Cash crunch hits consumer diamond jewellery business in India

Cash crunch in the market post demonetisation of high currency notes by the government has hurt consumer demand of jewellery in India with diamond processors reducing prices to clear their inventories.

“The cash crunch hurt consumer demand of diamond jewellery in India. While prices of bigger sized polished diamonds have gone up marginally, prices of smaller diamonds have fallen by 2% in the last one month as diamond processors in smaller centres like Amreli and Bhavnagar in Saurashtra are keen to clear their inventories”, the president of Surat Diamond Association Dinesh Navadia told the Economic Times.

This means there are cheaper stones to export due to the temporary glut which brought down prices of smaller stones. India's rough diamond imports between April and November of FY17 rose 30.5%, while exports of cut and polished diamond during the period rose by 12.2%, he added.

However, prices of large and mid-sized polished diamonds have gone up 2-3% in the past one month.

“Prices of higher category polished diamonds have remained firm and in some cases prices have also gone up by 2-3%” said Vipul Shah, managing director of Asian Star, a leading diamond exporter.

Demand from the US, one of the biggest consumers, remains stable. Diamond mining companies such as De Beers, ALROSA, Rio Tinto and Dominion Diamond have also not forced Indian processors to lift higher volumes of diamonds in the past one two months, Shah added.

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