Diamond jewellery demand down 20% in Diwali; Lacks sparkle in upcoming wedding season too

KOLKATA: Diamond has lost its sparkle in the domestic market. There has been a 20% drop in demand for diamond jewellery this Diwali. Even the ensuing wedding season is seeing a reversal of the trend when diamond jewellery was preferred by Indian consumers when they were available at price points as low as Rs 1,000.

The diamond jewellery market in India is valued at Rs 25,000 crore and till last fiscal it grew at the rate of 25-30% year-on-year. “This sort of a growth may not happen this year as the extreme volatility of gold prices has affected the diamond jewellery market. Though there was a good offtake during the months of April and May when gold prices fell to Rs 26,000 per 10 gm, the momentum did not continue in the following months.
Jewellers across India have reported a 50%-plus drop in demand for diamond jewellery. At Orra, we have seen a marginal 7% growth this Diwali which is much less than we had witnessed last year. And this includes wedding season purchases as well,” said Vijay Jain, CEO, Orra. Jain’s view was reiterated by Ashok Gajera of Laxmi Diamond.

“The demand for diamond jewellery has been muted this Diwali and for the upcoming wedding season. The production of cut and polished diamonds according to carat size was down by 10-15% both in Surat and Mumbai - the two cutting and polishing centres in the country. Volatility in gold prices as well as rough diamond prices has affected jewellery manufacturers in the country.”

Though diamond mining companies like Alrosa have reduced prices by 3-4% and DTC by 1%, the industry feels that there is a need to bring down rough diamond prices by 5-7% to increase the margins of manufacturers and to make diamonds more attractive.

Sanjiv Bhatia, chief financial officer of Delhi-based PC Jewellers said that volatility in gold prices has cast its shadow on the diamond jewellery business as well. “Even attractive price points for diamond jewellery are not exciting consumers.

The market sentiment is very bearish. We are hoping better demand from January next year,” said Rajiv Jain, chairman of Jaipur-based Sampad Gems. A bad market and a drop in demand have forced diamantaires in Surat and Mumbai to go on a threeweek vacation. This is also, is likely to bring down production by at least 40% this month.

“The demand in the domestic market is slow though the international market is looking up. Liquidity crisis is affecting the domestic market,” said Vipul Shah, chairman, Gem and Jewellery Export Promotion Council.