Surat-based diamond exporters are facing tough time competing with other Asian majors including Bangkok and Hong Kong. High prices of imported rough diamonds, increased duty on gold imports and lack of incentive for diamonds and diamond jewellery exports has brought the diamond industry under a tight spot.
"We feel being neglected as the finance minister seems to have entirely ignored this large industry in his budget speech. This industry holds about 25 per cent share in India's total foreign earnings. Yet in the present situation of global weakness, government has not given any support," said Dinesh Navadia, president, Surat Diamond Association (SDA).
According to industry insiders, rough diamond prices have already increased over the past one year and continue to surge further in 2013. In addition to that, a hike in duty on gold imports earlier this year has put additional burden on the diamond jewellery makers.
"Our diamond jewellery is becoming less competitive in the international market. This is mainly because of the increase in gold import duty and costly raw material. Hong Kong and Bangkok have emerged strong competitor for Indian diamond jewellery business," said Praveen Nanavati, a leading diamond exporter from Surat. As per the data provided by Gems and Jewellery Export Promotion Council (GJEPC), India exported 51.8 million carats of cut and polished diamonds during April-March 2011-12, which has reduced from 66.6 million carats in 2010-11.
So far in the current financial year, India has exported 27.5 million carats of cut and polished diamonds (during April 2012-January 2013) as against 44.4 million carats exported during same period last year. "Our exports are getting hampered because of cheaper goods of other countries. This fiscal our diamond and diamond jewellery exports will be less than last year," said Nanavati.
Weak economic conditions in Europe and America, which constitute about 60 per cent of India's total overseas diamond sale will hamper export prospects this year.
However, the finance minister has reduced the basic customs duty on pre-forms of precious and semi-precious stones from 10 per cent to 2 per cent. But this has failed to bring smile on the faces of the diamond industry.
"Gem stones and other precious stones have very less application, not even 5 per cent of the total requirement. Hence, any announcement with regard to this is a non-event for us," Nanavati stated.
GJEPC data showed that coloured gem stones imports constitute a very small portion of India's total gems and jewellery imports. In the year 2011-12, against the total gems and jewellery imports worth Rs 203,000 crore, the import of rough coloured gemstone, raw pearls, rough synthetic stones etc was merely Rs 1178 crore, less than 2 per cent of the total imports of gems and jewellery.
Similarly, this year so far total imports are registered at Rs 164,000 crore, of which imports of gemstones was Rs 1342 crore.