The Hindu Business Line : India's share in diamond processing industry to drop

The country's share of diamond processing industry pie will drop from the current 57 per cent to 49 per cent in value terms by the year 2015, following an anticipated slower growth (3.3 per cent CAGR) in global diamond jewellery industry.

This despite a forecast growth of 6.7 per cent for the global jewellery industry as a whole taking it to $280 billion.

At the global level, India and China combined are expected to emerge as markets that will be equivalent to that of the US, which is the largest market with an estimated 31 per cent share of the world jewellery sales in 2005, KPMG said, in a report titled "Global Gems and Jewellery - Vision 2015: Transforming for Growth".

India and China have been steadily raising their share of world jewellery consumption, which stood at 8.3 per cent and 8.9 per cent, respectively, in 2005.

Global sales

Global jewellery sales are expected to grow at 4.6 per cent year-on-year to reach $185 billion by 2010 and $230 by 2015. The industry has grown at a CAGR of 5.2 per cent since 2000. Diamond industry will have growth rate of a mere 3.3 per cent. While India's diamond processing share is forecast to drop by 8 percentage points to 49 per cent in 2015, China's is expected to have a 21.3 per cent share.

The report predicts that by 2015, nine per cent of the world's diamond processing in terms of volume will be done locally by the mining countries. Fragmentation of supplies and slow growth in diamond jewellery will make the rough diamond industry more demand-sensitive, according to KPMG.

Gold, Diamond rule

Palladium is expected to emerge as an alternative metal for jewellery fabrication. Gold and diamond jewellery with an 82 per cent share will continue to dominate the market. The jewellery fabrication has been subjected to accelerating fashion cycles, relative factor costs between manufacturing and consuming nations, and volatile metal prices have fuelled the drive of the shift, moving the fabrication to low-cost industries. Supply sources have become fragmented, raw material prices have shot up and consumers have become more demanding and less loyal than ever before, the report stated.

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