Banking Seminar Gives Trade Reality Check

The banking and finance seminar that took place in Mumbai alongside Signature IIJS discussed the financing challenges in securing credit facing the global trade and possible solutions. A report by Sanjiv Arole.

- Sanjiv Arole

The GJEPC celebrates its Golden Jubilee this year. Indeed, the diamond industry has come a long way from exporting just a few million dollars’ worth of gems and jewellery to around $40 billion (including cut and polished diamond exports of $20 billion plus). Today, India is the largest centre for the manufacture of diamonds in value (70%) and volume (nearly a billion pieces – 14 out of 15 diamonds cut and polished in the world).

In this journey over the last 50 years, the industry was aided, supported and propped up by several agencies. The successive governments at the centre offered great incentives to enhance the export potential of this sector. The banking sector, both at the domestic and the international level, helped the Indian diamond industry with cheap and ready finance available fairly easily that saw the Indian diamond industry pile up huge debts as it became the manufacturing hub for cut and polished diamonds.

The single-channel system saw De Beers help the Indian diamond industry right from its nascent stage and set it on the way to becoming the focal point in the diamond industry. So much so, that India became a consumption centre as well. Generic marketing during that period of monopoly by the conglomerate helped the Indian manufacturers sell their products worldwide.

However, nothing lasts forever and the Indian diamond industry realised that one by one, the very underpinnings that propped it up, gradually disintegrated. The industry now had to fend for itself and stand on its own feet. First, with the dramatic demise of the single-channel system of distribution of rough diamonds in the late 1990s, the Indian industry had to survive in the multi-channel system where there were a few big players that dominated the supply of rough.