According to multiple media reports, diamond traders and wholesalers in India – the largest supplier of diamonds to the Australian and New Zealand markets – have been offering discounts from 3 per cent up to 20 per cent in order to move inventory and reduce debt.
It has been reported that the Indian diamond industry had already been facing a financial crisis, which had been further compounded by the winding down of operations at the Antwerp Diamond Bank (ADB) as well as the impending loan recall from the Standard Chartered Bank as it moves to minimise its exposure to the diamond industry.
However, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), Vipul Shah, said in an official statement that the Indian diamond industry remained strong, with the rumours of discounting described as “false” and “baseless”.
The reports of discounting were said to have been made without “substantial understanding” of how the bank operated with the diamond trade and without adequate feedback from the industry.
Shah was quoted earlier this month by Indian newspaper The Hindu saying the situation was “very challenging”, and that “the impact, particularly due to closure of ADB, would be a 6 billion rupees to 8 billion rupees hit (AU$112–$150 million) for the Indian diamond industry and there will be a huge liquidity crunch due to this”.
However, in its recent statement, GJEPC denied that the closure of the ADB had created an “overnight liquidity crunch” or that it would have any immediate direct impact on the industry.
“Any international bank while closing down provides an adequate time period for their clients for repayment of loans and does not demand an overnight settlement,” the press release stated. “In the case of the ADB, it provides a minimum period of one year to their clients in India...and gives no reason to emerge in a havoc scenario as wrongly stated.”
As previously reported by Jeweller, ADB’s parent company announced last month that the bank’s loan portfolio and activities would eventually be “run down”. The financial institution deals exclusively with the loose diamond and diamond jewellery sector.
GJEPC added that the mood was upbeat within the Indian diamond industry, with Shah saying, “The long-term fundamentals of the diamond industry remain strong and robust as there are no new major finds and the sales of diamond is growing in the emerging markets of China and India.”
Established in 1966, GJEPC is involved in introducing and promoting exports of Indian gemstones and jewellery. It provides market information to its members regarding foreign trade inquiries, trade and tariff regulations and rates of import duties.
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