Diamond imports by India declined this month even though prices fell 2 per cent in the international market as jewellers seemed keener to sell polished diamonds to cut their inventory pile-up.

This pushed prices of polished diamond down by 2-3 per cent in the last one week.The Prime Minister's Office had recently asked gold and diamond traders to suggest measures to reduce imports and increase exports to contain the current account deficit (CAD).

"We feel there is a necessity to source diamonds directly from the mines, which will cut down transaction cost and have a positive impact on the country's import bill," said Vipul Shah, chairman of Gem & Jewellery Export Promotion Council.

"Cost can be further brought down if machinery suppliers from Italy and Israel can set up their units here, so as to avoid import of machinery, which is very critical for polishing and cutting diamonds." Shah added that the government should speed up beneficiation in the diamond sector, taking lessons from other diamond producing and non-producing countries, which dominate the gem trade. Beneficiation entails the value addition of minerals by processing them to attain higher returns.

India's imports of rough diamonds fell 10 per cent year-on-year in July to 540.08 lakh carat. "Though final figures are yet to come for August, initial reports suggest a further drop," said Shah.

In value terms, import of cut and polished diamond fell to Rs 3,808.11 crore in July from Rs 3,828 crore in the same month last year.

However, exports also fell in July to Rs 11,123.67 crore from Rs 12,466.67 crore a year ago. Exports of gold bars and medallions came down to Rs 510.24 crore in July from Rs 1,597.66 crore in the yearago month.

But experts say this is a temporary lull."The overseas market has just opened and we are hoping export queries for Christmas will start coming in," said Dinesh Navadiya, president of Surat Diamond Association.

Source:- economictimes.indiatimes.com