With the industry still servicing old orders out of the existing inventory of rough diamonds amid sub-optimal demand, the voluntary ban on imports of the precious stones that is on for the month of June may just get extended.
The diamond industry had voluntarily discontinued rough diamond imports for the whole of June in order to stabilise prices that had begun seeing lot of volatility. While industry sources are certain that the month-long voluntary ban may get extended, regional chairman of Gems & Jewellery Export Promotion Council (GJEPC) Dinesh Navadia told Business Standard that the matter is being reviewed.
The voluntary ban on imports in June, according to newly appointed chairman of the Gems & Jewellery Export Promotion Council (GJEPC) Colin Shah, came at a time when demand levels are still at 30-40 per cent. "Inventory of rough diamonds lying with the industry since the beginning of the lockdown in March will get cleared only by second quarter of the current fiscal 2020-21," Shah added.
The discontinuance of imports was aimed at stabilising prices, a motive that the industry seems to be achieving now. "It (voluntary ban) has helped in controlling volatility in pricing which are now steady," Shah added.
On the other hand, Navadia said that with $2.3 billion of rough diamonds inventory lying with the industry, it would take another 2-3 months to service previous orders. "There are also financial constraints in the industry and payments are not happening. In such a scenario, importing more rough diamonds will not make sense in the interim," Navadia added.
Rough diamonds worth over Rs 6700 crore were imported in June 2019 while that in May 2020 stood at roughly Rs 610 crore.
The voluntary ban on rough diamond imports has been helping the industry clear existing inventory but with a minor glitch.
With Covid-19 positive cases rising among its workers in Surat, the largest diamond polishing hub in the country, the industry has called for a voluntary closure of units for a week to arrest the outbreak. Industry representatives also met with civic authorities on Monday to chalk out additional norms amidst the fresh outbreak.
In a notification to the diamond polishing unit owners as well as traders, Navadia who is also the vice president of South Gujarat Chamber of Commerce and Industry (SGCCI) called for voluntary closure of units for a week.
"Currently, due to the situation arising out of Covid-19 there are a rising number of positive cases among workers in the diamond industry which could lead to more infection among others involved in the industry and their family members in near future. Taking all kinds of precautions to face the Covid-19 challenge is the foremost step needed to be taken right now by all small and large diamond polishing unit owners. Therefore, I appeal to all of you to voluntarily shut down our units for the next one week and join hands with the nation and world in facing this pandemic," said Navadia.
Most of the diamond polishing units are largely situated in and around the areas of Katargam and Varachha in Surat which have seen a spike in Covid cases.
Already 10 units have voluntarily closed so far. However, post the meeting between industry representatives and civic authorities including municipal commissioner and mayor, fresh norms will be incorporated to safeguard workers, unit owners and their families.
For instance, if a diamond polishing unit operates from more than floor in a building and if a Covid case is detected in one floor then that floor will be shut and quarantined for a week. "But if three or more cases are detected in a single floor then the entire unit will be shut for a week for institutional quarantine. Also all centrally air-conditioned units have to keep themselves ventilated as much as possible. And every worker should be served herbal tea and hot water frequently," Navadia added.
The spike in cases in Surat diamond industry comes at a time when the industry has seen roughly 200,000 workers resume work with the industry operating at 50 per cent capacity. Under the new norms, only two workers instead of previous four will be stationed at each table for polishing diamonds.
While Surat may have taken such steps, overall the gems and jewellery industry is going by guidelines of the respective states and cities, said Shah.