India's diamond industry to remain stable: Crisil | delhi | Hindustan Times
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India's diamond industry to remain stable: Crisil

India's diamond industry is expected to remain stable this fiscal, on the back of steady demand and improved prices, although the Eurozone crisis may have some impact on gems and jewellery exports, credit rating agency Crisil said.

delhi Updated: Jul 22, 2010 22:58 IST

India's diamond industry is expected to remain stable this fiscal, on the back of steady demand and improved prices, although the Eurozone crisis may have some impact on gems and jewellery exports, credit rating agency Crisil said.

"The credit risk profiles of India's diamond and diamond jewellery players will remain stable over the medium term, on the back of steady demand expected in key markets, and improved prices of polished diamonds in 2010-11," Crisil said in a study of the 142 players in the industry.

It said the prices of polished diamonds will remain firm over the medium term, with exporters passing on the increase in the procurement cost of rough diamonds to customers.

With the improvement in global demand, the prices of cut and polished diamonds rebounded in the second half of 2009-10 from weak levels in the second half of 2008-09.

Looking ahead, Crisil said, "Demand from the US market, which accounts for more than half of India's gems and jewellery exports, will be steady, backed by a stable economy, and will result in moderate buoyancy in exports by Indian players over the medium term."

However, it cautioned that the prevailing crisis in Europe may affect exports.

"Deterioration in recessionary conditions prevailing in the European Monetary Union (Eurozone), which accounts for around a fifth of the global demand for diamond jewellery, can impact the export of gems and jewellery from India," Crisil said.

Buoyant demand and restocking by retailers drove the growth of overall gems and jewellery exports in the second half of the last fiscal, making it increase by 46 per cent.

Gems and jewellery exports increased by 15 per cent to $ 28 billion in 2009-10 over the year-ago period. Exports stood at $ 24.4 billion in 2008-09, it said.

They rose by 31.24 per cent to $ 2.46 billion in May, 2010, from $ 1.87 billion in the same month of 2009.