Amid the nationwide lockdown due to the coronavirus (Covid-19) pandemic, the diamond industry at Surat, processing the most diamonds imported in the country, got some relief with exports resuming albeit in small quantity.
While polished diamond export to Hong Kong from Surat has begun, the industry is still sitting on an inventory of around $2.3 billion which will take some time to exhaust.
So far, initial exports are estimated to be of the tune of Rs 600 crore which is minuscule compared to the polished diamond inventory.
"The industry, especially in Surat, is in no position to resume production until the cost of production becomes viable. However, while exports have begun, it is nothing compared to the diamond inventory worth $2.3 billion lying in the country," said Dinesh Navadia, regional chairman of Gems & Jewellery Export Promotion Council (GJEPC)
Post GJEPC meeting with the customs authorities to ensure that diamond exports resume from Surat, the council was informed by the customs authorities that the first 10 shipments were being exported from Surat Diamond Bourse (SDB) with Surat to Mumbai transshipment being done via air cargo.
"GJEPC is further coordinating with agencies to propose competitive charges to tranship the export parcels from Surat to Mumbai once or twice in a week as per Hong Kong flight connectivity to enable members to start exports. GJEPC is also coordinating with district authorities to permit interstate transport for export purposes from Surat to Mumbai by road," Navadia said.
So far, around 17 export shipments were processed by SDB to be transferred to Mumbai, with the Surat collectorate granting interstate travel permission to eight entities for the collection of inventory.
While the resumption of diamond exports amidst the lockdown and bleak economic scenario is worth celebrating, industry sources believe it will take several months for the situation to normalise.
"Roughly over two months of inventory is lying with the industry. Since social distancing in the diamond industry is not possible while maintaining productivity since at least 3-4 workers simultaneously work on one stone, resumption of normal production will take a few months. Plus, while Hong Kong may have opened up, there are concerns over consumers' purchasing power and demand for diamonds globally. So how soon will the current inventory be exhausted is unknown," said Kirti Shah, a Surat-based diamantaire.
Diamond polishing units and traders who import rough diamonds are also facing payment challenges with depreciation in rupee value.
"In January, the prices of the rough diamond had risen by 15-20 per cent, while soon after the pandemic polished diamonds prices have fallen by 15-20 per cent, leaving traders and exporters in a lurch. Firstly, it is now uncertain when will businesses resume and payments for the exports will be made. Secondly, while import prices for rough diamonds may have fallen, it has been compensated by rupee depreciation, leading to more payment being done in dollar terms," Shah added.
Meanwhile, among other steps of easing pricing pressure, diamantaires have reached out to grading laboratories like GIA, HRD, and IGI to reduce fees for diamond grading certificates, Shah added.