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written by | October 11, 2021

Guide to Diamond Trading in India

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Table of Content


Diamond is among the most wonderful substances known to man. From regular jewellery to medical equipment, diamonds are used in many instances. A diamond dealer gets their supply by contacting diamond mine owners and further sells these diamonds to retailers or jewellers.  

In natural form, these diamonds don't have a proper shape. The diamond cutter's job is to cut and polish the diamonds and make them look like most of us know. If you're already studying gemology and have an interest in this line, you can run a successful business as a diamond trader.

Besides in-depth knowledge of the diamond market, you should also consider the risk factor. You need to work with trusted people as diamond dealers, traders, and brokers have significant stakes and earn a significant profit. 

Did you know? 

India's diamond industry is worth USD 23 billion (approximately ₹1753 billion), and it forms around 7% of India's GDP. 

Tips on Starting a Diamond Business in India

Understand the Market

Researching the market is always vital, no matter what business you're in. Talking about the diamond market, you will have to research a lot of factors, but the vital ones are listed below:

  • How many diamond investors are there in your locality, and how much do they roughly invest?
  • What are various types of diamond businesses available?
  • What's the diamond market size in your area, and which nearby markets can you target as a diamond dealer?
  • How many varieties of diamonds are available in your local market? Is there something new that you can introduce?
  • In what circumstances may you face losses, and what are your loss-recovery strategies?

Once you consolidate your connections in the market, you'll be able to decide your niche and predict investments, chances of success, timer period, market fluctuations, etc.

Also Read: How to Start an Artificial Jewellery Business from Home

Increase Your Expertise

Without in-depth knowledge about diamonds, you can't run a diamonds business. If you're qualified enough, then it's great for you, and if you already have some experience working under somebody else, it's even better.

You need to be an expert in estimating the costs of diamonds in various forms. Remember that your competitors haven't established businesses in the same domain without expertise. So, you'll have to do the same. 

Decide the Model and Size of Your Business

You should have a strong understanding of how much funds you'll need to run a business of your scale. So, before organising your business, you should have proper estimations in your hand.

  • Will you begin with some local jewellers? 
  • Will you run your business online as well? 
  • How confident are you in terms of dominating the competition?
  • How much funding is readily available?
  • Are you planning to onboard team members?
  • How much commission will you give to the diamond artists?

Beware of the Competition

The diamond business is very cutthroat and well-established, and many college degrees are mass training students to work in it. So, competition remains a huge factor. 

You'll have to lay a lot of emphasis on marketing to beat the competition. You can even start collaborating with an established company and do in-depth research.

Set a Business Model

Diamond trading is undoubtedly a very big business. You need to be safe and always follow all vital legal procedures while buying/selling diamonds. It includes having a legal team, agreements with clients and suppliers, written documents confirming commission rates for brokers, mediators, etc. 

Economic Analysis

If you're looking at the success of launching your company and making the most profits, then you have to make sure you do your cost and economic analysis correctly. You should attempt as hard as you can to apply international best practices to the field you decide to start a business.

The trading business in diamonds has roots that go back to the barter trade. Therefore, when planning your cost and economic analysis, conduct a thorough market analysis of the money required to purchase diamonds and the equipment or facility required to manage the business.

It is important to include the securities and travel expenses in analysing the costs of the beginning of a diamond trading business. Be aware that you could benefit from a network and economies of scale. In the end, when you're unfamiliar with this kind of business that requires capital, you should seek out experts who can assist you in completing a thorough economic analysis.

Should You Get a Franchise or Begin From Scratch?

Diamond trading business is among the companies that have not fully embraced franchising due to obvious reasons. If you're thinking of starting your diamond trading business, there is no other choice other than to start from the starting point. Don't be scared to begin from the beginning because you could work with someone already working in the field to get the basics of the trade and invest carefully.

One of the biggest threats you will be confronted with when you start your diamond trading business, especially if you're getting started on a small scale, is the competition from large players in the business that includes mine-to-market companies. A diamond could be taken from the ground to be displayed in the jewellers' display case and all under one company's control.

Learn About the Best Insurance Policies for You

It is essential to establish an insurance budget and possibly seek an insurance agent to help you select the most appropriate and effective insurance policy to protect your diamond-trading company.

Secure Your Intellectual Property

Are you thinking of setting up a diamond trade company? You may not have to apply trademarks or intellectual property protection because the nature of your business allows you to operate it without having a reason to sue anyone in court for infringement of the intellectual property rights of your company.

Also Read: An Overview of India’s Best Clothing Brands

Meet Your Technical and Personnel Requirements

There are no specific technologies or equipment required to operate this kind of business, except for secure shelves and software for retail. Additionally, you'll require computers/laptops with proper internet access, phones, office furniture, etc.

In the case of leasing or buying outright a store, the decision will depend on your financial situation. The reality is to remain on the safer side. It's recommended to start with a short-term lease or rent while evaluating the possibility of operating the business from one fixed place. 

If everything goes the way you planned, opt for a long lease for a specific period or outright purchase the building. Search for a new place if things don't work out for you while operating from your existing place.

Conclusion

After knowing everything about how to start a diamond business, we would like to say that the diamond business can never be your side game. Undoubtedly there are chances of great profit margins, but you need to touch the depths of the market to reach that level. Your knowledge and connections make the biggest impact in the diamond trading business, which depends on your marketing skills. 

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting

FAQs

Q: Is the diamond business profitable in India?

Ans:

The diamond industry in India is one of the top exporters worldwide. India holds 70 % of the global diamond exports, making it among the most lucrative and successful industries. The employment rate is huge, and this industry has witnessed a steady development of about 15 % every year.

Q: Do you think it is more lucrative to put money into diamonds than gold?

Ans:

Diamonds aren't considered to be of any value for resale, and most people choose to put their money into gold for long-term gains. However, the value of diamonds isn't influenced by the stock market, which makes it a very safe investment.

Q: Do diamonds cost more than platinum?

Ans:

Diamonds are more costly than platinum. Platinum costs about ₹25,180 (may change with time). Diamonds can cost anywhere from ₹2 lakhs to ₹15 lakhs, based on their clarity, shape, colour and quality.

Q: What is the main difference between natural and lab-grown diamonds?

Ans:

There isn't any vital difference between a genuine diamond and a laboratory-grown diamond. But natural diamonds have tiny amounts of nitrogen, while lab-grown diamonds have zero nitrogen present.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.