The Indian diamond industry is facing a major challenge from the falling rupee, and small and medium diamantaires in Surat are in trouble as the global diamond miners are still maintaining their dominance over the rough diamond prices, The Times of India reports.
As it is becoming impossible for them to buy rough diamonds due to record fall in rupee against the dollar, industry leaders want the miners including De Beers, Alrosa, BHP Billiton and Rio Tinto to reduce the prevailing rough diamond prices.
Industry experts said there are several reasons for the despondency in the industry. The first-hand buyers of rough diamonds - sightholders - claim they are losing money as the prices of rough diamonds offered by miners remain firm and the polished prices are declining coupled with declining profitability.
The rough diamond prices have gone up by almost 15-20 per cent in the past one year and that the polished diamond prices have decreased by 6 per cent since January-2013.
Dinesh Navadia, president, Surat Diamond Association (SDA) told TOI, "A drastic reduction is needed in the prices of rough diamonds offered by the diamond miners. Small and medium players are not able to buy rough diamonds as the rupee is trading at Rs 68 against the dollar."
As per the official data from the Gems and Jewellery Export Promotion Council (GJEPC), India imports rough diamond worth $11 billion per annum. Around 85 per cent of the rough diamonds are processed in Surat and the rest at other diamond cutting and polishing centres in Ahemdabad, Navsari and Saurashtra region.
Naresh Patel, a rough diamond dealer said, "There is no profitability left for the manufacturers in buying rough diamonds at exorbitantly high price. The small manufacturers will not buy rough diamonds till the diamond miners would not reduce the prices and the rupee will ease against the dollar."
