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Recession hits diamond trade in India

The recession in diamond industry in the last six months has become more acute, with the purchase of rough stones by diamantaires based in Surat and Mumbai falling to the lowest level in the last 10 years since the global economic recession hit the industry in 2009.

The diamantaires are said to be sitting on a huge inventory and have deferred purchase of roughs worth Rs 14,000 crore during the period.

An office-bearer of Surat Diamond Association said that diamond manufacturers are saddled with huge inventories and they are unlikely to go for new supply of roughs. The production of polished diamond has declined by about 40 per cent and manufacturers have moved to lower-cost goods to keep their production units running ahead of the festival season and protect jobs of their workers.

According to GJEPC data the import of rough diamond during April-July dropped 28 per cent to 4.5 billion as against $6.2 billion during the same period last year. The export of polished diamonds declined 18 per cent to $6.7 billion over the same period against $8 billion last year.

During the last six months, the combined loss of sales by leading diamond miners ALROSA and De Beers has been to the tune of $2.5 billion.

ALROSA’s sales dropped 34 per cent to $1.95 billion between January and July from $2.97 billion during the same period in the previous year while De Beers’ sales crashed 25 per cent to $2.5 billion over the same period.

According to industry sources, diamantaires currently have a stockpile of polished diamond worth at least Rs 70,000 crore, which is incredibly high since the global economic meltdown hit the industry in 2009.

With such a drastic fall in import of roughs, the diamond processing units are running at much below their capacity and artisans and workers are being laid off. According to Gujarat Diamond Workers Union, at least 13,000 workers in Surat-based diamond processing units have lost their jobs in the last six months.

A leading diamond industry analyst says that the diamond industry is headed for worse days ahead with more lay-offs expected in the pipeline. At this stage, the upcoming festival season presents a gloomy prospect.

Diamond prices have seen a decline of 25 per cent over the last one year because of the prevailing recession.

Courtesy - Diamond World



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