SURAT: The world’s largest diamond cutting and polishing centre in Surat is staring at severe liquidity crisis because of huge payment overdues by traders in Hong Kong and China in the aftermath of coronavirus outbreak.
Industry estimate put the payment overdues in China and Hong Kong in the past one month at Rs5,000 crore.
Recently, Gems and Jewellery Export Promotion Council (GJEPC) had made a representation to banks, finance and commerce ministries of Government of India requesting more time to pay back loans due to major imbalance in payments of companies that deal with merchants in China and Hong Kong.
Surat Diamond Association (SDA) president Babu Kathiriya said, “There is huge blockage of payment in China and Hong Kong, which is estimated at Rs5,000 crore. Due to payment blockage, merchants and manufacturers are facing severe liquidity crisis.”
Kathiriya added, “Diamond trading in Mahidhapura and Varachha diamond markets has been severely affected due to weak demand for polished diamonds and blockage of payment by traders in Hong Kong and China in the past one month. Trading has been reduced to just 20%.”
Industry sources said China and Hong Kong are largest markets for polished diamonds after the United States. About 40% of polished diamonds to the tune of $8 billion are exported to China via Hong Kong. While Chinese market is totally closed, Hong Kong market is shut till April 24 with the government announcing holiday in schools and colleges.
Diamond industry analyst, Aniruddha Lidbide, told TOI, “The situation in diamond markets in Surat is such that nobody is ready to purchase diamonds due to severe liquidity crisis. As coronavirus is spreading to other diamond consuming countries like the US, Europe etc., the demand for diamonds is only going to fall further.”
Venus Jewels chairman Sevanti Shah said, “The liquidity crisis will increase due to payment issues in Hong Kong and China. Also, the buyers have stopped coming to India due to coronavirus outbreak. This will further impact polished diamond production by almost 40%.”
Industry estimate put the payment overdues in China and Hong Kong in the past one month at Rs5,000 crore.
Recently, Gems and Jewellery Export Promotion Council (GJEPC) had made a representation to banks, finance and commerce ministries of Government of India requesting more time to pay back loans due to major imbalance in payments of companies that deal with merchants in China and Hong Kong.
Surat Diamond Association (SDA) president Babu Kathiriya said, “There is huge blockage of payment in China and Hong Kong, which is estimated at Rs5,000 crore. Due to payment blockage, merchants and manufacturers are facing severe liquidity crisis.”
Kathiriya added, “Diamond trading in Mahidhapura and Varachha diamond markets has been severely affected due to weak demand for polished diamonds and blockage of payment by traders in Hong Kong and China in the past one month. Trading has been reduced to just 20%.”
Industry sources said China and Hong Kong are largest markets for polished diamonds after the United States. About 40% of polished diamonds to the tune of $8 billion are exported to China via Hong Kong. While Chinese market is totally closed, Hong Kong market is shut till April 24 with the government announcing holiday in schools and colleges.
Diamond industry analyst, Aniruddha Lidbide, told TOI, “The situation in diamond markets in Surat is such that nobody is ready to purchase diamonds due to severe liquidity crisis. As coronavirus is spreading to other diamond consuming countries like the US, Europe etc., the demand for diamonds is only going to fall further.”
Venus Jewels chairman Sevanti Shah said, “The liquidity crisis will increase due to payment issues in Hong Kong and China. Also, the buyers have stopped coming to India due to coronavirus outbreak. This will further impact polished diamond production by almost 40%.”
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