While the diamond industry in Surat has heaved a sigh of relief with the resumption of exports, albeit in a small quantities, a $2 billion plus unsold inventory is weighing heavily.
Though exports to Hong Kong, a major destination for India’s polished diamonds, have resumed, the industry is currently sitting on an inventory worth around $2.3 billion. Initial exports are estimated to the tune of Rs 900 crore, which is minuscule when compared with the polished diamond inventory.
According to diamantaires in Surat, the diamond industry in Surat is in no position to resume production until the cost of production becomes viable. While exports have begun, it is nothing compared to the diamond inventory lying in the country. Diamond polishing units and traders who import rough diamonds are also facing payment challenges because of rupee depreciation.
After a meeting with the Customs authorities, the Gems & Jewellery Export Promotion Council (GJEPC) was informed that the first 10 shipments were being exported from the Surat Diamond Bourse (SDB). Surat to Mumbai trans-shipment was done via air cargo.
GJEPC is further coordinating with agencies to propose competitive charges to trans-ship the export parcels from Surat to Mumbai once or twice in a week based on the Hong Kong cargo flight connectivity to enable members to start exports. GJEPC is also coordinating with district authorities to permit interstate road transport.
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 three-four workers simultaneously work on one stone, the resumption of normal production will take a few months.
Besides, while Hong Kong may have opened up, there are concerns over the purchasing power of consumers and demand for diamond globally. Since January, the price of rough diamonds has risen by 15-20 per cent, but as the virus started spreading across the world, the price of polished diamonds fell 15-20 per cent, leaving traders and exporters in a lurch. it is now uncertain when will businesses resume and payments for the exports be made.
To add to their woes, while the import price for rough diamonds may have fallen of late, the rupee has depreciated, leading to more payment being made in dollar terms.