Jewellery exporters contact mines to directly supply rough diamonds to SMEs

Faced with an irregular supply of quality diamonds, which is hurting domestic sales and exports, diamond processors, under the aegis of the Gems and Jewellery Export Promotion Council (GJEPC), are in talks with leading global miners to accommodate small and medium enterprises (SMEs) into their sightholders’ list to deal with them in small quantities of rough diamonds.

Leading global diamond miner De Beers, which contributes nearly 20 per cent of global rough diamond supply, normally, allocates rough diamonds to pre-selected large processors across the world. De Beers picks up between 70 and 80 global buyers, who they call sightholders, through an annual bidding process every year for the allocation of rough diamonds. The company also sells a small portion of its rough diamond output through online bidding.

India being the privileged cutting and polishing market in the world and contributing every 11 out of 13 rough diamonds mined globally, the share of Indians in De Beers’ sighholding goes upto 90 per cent directly and indirectly. While nearly half (around 35) sightholders from India find their names in the annual De Beers’ rough diamond allocation list, another 25-30 sightholders of Indian origin in Belgium, Antwerp and Hong Kong find place in the list of De Beers’ sightholders.

“Unfortunately, SMEs do not have large pocket size to invest in De Beers’ annual sightholding process. Even if 10-15 small SMEs join hands to participate in online tenders and get an allocation, the quality of rough diamond changes in the next bid. Since they create a market for a certain quality of diamonds or its jewellery, supply allocation goes to someone else next time resulting in a disruption in the same quality of rough diamond supply and thereby the whole business cycle. To assure supply of the same quality diamonds for a long period, we are in talks with leading diamond miners including De Beers and Alrosa for a separate classification of SMEs in their annual supply list,” said Manish Jiwani, Convenor (micro, small and medium enterprises – MSME), GJEPC.

Apart from De Beers, Alrosa from Russia has emerged as a major supplier of rough diamonds to India. However, its supply again goes to large players which then sell to SMEs and MSMEs in smaller quantities for processing.

“SMEs and MSMEs normally face three issues; rough supply, financing and market access. We are helping small enterprises in all the three aspects. We are in talks with banks for financing and also with small jewellery manufacturers for market access. We create awareness across the country about the incentives and benefits provided by the government for encouraging exports. Many SMEs have taken advantage and have converted into an exporter from a local jewellery retailer or supplier to large players,” said Jiwani.

Around 85 per cent of GJEPC members are from SMEs and MSMEs and most of them lack professional efficiencies. GJEPC, under the Union Ministry of Commerce, organised hundreds of awareness programmes across the country to bring SMEs and MSMEs at par with jewellery exporters.

In terms of financing and market access, the GJEPC has helped many SMEs and MSMEs to achieve professional scale to avail working capital loans from banks at the current 5 per cent of interest subvention scheme and participate in global trade fairs to expand their reach overseas.

“While the global jewellery export scenario remains challenging, inclusion of SMEs and MSMEs would certainly help in achieving growth in the future,” said Jiwani.

India’s gross gems and jewellery exports declined by 4.78 per cent to $30.65 billion for the period between April ‘19 and January ‘20 compared to $32.58 billion reported in the corresponding period last year.

Courtesy: BUSINESSSTANDARD