Q&A: GJEPC Chairman Vipul Shah

SourcingMar 15, 2023

Q&A: GJEPC Chairman Vipul Shah

Shah talks with National Jeweler about diamond demand, lab-grown, and why it’s difficult to make predictions about the U.S. market.

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Vipul Shah is the chairman of India’s Gem & Jewellery Export Promotion Council.
Mumbai—As Q1 2023 enters its final weeks, there is a growing optimism in India’s diamond industry. 
The positive indications emerging from the Far East market at the just-concluded Hong Kong show, coupled with some early signs that demand in the U.S. may stage a recovery, are driving this sentiment.
The apex body that helmed the Indian gem and jewelry industry’s rise to global prominence, the Gem & Jewellery Export Promotion Council (GJEPC), is also on an upswing. 
Its membership has just crossed 9,000, a full 38 percent above 2021 membership. 
Last month the organization unveiled plans to expand its flagship show, IIJS Premiere, making it the second largest gem and jewelry trade event globally, with 1,850 exhibitors across 3,250 booths split between two world-class venues.
National Jeweler caught up with GJEPC Chairman Vipul Shah to talk about overall demand, lab-grown diamonds, and the impact the war in Ukraine is having on India’s diamond industry. 
Q: Exports of polished diamonds from India have slowed over the past few months. What are the factors behind this?
A: Global uncertainty hit consumer sentiment in the U.S. and Europe, and China remained closed for a long time. So, during April 2022 to January 2023, Indian cut and polished diamond exports witnessed a 10 percent decline. 
Diamond manufacturing was also impacted by rough supply being erratic, irregular and undependable. Prices of Russian rough diamonds are steep, and dealers are facing hurdles as they are not able to send payments smoothly due to the U.S. sanctions
The war has severely impacted everyone globally with high inflation, high interest rates, high cost of holding inventory, etc., in the last eight months.  
Q: Has this slowdown been uniform across all categories of polished?
A: No, it differs across the three basic categories of polished. 
The demand for 20 pointers and below is strong and stable due to the shortage of rough, as supply has declined over the last one and a half years. Prices are stable, though slightly on the higher side. However, supply of rough from Alrosa is unstable, with a month of supply followed by one to two months of no supply. 
[Demand in] the 20-50 points category has started to pick up very recently, mainly driven by Chinese demand following the lifting of lockdowns. Gold jewelry sales were high during the Chinese New Year, and diamond jewelry is the next major category both in China and other southeast Asian markets. 
Fancy shapes like pear, oval, marquise, etc., have performed well across the board. 
In the 1-carat-plus round category, however, there has been a significant decline in demand as a large portion of these goods are exported to the U.S.A., which has underperformed in the last six to eight months due to the American economic slowdown, inflation, recession, etc. 
Moreover, lab-grown diamonds have taken over about a third of the large-stone engagement ring market share in the U.S. market. 
Q: What has been the impact of the rise of lab-grown diamonds on India’s diamond business?
A: The impact of lab-grown diamonds on small diamonds is not as significant as it has been for larger diamonds. In smaller sizes, the price differential between natural and lab-grown diamonds is not significant. Additionally, the labor required to polish either type of smalls is similar, further reducing the price differential. 
In larger sizes of 1 carat and above, the price differential between the two is significant, around 30-40x. For instance, if a lab-grown diamond costs $2, its natural equivalent stone will be priced at $60. This impacts the market greatly especially at a time when the economy is facing challenges such as inflation, recession, and other related issues. 

What are GJEPC’s plans for further development in this context?
A: India’s gem and jewelry industry contributes $40 billion in export income, which is about 10 percent of the country’s merchandise exports. GJEPC aims to increase this to $75 billion over next five years. 
The diamond sector accounts for more than 60 percent of exports and will continue to be a key segment.
The country is also emerging as the fastest-growing jewelry manufacturing center both for plain gold and studded jewelry. The recent free trade agreements—India-UAE CEPA and India-Australia ECTA—have provided impetus to the sector and boosted jewelry exports to these markets. Bilateral trade agreements with other nations are expected to provide a further fillip.
Our industry is also focusing on developing the manufacturing infrastructure in the country. 
India’s largest jewelry park is coming up in Mumbai, and hi-tech Common Facility Centres (CFC) and a Mega CFC in Seepz will enhance quality of the product. A gem bourse is also coming up in Jaipur.
Additionally, GJEPC holds three popular trade shows, IIJS Premiere, IIJS Signature and IIJS Tritiya; organizes India Pavilions global exhibitions; and conducts product-specific and market-specific buyer-seller meets and India Global Connect e-meetings to introduce Indian exporters to potential buyers worldwide. 
Moreover, we are focusing on responding to increasing consumer interest in traceable, responsibly sourced diamonds, supply chain transparency, sustainability, and ethical practices. 
Q: So, what are your expectations for the rest of 2023?
A: The opening up of markets in China and Southeast Asia is a good thing and we anticipate no further drop in exports. In fact, we expect some positive signs from the Far East over the next six months. 
In Southeast Asian countries such as Vietnam, Cambodia, Thailand, Indonesia and others, there is a lot of new money. The economies have performed well and are potential new markets. Vietnam or Cambodia can even be likened to the China of 20 years ago! 
There are also expectations the U.S. market will recover from the economic slowdown of the last few months. Consumer confidence is also expected to improve. This could lead to a rebound in demand for luxury goods, including diamonds and jewelry. 
However, one cannot underestimate the impact of external factors such as inflation, interest rates, and global economic conditions. Currently, therefore, it is difficult to make an accurate prediction for the U.S. 

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