The letter from five groups, including India's Gems and Jewellery Export Promotion Council (GJEPC), asks that rough diamond imports be stopped between Oct. 15 and Dec. 15 to "better manage the balance between demand and supply, protecting the value of assets and increasing consumer confidence."
Because of problems with the natural diamond supply, Indian industry groups have asked their members not to bring in any rough diamonds. The Indian diamond industry has called for a two-month freeze on rough imports. This is the most serious emergency action the industry has taken since the Covid-19 crisis.
Five major trade groups said Tuesday in a joint statement that the break will last from October 15 to December 15. The decision was made the same day at a meeting of more than 100 people from the business. They said they would look at the situation again in the first week of December.
The move is a reaction to the sharp drop in polished diamond sales, which has been caused by slow retail sales in the US, more competition from lab-grown diamonds, and a slowing economy in China.
India cuts and polishes 90% of the world's rough diamonds, which employs millions of people. Between April and August of this year, the value of India's exports of gems and jewelryfell by nearly 4.4%, to $12.4 billion, compared to the same time last year.
Chairman of India's industry group, the Gem & Jewellery Export Promotion Council (GJEPC), Vipul Shah, says the move is meant to get rid of the present oversupply of rough and polished gems.
This was a unanimous decision from all the stakeholders in India. We have to do what is right for the entire industry. We are seeing falling prices in both rough and polished. We feel if we collectively take action and stop prices from falling, that will boost confidence in the entire industry.- Vipul Shah
He says that India has put a voluntary ban on imports four times in the past, most recently in 2020 during the COVID-19 pandemic. Each time, the industry has worked together to balance the market.
After hitting all-time highs in 2021 and 2022, demand for diamonds has been "materially affected"in both the US and China, according to a letter signed by the heads of the major trade groups.
From January to August of 2022, India exported 25% fewer diamonds than it did from January to August of 2022. The letter says that the year-over-year drop is expected to stay at that level for September. It also said that Indian companies should keep cutting and polishing gems, but they should only use the ones they already have.
During the fall of Lehman Brothers in 2008 and the Covid-19 outbreak, the trade did the same things.
Insiders in the trade said that mining companies usually keep selling rough diamonds to the cutting and polishing business, which is also called "midstream," no matter how high or low the demand is. They said this puts the onus on the middlemen to keep track of the real demand and let mine companies know how many rough diamonds they need.
Taking these dynamics into account, we have already reached out to all the major diamond mining companies, sharing with them the current challenges that are faced by the midstream and requesting them to support the industry with a prudent and responsible approach in their offerings to their respective customer base.- Vipul Shah
Alrosa, a Russian company that mines diamonds, said last week that it would not sell its next two rough diamonds. David Johnson, a spokeswoman for De Beers, said that the company “will continue to hold sights and will take a responsible approach to rough diamond sales, supplying to demand and providing sightholders with supply flexibility.”
GJEPC has also asked Anglo American's (AAL.L) top diamond producer, De Beers, to limit sales. In response, De Beers said that they would "provide complete flexibility to all their clients."
The moves come as the Group of Seven (G7) countries are likely to say soon that they will ban the import of Russian diamonds. This will make it harder for Russia to pay for the war in Ukraine.
According to statistics from the GJEPC, India's rough-diamond imports fell 3% year over year to $1.32 billion in August, and the amount dropped 14% to 12 million carats.
The freeze will happen at the same time as the Diwali holiday on November 12. During this time, companies in the Indian city of Surat, which is known for cutting, usually close for two to three weeks. People in the industry think that the shutdown will last longer this year. The groups also asked for steps to be taken to help artists during the import halt so that it doesn't hurt their jobs.
We have no doubt and remain confident that we will address and improve long-term demand in this precious and rare natural resource, but at the same time, we must navigate the short term carefully.- Gem & Jewellery Export Promotion Council (GJEPC)
Indian diamond trade groups have asked their members to stop bringing rough diamonds into the country for two months, starting on October 15. The groups said that stopping diamond imports would keep the supply and demand of the gems in balance, which would increase their value and people's trust in them.
Five trade groups said in a letter that the appeal only focuses on the voluntary halt of importing rough diamonds. This means that diamond manufacturers will be able to keep doing business as usual.