Diamantaires unable to get direct supply of roughs

Small diamantaries are still waiting for direct purchase of rough diamonds from Russia, despite of an agreement signed between some diamond companies from Surat and Mumbai with Alrosa, a Russian diamond company for supply of rough diamonds in December 2014.

In December 2014 that Gems and Jewellery Export Promotion Council (GJEPC) and some diamond companies from Surat and Mumbai signed an agreement with Alrosa, a Russian diamond company, in the presence of Russian President Valdimir Putin and Prime Minister Narendra Modi at the World Diamond Congress (WDC) in New Delhi for long-term supply of $1.2 billion worth of rough diamonds.

Its two years now from agreement signed and the small and medium diamantaires are still waiting for direct purchase of rough diamonds from Russia. As per the agreement, Russia was supposed to sell $1.2 billion rough diamonds at Special Notified Zone (SNZ) in Mumbai. Though, the SNZ has been up and running since one year, the diamantaires are still awaiting for the tender auctions of rough diamonds by diamond mining companies like Alrosa, De Beers and Rio Tinto as reported in Times of India (TOI).

India imports rough diamonds to the tune of $16 billion per annum. Around 60 per cent of the rough diamonds are purchased from diamond mining companies and the rest comes from Antwerp, Dubai and Israel. Industry sources told TOI that the ministry of finance is yet to specify guidelines on the issue of taxation, failing which the diamond mining companies are unable to hold tender auctions or sell rough diamonds directly to the members of GJEPC and Bharat Diamond Bourse (BDB). The international mining companies are only allowed to display their goods to prospective buyers.

“It has been a long wait as the ministry of finance is yet to issue specific guidelines on taxation matters. Antwerp, Dubai and Israel and the companies have to pay presumptive tax on the diamonds sold at the auction,” GJEPC chairman Praveen Shanker Pandya said TOI. Union commerce minister Nirmala Sitharaman, who was in the city, told TOI, “I was the one who inaugurated SNZ at Mumbai. The commerce ministry is constantly following the taxation issue for the smooth operation of SNZ with the ministry of finance. We accept, there is a delay in pursuing the issue by the ministry.”

GJEPC regional chairman Dinesh Navadiya said TOI, “SNZ has been set up in Mumbai, but small and medium diamantaires have to still visit Antwerp and Dubai to purchase rough diamonds. Diamantaires have been paying heavy premium on rough diamond purchases. If the government relaxes taxation norms, the diamantaires could hope to get diamonds directly from the miners.”