Page 30 - Bullion World Volume 3 Issue 2 February 2023

Bullion World | Volume 3 | Issue 2 | February 2023

Chart 2: Imports of rough diamonds in India

Source: GJEPC
CARE Ratings expects the entities
operating on a moderate scale with
dependence on the secondary
CARE Ratings Limited (CARE Ratings) market to be impacted more when
expects that the inflationary pressures compared with entities having long-
leading to rise in the interest rates, term supply contracts at both ends
of the value chain. With the focus
increase in travel and experience- of the entire value chain to improve

related activities, slowdown in China, and efficiency, reduce speculative
movements in the prices, and
geopolitical uncertainties will outweigh promote sustainable and ethical
the performance of the Indian diamond luxury, we expect organised players
with mine-to-market partnerships
industry in the near term. will continue to gain a larger market

share once the demand stabilises.

Way ahead interest rates. Moreover, the Indian entities are expected to
Overstimulation of the US economy situation was further exacerbated witness moderation in income
with more than USD 5 trillion in by the zero-tolerance stance of the as well as profitability during
stimulus payments followed by Chinese government leading to FY23, after reporting healthy
Russia’s invasion of Ukraine has intermittent lockdowns in various growth during FY22. The polished
build-up inflationary pressure on key cities and domestic property, production has reduced below
essentials like clothing, food and and a banking crisis in China, the operational capacity since
energy. Strong recovery of the second-largest diamond jewellery December 2022 with entities opting
entire diamond value chain post market in the world. With gradual for reduced working hours and
lifting of lockdown restrictions due opening of market post relaxation weekly offs. Nevertheless, overall
to the lack of alternate avenues of lockdown restrictions, demand credit profile of entities in the
for spending on the backdrop of for smaller size diamonds is organised segment is envisaged
overstimulated economies buoyed showing a positive traction. to remain stable on the back of
the demand of diamond jewellery. adequate liquidity, nil long-term
The outlook is now overturning Against this backdrop, sustained debt repayment obligations and
with a decrease in the disposable recovery in demand from these two augmented net worth base.
income on the backdrop of key consuming nations remains
withdrawal of excess liquidity, crucial for the overall performance
the surge in inflation across all of the Indian midstream segment in
key economies and decadal high the near to medium term.

30