US economy slow-down to affect Surat Diamond

Surat Diamond whose major market has been US, has seen in recent past going slow
down because of its slow economy. Surat Diamond already besieged with several
probels recently, now going to face another problem. The Industry is under
pressure of increasing rough diamond prices, recent wage hike stir byt workers and
already hit by economy slow down of America, the financial crisis on the Wall
Street has raised concerns of diamantine in Surat. Many in this Rs 70,000 crore
industry apprehensive about the health of their trading partners the jewellery
retail firms in the US. One of them Fortunoff, which owes $19 million to the
creditors, had filed for Chapter 11 Bankruptcy in the US court, some days Before
Lehman Brothers collapse.
“We are worried about the financial health of our trading partners,” said
Sanjay Kothari,chairman, Gems and Jewellery Export Promotion Council (GJEPC).
Kothari sai-the Indian diamond exporters were expecting a good business in the
upcoming Christmas season, but the Lehman collapse has shocked the industry. “US
is the biggest market as far as the diamonds are concerned. The real scenario in
the jewellery market would emerge only after4 10 to 15 days,” said Kothari.

bankruptcy protection in US courts in the last one year. In junr-2008, the

Chicago-based Whitehall jewelers Holding Inc. had filed for chapter 11 protection.
The firm had reported approximately $13.5 million of trade debt including $8 to $9
million to the Indian suppliers.
In November-2008,M fabricant & Sons Inc and Fabrikant-leer International
Limited, one of the biggest Biggest US jewellery retailer importing polished
diamonds from India, had filed for Chapter 11bankruptcy.the company owed around
$25million to the diamonds suppliers in India.
Sevanti Shah, owner,Venus Jewels said, “In the past three year, we have lost
some major buyers.One cannot rule out more jewellery firm in the US filing for
bankruptcy after the financial crisis. Being the largest exporters lf solitaires
in India, we have already started talking calculative risks to overcome the
crisis.”Shas added,”You can’t stop dealing with Us buyersfearing the losses. If
you do that then your inventory will increase.”
US accounts for approximately 40-45 per cent of India’s diamond and
jewellery exports.But the start of slowdown in the US has left many Indian
diamantaires to look for other markets such as Egypt, Europe and China. “Many have
been successful in penetrating markets in Egypt, Europe, Middle East in last one
year. Diamantaires cannot solely depend on US consumers,” said KK Sharma,
executive director, IDI.
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