptcies in the industry have pushed up cost of capital, especially bank finance.
“The Traders reviewed the market situation and have unanimously decided to defer the option of voluntary Closure or Embargo on Rough Import, like in November 2008, for the time being and encouraged upon Self Discipline by the Traders in import and purchase of rough diamonds based on their inventory and demand for polished diamonds.,” the Gem and Jewellery Export Promotion Council (GJEPC) said in a statement.
“The current market situation of diminished polished demand coupled with issues related to absence of profitability in diamond manufacturing due to bank finance becoming increasingly costly, absence of relativity of pricing of rough and polished diamonds is causing a severe strain on the players mainly in the mid segment of the diamond value chain,” the statement said.
Nevertheless, the industry has decided to try alternative methods, before resorting to closing down of units and factories.
These methods include – formation of a 10-15 Member Committee comprising of businesspeople from all associations, and the formation of three separate delegations for consultations – one for banks, one for miners and upstream providers and one for talks with the government of India.
The diamond traders also decided to make Promotional efforts to increase the demand for diamonds by increase of sales of diamond jewellery.
“The situation will be monitored for a month and a meeting will be organized after one / two months to discuss the decision of the trade as way forward,” GJEPC said.
The meeting was attended by around 250 of the top diamond exporters of India and was held at S.G. Jhaveri Trading Hall, BDB, BKC, Mumbai at 4.00 pm on Tuesday.
The GJEPC of India has than 6000 members across India.