Mumbai, June 20
India's diamond exports crashed by more than 50 per cent in May
this year compared to the year-ago period sparking off panic in the
diamond cutting and polishing industry, which is one of the biggest
employers in Western India.
According to data released by the Gems and Jewellery Export
Promotion Council (GJEPC), exports of cut and polished diamonds fell
from 51.22 lakh carats in May 2011 to 25.74 lakh carats in the
corresponding period this year. In value terms, the fall in exports was
44 per cent - from $2,240 million to $1,245 million in the same period.
decline in May was steeper than in April this year, which saw exports
decline 35 per cent in terms of value as compared to April 2011.
merchants are blaming the fall in exports on the Indian government's
decision to impose two per cent import duty on polished diamonds from
January 2012 as a measure to conserve foreign exchange.
indicates that import of cut and polished diamonds fell 88 per cent as a
result. "Though margins were lower, cut and polished diamonds were
imported for the purpose of value addition," says Amanbhai Shah, who
owns a diamond polishing unit in suburban Mumbai.
the diamond cutting and polishing business at home has also been
affected, according to the data. The Indian diamond industry imports
rough stones which are cut and polished within the country before they
are exported. However, even this part of the business took a major hit
in May this year. According to the GJEPC data, imports of rough diamonds
fell 20 per cent over May 2011.
Those in the diamond trade say
the sharp fall in the Indian rupee has made it expensive for them to
import rough stones. Often importers of rough stones trade these with
other businessmen who specialise in cutting and polishing them who in
turn trade their finished goods with the actual exporters. Since it
takes several months for dues to be settled across the chain, traders
are wary of taking positions in stock lest they be affected by
volatility in the exchange rates, analysts said.