From The Desk of Rajesh Bajaj
GJEPC must lead from the front to determine polished Diamond price!
In any of the era pricing, a product remained challenging! Another point is the actual price, which is generally accomplished. In the context of society's advancement, pricing remains under the prescribed norms from time to time! In the era of perfect competition, a product price gets settled moderately! Over time, every product has been labelled with its MRP, especially FMCGs, precisely manufactured products! Yet, many products are out of the MRP ambit!
In the long run, every product settles at an average profit in the perfect competition;
because of the number of buyer-n-sellers! Though pricing is the play of demand & Supply indeed! Pricing is an art to bag a higher profit for a product without MRP.
Even the diamond category is out of the ambit of pricing. There is no MRP, and the market has been on the simple demand & supply norms for a long time! In the days of Cartel & Monopoly on rough diamond, manipulator bag supernormal profit! Yet, again, in the long run, in the era of perfect competition and the period of hyper-competition and the age of hyper digitisation, the rough price track & polished diamond price track have become very decisive!
Often rough diamond price moves firmly growing, and polished diamond price behaves insensitively to rock up. Those narrow the whole of the efforts of diamond manufacturing keeps thinning profit of the midstream! Nobody bothered for scientific study to set the MRP. Because there was a perception that the rough diamond is limited in nature and demand is growing high… so, when a buyer comes to the diamond buying, the price never remained a factor in the past!
Now, in this competitive era, when the midstream resists the growing rough diamond price, they stop buying rough, they adopt a policy to buy the required wild only! On the other hand, on the retail front, when retailers resist the growing polished price, they look at another potential LGD category & that includes numbers of renowned diamond players who have lean-to LGDs! On the back of LGD, other types are also trying to cut their pie, including CZ and Moissanite!
LGDs are offering the entire range of jewellery in precious metals! Here, except mined diamonds, rest all those valuations & costs are the same! This means that the higher price for a mined diamond is a premium! Now the consumer's question is, how much to pay more as a premium & answer depends on that consumer's wisdom!
Well, the industry has a generic campaign and promotes mined diamonds today! On the other hand, the LGD category is also shaping up swiftly with supernormal profit & mined midstream profit is on a thinning spree! Even numbers of diamond manufacturing players in Surat have also focussed on LGD, mainly while mined rough is not available at their hand to keep their wheel running! One should note that several such players are increasing in Surat!
No doubt, as of today, the market share of the LGD is minuscule, yet that puts the cap on the growing attitude of a rough price! That also puts a cap on the ever-increasing polished price! This is the beginning of setting up a new equilibrium, and the critical factor is the price!
We think this is the right time to introduce good price parity for the rough diamond price, and equally, it is also essential to the polished price! That will be too late when the end-user starts resisting and retail counter that changes their showcases with LGDs!
Today, numbers of the play are claiming and attempting to set the polished diamond price! Yet there is no industry-wide study for the diamond price! No Trade associations are undertaking such a study, not taking any leadership role to set up a feasible mechanism for a diamond price! We are well convinced that any influential trade body should undertake and introduce a well-defined price mechanism for diamond price.
In the good old days, DeBeers had played this critical role as they held about 80% of those mined rough diamonds & the well-set way of cartel distribution with their way of diamond promotion & campaign! They regulated the market.
My point is that
Now, India is manufacturing about 94% of the polished diamond have its way of effective marketing network, yet the point is, can India determine the polished diamond price? Can a significant trade body undertake an adequate price mechanism across the diamond fraternity in India? Can polished price India create an impact & ensure consistency in the global diamond market? The GJEPC has to lead from the front to determine a diamond price for Polish!