India poised to become centre for rough diamond trading?

At the recently concluded BRICS summit in Goa, Russian President Vladimir Putin and Prime Minister Narendra Modi discussed about strengthening bilateral diamond trade.

Will the Special Notified Zone (SNZ) become the centre for rough diamond trading? At the BRICS summit both India and Russia welcomed initiatives to promote direct trade in diamonds between the two countries and gave positive evaluation of the work of the SNZ at the Bharat Diamond Bourse (BDB) in Mumbai during the summit after noting active support of this project from Russian diamond company, ALROSA.

India is the world’s largest diamond cutting and polishing centre and one of ALROSA’s key trade partners. In 2015, companies with Indian capital purchased ALROSA’s rough diamonds for the total of US$ 1.5 billion, including US$ 575 million direct supplies to India. Russia noted the latest increase in the number of Indian resident companies signing long-term rough diamonds supply contracts with Alrosa, and emphasized the importance of further development of mechanisms and terms of work in the SNZ with the aim of strengthening bilateral diamond trade.

Industry sources said that the Russian diamond mining company, Alrosa has increased its Indian diamond clients in the last couple of years. Russia is the world’s top producer of rough diamonds with annual exports to the tune of over $4.5 billion. But the direct selling of rough diamonds from Russian mines to India is less. Most of the diamonds come through diamond hubs such as Antwerp and Dubai. In 2014, Indian diamond companies had signed a deal worth $1.2 billion for the long term supply of rough diamonds by Russia in the presence of Putin and Modi at the World Diamond Congress in New Delhi.

In December 2015, Alrosa held a pilot tender at the SNZ to test the duty-free import-export system and noted high level of sales organization. However, the tax regulations in India is preventing Alrosa to auction its diamonds at SNZ. Regional chairman of Gems and Jewellery Export Promotion Council (GJEPC), Dinesh Navadia told TOI, “At present, the diamond mining companies are allowed to display the diamonds at SNZ. After the diamonds are viewed at SNZ, the diamantaires have to visit overseas to purchase the diamonds in auction. The diamonds are not auctioned at SNZ due to some technical tax issues. After the BRICS summit, we hope that the issues will be sorted out.”

Courtesy: Times of India