Costly Gold Losing Its Sheen To Diamond In India, China
Posted in News on June 24, 2012 by Elite Diams
Hindustan Times Article
With gold prices on a high, the Indian middle class is apparently finding the shine of the diamond more attractive.
The yellow metal has risen about 30% in the last one-year, from Rs. 22,000 per 10 grams in June 2011 to Rs. 30,000 now. “The high gold price is not the only driving force for this gradual shift from gold to diamond,” said Bachhraj Bamalwa, chairman of the All India Gems and Jewellery Trade Federation. “The young generation prefers diamond jewellery , which is not only lighter but also a fusion of Indian and western designs, vis-à-vis bulky gold jewellery.”
A recent report by Bain & Co claims consumer appetite for diamonds is seeing a surge, driven by increased prosperity in China and India. Demand is set to grow at an annual rate of 6.4% to nearly 250 million carats by volume and 6.6% in value terms by 2020.
“India’s jewellery sector is predicted to grow by 30% by 2015,” said Rajiv Jain, chairman of Gems and Jewellery Export Promotion Council (GJEPC). “Given that 90% of diamonds are cut and polished in India, taxes incurred on the purchase of diamonds is significantly lower, making it a more viable investment option. In comparison gold is linked to higher import duties, making it a more expensive investment.”
“Demand for diamond jewellery in India has increased significantly over the past few years, and India is now the third largest consumer market in the world behind US and China,” said Nirupa Bhatt, managing director of the Gemological Institute of America (GIA).
“Indian demand for diamonds is expected to grow more than the demand for gold in the next five years, at about 20%,” Bhatt said.
At present, India's consumer market representing about 8% of the worldwide demand for diamonds, roughly equal to Japan and just behind China, making it the third largest.
Retailers such as Tanishq (part of the Tata Group) Gitanjali, Zoya, and others have been seeing surge in diamond sales even as the price of the precious stone increased by 30% this year.