India, a diamond cutting and polishing centre, is looking at strengthening its rough diamond supply. Praveen Shankar Pandya, chairman, Diamond India, spoke to Business Standard to get a perspective on direct rough supply from mines. Excerpts:

What are the objectives behind Diamond India's sourcing rough diamonds from Africa and how will it benefit the Indian jewellery industry?

Since the last three to four decades, India has evolved a structured and well-developed diamond industry. Earlier, Dee Beers dominated the global rough diamond supply with more than 90 per cent market share. However, with multi-sourcing channels and marketing, its share in rough diamond supply has dwindled to about 45 per cent.

But African companies are insisting that stones be cut and polished in the same province. How do you perceive this development?

This demand will invariably affect the domestic industry as India has expertise in diamond cutting and polishing. The Indian companies will consider setting up units in Africa if needed.

What is Diamond India's role in ensuring rough supply?

Diamond India is involved in imports, distribution and sale of rough diamonds. The company, comprising 60 leading Indian jewellery firms, is engaged in sourcing diamonds from outside the purview of De Beers. Some portion of the supplies is earmarked for the members, while the rest is shared with the industry.

Instead of individual companies approaching the mines independently, collective sourcing enables the company to negotiate better price for the inventories.

Already the company's monthly imports have touched $5-7 million, with four supplies from Alrosa, one of the world's major rough suppliers, hitting the shores. The company is also in advanced talks with other mines for procuring additional supplies.

Is the Indian jewellery industry in a consolidation phase? What has been the impact of the rupee appreciation?

On an average, India carries an inventory of $5 billion and the currency appreciation has hurt the industry as the stockpiles are converted into rupees. Overall, the business is taking new shape as volume players have to realign, while those catering to the niche market continue to grow.

The diamond industry will pass through the consolidation phase as very small companies would not be able to sustain the competitive business environment.

Do you see new players entering the branded jewellery segment? How will the emergence of modern retail impact the jewellery industry?

Globally, store brands have been more successful as they provide a unique experience. Though low-ticket value products sells, customers prefer jewellery stores for value-added products. The entry of international brands would improve the products and back-end efficiencies of Indian firms.

Similarly, the jewellery retailing is expected to climb the value chain, with companies planning to offer a differentiating retail experience.