Sunday, September 25, 2011

Rough diamond import to remain low due to weak

Rough diamond import from April-August may have registered a phenomenal 48 per cent increase compared to previous year, but it is likely to remain low from September onwards following the weakening of the Indian rupee against dollar.

As the US dollar is an all time high, a level not seen in more than 28 months, diamond merchants in Surat and Mumbai are not willing to take the delivery of rough diamond consignments bound for India from Antwerp, Dubai and African countries.

Reason: The industry is already facing severe liquidity crisis and the cash flows are further impacted significantly as the diamond companies, especially the small and mid-sized, have to pay at the current rupee rate of Rs 50.

A diamond merchant, who had booked rough diamond consignment worth $1 million last week when the exchange rate of rupee was at 47.94 per US $ will have to pay Rs 49.67 per US $ now. The diamantaire will have to pay Rs 1.73 crore extra on the import of rough diamond consignment.

Market sources said the rough diamond parcels are parked in Antwerp, Dubai and African countries and the Indian diamantaires are paying the depreciation charges to the exporters, believing the currency may recover soon.

As per the statistics of Gems and Jewellery Export Promotion Council (GJEPC), India imported rough diamonds worth $7 billion in five months from April-August 2011 registering a 48 per cent increase compared to the same period in previous year. The import of rough diamonds in the month of August was worth $830 million registering an increase of 20 per cent compared to $689 million in the same month in previous year.

In September 2010, the diamantaires had imported rough diamonds worth $ 973 million registering a 37 per cent increase compared to $ 708 million worth of rough diamonds imported in the previous year. In 2010, India imported rough diamonds worth $ 11 billion.

"Nobody in the industry wants to take any risks. Though the prices of rough diamonds have decreased by 10-15 per cent in the last two months, the diamantaires are faced with a new set of worry about the weakening Indian rupee. Most of the diamond merchants have parked their diamond parcels overseas fearing the dollar may appreciate further in the coming days," president of Surat Diamond Association (SDA) Dinesh Navadia said.

Asked about the impact on the industry, Navadia said, "The industry may experience the rough diamond shortage in October. This will further result in the diamond workers getting less work when they will return from the Diwali vacation in November."

A diamond merchant Rakesh Gandhi said, "The industry is following the wait and watch strategy as far as the import of rough diamonds is concerned. Nobody in the industry wants to cough up extra bucks at the time when the merchants are facing liquidity crisis."

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