ICRA advises focus on larger diamonds

India has to focus on export of medium and large size cut and polished diamond (CPD) to maintain its growth in the export market in the future.

According to rating agency ICRA, the country already enjoys domination in the world CPD market in the categories of general and small-sized diamonds. The scope for significant increase in market share in small-size diamond export was limited.

Low cost and skilled diamond processing had made India the world's leading diamond cutting and polishing centre, accounting for 53 per cent share of the global polished diamond market in terms of value, 80 per cent in terms of caratage and 95 per cent in terms of pieces.

However, Belgium and Israel dominated the cutting and polishing of larger sized and higher value diamonds (over 0.5 carat). Per unit realisation in India was lower than these two countries.

ICRA pointed out the per carat (p/c) realisation of Indian exports of CPD was $224 during 2003, against $1,174 for Israel and $714 for Belgium. The average size of Indian CPD production was about 0.02 carat per stone.

Israel dominated the market for large size CPD with a market share of 60.3 per cent. India controlled 70 per cent of the lower size market.

Indian exporters appeared to be realising the need to shift from low size to large size diamonds. "We have to focus on higher caratage to get a better unit realisation from our export," a diamond exporter said.

Export data from Gems and Jewellery Export Promotion Council (GJEPC) indicated a shift in Indian export to higher value segments, reflected in higher p/c realisation from $181.6 in financial year 2002 to $191.8 in FY 2003 and to $218.7 during first nine months of FY 2004.

In the US, India's largest export market, imports of larger size polished diamonds from India increased 84.4 per cent during 2002 to $706 million. In the same period, total CPD export stood at $5.85 billion.