Diamond Exports Up Even As Chinese Threat Looms

Mumbai, September 29: | Updated: Sep 30 2002, 05:30am hrs
Even as the US is known to be struggling on the growth track and is battling hard with the after effects of the plunging stock prices and consumer spending, it is seen busy buying higher quantity of diamonds and diamond studded jewellery, especially from India.

Indias diamond and jewellery exports during April to August 2002 have witnessed a healthy 30 per cent growth in rupee terms, and over 25 per cent in US dollar terms.

However, the joy of increased diamond and jewellery exports at times of all round gloom is dulled primarily because of neighbouring China, which is fast nibbling away the diamond processing pie that was till recently controlled by India.

Thanks to Chinas continued rise in its economic growth and the rising number of wealthier consumers, single window clearance and other favourable policies, diamond processors from Israel and Belgium have chosen China to set up processing units there and not in India. Sources said, over 25,000 units have already been set up there which along with its cheap and disciplined labour would give serious competition to Indian players.

Little wonder therefore, Indias diamond and jewellery exporting community is a worried lot and is busy trying to find newer ways to fend off the Chinas threat as also make aggressive forays in the newer markets. The Gem and Jewellery Export Promotion Council (GJEPC) had recently sent a 10-member team to China whose insights in Chinas forays in diamond processing would be helpful in chalking out the industrys future moves.

During the five month period to August, the industry exported goods worth Rs 16,472.80 crore, up over 30 per cent from Rs 12,641.06 crore during the last years same period. In dollar terms, these figures were at $3,384.63 million, up 25.19 per cent from $2,703.62 million.

Rising exports are always welcome, what is worrying a section of the industry is the fast rise in imports of raw materials, including the rough diamonds. During the five month period to August 2002, the raw material imports has zoomed over 52 per cent to $3,043.66 million from $1,997.92 million in the same period last year. In rupee terms, this has jumped to Rs 14,930.72 crore, up from Rs 9,414.94 crore.

We will have to see why rough diamond imports are rising at such a frenzied pace, said a top industry source on anonymity. May be part of this would be resulting in higher exports as figures show, but the trend is definitely causing concern.

GJEPC chairman Sanjay Kothari said, We are happy with the export growth and the industry prospects look better during the days ahead, especially when the consumers in the US are increasingly turning to gold and jewellery as yet another avenue for savings. Mr Kothari, however, refused to say anything on the rising threat from China but added, We are in the process of preparing our plans.

A former office bearer of GJEPC requesting anonymity said, Well have to be very cautious with the Chinas foray into the diamond processing industry.

One of the reasons why players from Israel and Belgium, two of the largest market for rough and processed diamonds especially of higher value diamonds prefer not to opt for India for setting up their processing facilities is Indias battalion of bureaucracy and over 22 different authorities which control the activities of the players in India.

For overseas players, there is an environment of fear which; also, our labour laws and labour attitudes too are not too conducive for them to function as freely in China, said a leading diamond jewellery exporter.

China despite its socialistic style of governance is more capitalist, while India despite its democratic environment, is seen as more socialistic, he added.

It, therefore, remains to be seen how the government and the GJEPC along with its members prepare themselves to counter the rising threat from China whose fledgling jewellery market is said to be over $1 billion. Already prominent names in the diamond industry are active making their presence felt through aggressive marketing campaigns.