The world’s largest diamond cutting and polishing centre in Surat, India, is facing a potentially massive liquidity crisis as a result of overdue payments owed by diamond traders in China and Hong Kong in the aftermath of the coronavirus outbreak, writes The Times of India.
Industry estimates estimate the value of those overdue payments at Rs5,000 crore, about $670 million, in the past month alone.
The Gem and Jewellery Export Promotion Council (GJEPC) recently appealed to banks as well as India's finance and commerce ministries, asking them to give manufacturers more time to pay back their loans due to the massive shortage of payments from their clients in China and Hong Kong.
Surat Diamond Association president Babu Kathiriya said, "Due to the payment blockage, merchants and manufacturers are facing a severe liquidity crisis." If the manufacturers are not being paid for their diamonds they will lack the funds to purchase rough diamonds.
Diamond trading in India has been heavily impacted due to weak demand for polished diamonds and the lack of funds. "Trading has been reduced to just 20%" of its normal levels, Kathiriya said. Hong Kong and China are the largest polished diamond markets after the United States. About 40% of polished diamonds worth $8 billion are exported to China via Hong Kong. Both of those markets are as good as closed.
Source: The Diamond Loupe