Indian traders stop short of banning rough imports

Mumbai--Members of the Indian diamond industry came close Tuesday to doing something they have not done since the advent of the financial crisis in 2008: banning rough diamond imports.

In the end, though, the approximately 250 diamond exporters who gathered in Mumbai opted to go into what Gem & Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah described as “self-discipline mode” for the time being and adopt a number of measures to help the Indian diamond industry deal with the problems plaguing it.

They are: an oversupply of diamonds, decreased profitability, lack of bank financing and decreased demand for diamond jewelry worldwide, which many consider to be the issue at the core of the industry’s problems.

“Ultimately, it’s sales,” said Ronnie Vanderlinden, president of both New York diamond company Diamex Inc. and the Diamond Manufacturers & Importers Association of America. “Polished (diamond) sales are weak. Nobody wants to take more rough at the elevated prices.”

This is particularly true of many diamond manufacturers today, as they find themselves squeezed in the middle.

Rough prices have continued to increase in recent years even as polished prices have sunk and demand for diamond jewelry has slowed worldwide. Retailers, who also are faced with shrinking margins, want to pay less for polished stones so they can compete while the producers continue to charge more.

Exacerbating the situation in India are the stockpiles of diamonds many Indian companies accumulated when the economy began to recover and banks there were lending freely.

Now with retail sales around the world, including in the United States, slowing and lending tightening, Indian companies find themselves stuck with diamonds they can’t move and little desire to add to their stockpiles.

On Tuesday, among the list of measures noted by the GJEPC was partnering with diamond mining companies and other segments of the industry to promote diamond jewelry, an idea that works for Prakash Mehta, head of New York-based jewelry manufacturer Interings and president of the Indian Diamond & Colorstone Association.

When asked on Monday about the vote, Mehta said he didn’t think that banning rough imports into India for a short period of time would have much effect, noting that “so many things have to be done.”

To begin with, he said the industry needs to do more to increase sales for retailers, and to divert millennials’ attention from electronic gadgets to jewelry.

He said