Research Paper Synopsis
Country Attractiveness Parameters with
respect to the Polished Diamond Sector
Submitted to: Submitted by:
Prof. C P Joshi Mitul D. Shah
Roll no. 046
PGDM (IB)
DIAMOND INDUSTRY OVERVIEW
India is the world’s largest manufacturer of polished diamonds. About 90% of global
diamond-cutting capacities and 80% of workers with different degrees of qualification (up to
1 million people) are based in India. The state of Indian diamond market is an important
indicator of the global diamond economy, severely staggered by the world economic crisis.
In recent years India imports approximately 100 million carats of diamonds worth $10 billion
annually. According to the statistics of the Gem and Jewellery Export Promotion Council in
1995-2009, Belgium and Great Britain (Antwerp World Diamond Centre and De Beers)
remain major suppliers of rough diamonds; they account for up to 75% of the rough
diamonds flow.
India’s polished diamond exports surged 116 percent year over year to $1.9 billion in April
2010, according to the Gem & Jewellery Export Promotion Council (GJEPC). The amount of
polished exports is volatile. The volatility has intensified in the period of acute crisis phase
(autumn 2008 – summer 2009). So, the worst drop equal to 40% as compared with the
previous year was registered in January 2009. A relative decline in export was registered
before August 2009 compared with 2008. From September to December 2009, the Indian
diamond exports increased by 12-129% per month. As a whole, the diamond exports
amounted to $12 billion which is 4.6% more as compared with 2008. In terms of carats the
export growth rate reached 18%.
Topic:
Country attractiveness parameters with respect to the Polished Diamond Sector
Hypothesis:
In light of the financial crisis in U.S, regions like Hong-Kong, Dubai, Singapore and China
are more attractive for Indian Polished Diamond sector.
Scope of the Research Paper:
The paper will attempt to study carefully the attractiveness parameters of regions like Hong-
Kong, Dubai, China and Singapore.
The Scope of the paper will be as follows:
1. Study and background of Indian Diamond Industry
2. Factor conditions in regions taken into consideration
3. Demand Conditions in regions taken into consideration
4. Role of government both of the home country and the host country
5. Recommendations for the stakeholders
Need for the study:
Demand for diamond jewellery is improving world-wide and people in India are buying more
diamonds these days as it is a good mode of investment. According to Vivek Jain, chief
executive of leading diamond retail chain Orra, the Indian diamond market is likely to grow
at 20% to touch Rs 1 trillion in the next five years whereas gold will grow at 8-10% year- on-
year. At present, the domestic diamond market is pegged at Rs12,000 crore, Jain said, adding
the total jewellery market in the country is worth Rs70,000 crore.
Holding strong against the economic storm, China’s GDP reached 4.9 trillion dollars, an
increase of 8.7 percent in 2009. This growth in GPD is tempered by the fact that because of
China’s huge population its per capita GDP is still far behind the west. As the increase in
wealth sees its way to a larger population base, spending on consumer goods will increase.
As the population of China becomes increasingly wealthy so goes the population’s desire for
diamonds. The growth of the Chinese diamond market will surely follow the growth of
China’s per capita GDP. China last year overtook Japan to become the world's second largest
diamond market behind the United States with trade on the Shanghai diamond exchange
rising 16.4 percent to more than $1.5 billion, state media said.
In April, De Beers forecast China would account for 16% of global diamond demand by
2016.
According to a conservative forecast of De Beers published in the end of 2009, China’s share
in the world consumption of polished diamonds will increase from the current 8% to 16% by
2016, and in India it will grow from 7% up to 11%. It is noteworthy that the share of the
United States will be reduced down to 35% and that of Japan to 9%. Thus, Chindia + Japan
will turn to be the main diamond market on this planet staving off the United States to the
second place. The latest events prove that the forecast concerning the redistribution of market
shares can come true more quickly than expected: China occupied the second place by the
results of 2009 having outstripped Japan – according to the Shanghai Diamond Exchange, its
polished imports shot up 30.7% reaching a record of $699 million. Japan’s import dropped by
20% down to $619.2 million. The U.S. net polished import fell by 43%.
Belgium's tough federal legislation regarding money laundering and checks on the use of
diamond money to finance ugly conflicts are leading manufacturers to turn their eyes to the
tax-free haven of Dubai's free zones. The emirate boasts an excellent geographical location,
central to the booming diamond markets of China, Russia and the Middle East, while its
wealthy population, huge influx of tourists and relatively crime-free streets make for high
domestic sales. The GCC is now the third largest market in the world for diamond jewellery.
Lending a solid helping hand to the flourishing industry and the event are leading
international and regional associations formed to specifically promote the industry and
maintain the highest standards of quality. The Dubai Multi Commodities Centre,
International Diamond Laboratories and Dubai Diamond Exchange have played a key role in
the industry's rise, and continue to play an active part in its future plans.
In volume terms, the trade rose by 22% to 182 million carats in 2009 compared to the
previous year’s. According to figures from the Dubai World Statistics Department, a total of
80 million carats of polished diamonds were traded through the emirate in 2009 increasing by
more than 150% from 2008 when 32 million carats were traded, it said.
Methodology
The methodology would involve secondary research through review of peer reviewed
journals and publications.
Bibliography
Kripalani Manjee (2000) .Polish the Diamond [Link] Week Internation.
Mcgraw Hill. Fetched October 1 2009:
[Link]
This articles talks about the size of the Diamond industry for India and how 9 out of 10
Diamonds in the world pass through India. India focuses on Diamond polishing in the state of
Gujarat. The article mostly talks about how over the last 50 years Diamonds in India have
been a family business controlled by very small groups and families who only deal with other
families and groups they know. Usually these families are Jain and of the Palanpuri caste. .
Indian is part of the World Federation of Diamond Bourses.
World Federation Of Diamond Bourses. Fetched October 7th 2006 from:
[Link]
This is the official website of the Diamond Bourses who are responsible for the trade of
diamonds worldwide.
Chindia - the Hope of the Diamond Market
08.02.2010, [Link]
This article talks about the rise of India and China in the Global Diamond Industry and how
the future market conditions look like for the global Diamond industry
Diamond Market Outlook: Demand, Prices are Expected to Climb
29.06.2010, [Link]
The article talks about the current demand conditions and forecasts future direction of the
price of the diamonds and the overall market outlook
Indian Diamond Market: its State and Development Prospects
05.02.2010, [Link]
This article talks about the Indian diamond market scenario in the current situation and gives
a detailed information about the future development prospects that can be taken into
consideration
Hong Kong’s Sunset = Shanghai’s Sunrise?
28.06.2010, [Link]
The article gives us the information about the Hong Kong Diamond market and the Chinese
diamond market at the current projections of growth.
