Indian diamonds are back in demand in China, US

KOLKATA: Fresh demand for polished diamonds from the United States and China has spread good cheer in the diamond hub of Surat ahead of the assembly elections in Gujarat as prices of polished diamonds have risen 3-4% in the past fortnight and those of rough diamonds have firmed up 2%.

“The Christmas demand has been encouraging in the US. Chinese New Year purchases have also picked up. The processing units in Surat are working in full swing ever since they opened after the Diwali break,” said Ashok Gajera, managing director of Mumbai-based Laxmi Diamond.

Surat’s diamond processing industry handles nearly 90% of diamond business in the country and employs 2.5 million people. The industry is divided between 70-80 major firms on the one hand and small and medium businesses on the other.


Besides, Dinesh Navadiya, president of Surat Diamond Association, said traders are hopeful that the government would scrap the 3% goods and services tax ( GST) that is required to be paid in case of business-to-business transactions.

According to traders, the levy has affected smaller traders more than the bigger firms, whose businesses are export-oriented and so cash is not a big factor. “Moreover, the bigger firms have better infrastructure in place to handle GST,” said a trader, who did not wish to be identified.

Traders want the government to do away with the 3% GST on B2B transactions, pointing out that they are required to pay the levy even on polished diamonds sent from Surat manufacturing units to their branch offices in Mumbai.

“We had met finance secretary Hasmukh Adhia recently. He assured us that the matter will be looked into at the next GST Council meeting. Otherwise, we are happy because of the Modi government’s move to make it a tax compliant and more transparent trade,” Navadiya said.

A decision in favour of the traders might augur well for the government in the state elections, he said.

According to the Rapaport diamond market report, jewellery wholesalers are cautious as retailers are holding less inventory and insisting on memo. “Stacking-andlayering jewellery remains in strong trend in holiday collections,” the report said.

Gajera said that in India, wedding season demand for diamond jewellery has improved. “Polished diamond inventory has reduced since Diwali break. Manufacturing activity has picked up but it is yet to reach pre-Diwali level,” he said.

India’s gem and jewellery exports fell 13.18% in the first seven months of this fiscal from a year ago, but exports of cut and polished diamonds went up 7% in volume terms to 214.05 lakh carats.