India cutters bet on sales sparkle under Trump
India expects to export 10% to 15% more polished diamonds to the US in the year beginning in April
Mumbai — India’s diamond cutters, who polish 14 of every 15 of the world’s gems, are betting on Donald Trump to sustain the expansion of their biggest market in the US, even as Asian buying of luxury stones falters.
India expects to export 10% to 15% more polished diamonds to the US in the year beginning in April, growth similar to that seen in 2016, in the belief that a Trump presidency will reinvigorate the world’s largest economy, according to Praveen Shankar Pandya, chairman of the government-sponsored Gem & Jewellery Export Promotion Council.
"More jobs are being created in America and they would spend more money on jewellery. It is already a big market, it’s going to be bigger," the third-generation diamond merchant, who has worked in the industry for 40 years, said in an interview this week at his office in the sprawling 20-acre Bharat Diamond Bourse complex in Mumbai. "From 2008, the market took a beating and now it is again going up," he said.
In the eight months to end-November, India’s overseas sales rose 12% year on year to $15.4bn, he said, while rough diamond imports climbed almost a third over the period to satisfy the gains in export demand for the finished product. Some gems exported to Hong Kong — the gateway to China — are also routed to the US, making the country India’s biggest market, said Pandya.
The jewellery group joins top diamond supplier De Beers in forecasting more jobs and higher spending from a Trump presidency that will benefit luxury goods. The recovery in the US, which accounts for almost half of global diamond demand, predates Trump. An improving economy to the end of 2016 saw orders over Christmas double from year-ago levels, said Pandya.
The pivot westward comes as Chinese demand flattens along with its economic growth and India’s black money curbs in November tighten disposable income. Indian sales "should come back only by the next marriage season after September", Pandya said. "People would have found out the ways and means to do cashless transactions by then."
Demand for luxury goods in China has slowed as a result of the country’s anticorruption campaign and a weak yuan that has made imports more expensive, said Vipul Shah, MD of Asian Star, which sells to stores such as Macy’s and Fred Meyer Jewelers in the US.
"The focus is moving from east to west as the only centre that is really promising for the industry right now is the US," he said by phone from Mumbai. "But the GDP growth ratio from China and India is looking pretty good. So once the volatility is settled, things will start improving maybe from next year."
Banks from ABN Amro Bank to Macquarie Group have forecast a brighter outlook for the $80bn diamond industry, with prices expected to be higher for both rough and polished diamonds.
The price of uncut gems recovered last year from a drop to seven-year lows, and Macquarie predicts prices could start rising as much as 5% a year from the end of 2017.