Although the confusion about tax rates on unpolished and polished diamonds continues to rage in Surat, the diamond
hub of India, the Forevermark
brand of diamonds, owned by De Beers, is not expecting the transitory hurdles to affect its business in the country this year. Instead, the company is eyeing market share in generic diamonds to increase its sales volume.
"Clarity over the Goods and Services Tax (GST) regime is still impending in the diamond
industry, which can affect the market for 2-3 months but thereafter, branded players will register a growth trajectory.”, said Sachin Jain, president of Forevermark
He added, "As a result of GST, there has been an additional 1-1.5 per cent tax increase on diamonds, which I think will not dampen sales. There are things that require further clarification and I believe soon we'll get clarity on them".
Under the GST
regime, diamonds are subject to a three per cent tax while an additional 0.25 per cent levy will be charged on rough diamonds. However, input tax credit can be claimed.
Industry officials opined that since the GST
regime calls for a stricter compliance, the organised and branded players will be able to increase their market share, whereas the unorganised segment will either shrink or start falling in line with organised players. Branded players such as the Forevermark, which operates only in the organised segment, can use the situation for their benefit.
"For our growth trajectory in India, we are going to take away share of sales from the generic diamonds", said Jain.
Industry estimates suggest that at least 55 per cent of the market comprises of the unorganised and unbranded segment.
Another growth path for the company will be via the store expansion route. Jain is hoping to take up its presence in stores count to 230 from the current 200 by December-end this year. Moreover, it will focus on increasing its exclusive store count from one in Bangalore to cover all metro cities.
"By September end hopefully, our exclusive outlet in Kolkata in South City mall is going to come up and other two exclusive outlets in Delhi and Mumbai are expected by the end of this year", Jain added.
The company has opted to come up with these outlets via their partners instead of making an investment on fixed assets from their own coffers.
To increase its sales in India, Forevermark
will be focussing on rolling out more designs in the light daily-wear category, which Jain says is 50 per cent of the diamond
jewellery market in the country.
currently has 20 per cent market share in the Rs 50,000 – Rs 25,00,000 price segment of the precious stone and Jain expects to have a 125 per cent growth rate this year.