<div>India, a hub for cutting and polishing diamonds, must take the proposition ahead by adding value through better retailing of diamonds and diamond studded jewellery. The way ahead for adding value by Indian diamond manufacturers is through sharper branding and marketing, Union Commerce Secretary Rajeev Kher told delegates of the first World Diamond Conference in New Delhi on Friday.</div><div> </div><div>"India should take the story ahead by active retailing, rather than just being a supplier of cut and polished diamonds," Kher said.</div><div> </div><div>"We should drive the preferences in the world market, rather than just respond to demand. We should build skills and capacities in designing in that direction, so we influence preferences and shape demand," he added.</div><div> </div><div>Underlying the importance of the diamond trade for India, Kher pointed out that of the $314 billion annual export basket, gems and jewellery exports contributes 15 per cent, and is at second place only to oil and petroleum products which accounts for 37 per cent of the export pie.</div><div> </div><div>In terms of employment, India had the largest number of skilled craftsmen, while the gem and jewellery industry as a whole provided employment to as many as 3.5 million people directly, he said.</div><div> </div><div>"Competitiveness for the industry will come from leveraging opportunities for new products and tastes through good marketing, and this will generate more employment for the future," he told the gathering of Indian diamond manufacturers, bankers and representatives from big mining companies such as De Beers, Rio Tinto, Alrosa and the Angolan Endiama.</div><div> </div><div>Discussing the challenges of the future, Chaim Even Zohar, chairman of the consultancy firm Tacy Ltd, pointed out that in 2013, diamond rough purchases accounted for $15.5 billion, while total sales of cut and polished diamonds generated $21.6 billion.</div><div> </div><div>In other words, Zohar said, value addition accounted for just $7.1 billion, and the balance sheet of the industry as a whole showed a meagre net profit of $400 million. "This is not sustainable, and the industry had to find ways for greater value addition," he said.</div><div> </div><div>Stephen Lussier, MD of the South African giant De Beers also emphasized there had been growth, but "growth without margins is of no use."</div><div> </div><div>Explaining his position, Lussier said a De Beers study had shown that while just 2 per cent of the people had acquired a diamond unit in 2002, this had swelled to 9 per cent by 2011.</div><div> </div><div>"Despite competition, diamonds continue to captivate consumers, and it is still the repository of elegant emotion," he said.</div><div> </div><div>Outlining the strategy of the future, the De Beers chief said a McKenzie study had shown that the two most important consumers of diamond jewellery would continue to be US with 40 per cent of the market, while India and China would emerge as the fastest growth areas with 25 per cent of world consumption.</div><div> </div><div>Emphasizing the role of marketing, he said: "Young people in the US wanted to know more about the products they spend on. Therefore, they must be made to feel good about the luxury product they buy."</div><div> </div><div>Tracing De Beers' journey from the generic marketing of diamonds with the famous "Diamonds-are-forever" tag, to the company's new branded "Forevermark" diamonds, Lussier said branding "added that value, and will make the margin." He said the campaign was succeeding as data showed that from 2002, when 7 per cent of the consumers had bought a branded diamond, by 2014 as many as 25 per cent of the buyers had purchased a branded diamond.</div><div> </div><div>Jean Marc Lieberherr, MD of Rio Tinto Diamonds, also emphasized the success of the company's branding campaign with the "Nazrana" series, which he said was a "partnership" brand which was marketed by Rio Tinto in alliance with local manufacturers. The Rio Tinto chief said his company has sold 8 million carats of diamonds over 30 years to Indian manufacturers and had sunk $90 million over 10 years in developing the Bunder diamond mines in Chattarpur district of Madhya Pradesh. "We hope to produce diamonds one day," Lieberherr said in an obviously wry reference to the slow speed of business permissions in India.</div><div> </div><div>Giving a realistic picture of the future, acting president of the Russian mining giant Alrosa, Ilya Ryashchin, said the industry had emerged from the demand crisis of 2009 and a growth rate of around 5 per cent had been restored. He said by 2019, with a global consumption of 165 million carats, the roughs production will peak, and then begin to taper off. He said Alrosa, which accounted for 25 per cent of the world's production of roughs, had invested heavily in the development of underground mines in Mir and Dycal, and a quarter of the company's production will now come from its 3 underground mines, he said.</div><div> </div><div>"Though US consumption was stable, we expect the main jewellery consumption to come from India and China, in the future," he said.</div><div> </div><div>Presenting the Indian picture, Demexion chairman Rajeev Mehta said India was not only a production hub for cut and polished diamonds, accounting for 70 per cent of the world's production by value, but with the inauguration of the Bharat Diamond Bourse (BDB), the country had also become a trading hub.</div><div> </div><div>"The BDB in Mumbai's Bandra Kurla Complex (BKC) is the world's largest bourse with 2,500 offices and 2 million sq ft of office space. With a special notified zone, the BDB can become an auction centre and viewing area for diamonds," he said.</div><div> </div><div>India was also a huge consumption market for diamond jewellery, Mehta added, with sales of $8.21 billion in FY 2014 amounting to 11 per cent of the total world's retail trade.</div>
BW Reporters
Gurbir Singh is an award-winning senior journalist with over 30 years experience. He has worked for BW Businessworld since 2008, and is currently its Executive Editor. His experience ranges from covering 'Operation Bluestar' in 1984 to pioneering coverage of the business of Media & Entertainment and Real Estate for The Economic Times.
_20240703141026_original_image_15.webp)
