Centre decides to shut Hindustan Diamonds

Business has started moving to diamond bourse in Mumbai

The Cabinet on Wednesday approved the winding up of Hindustan Diamond Company (HDCPL), a joint venture between the government and the De Beers Group, the largest supplier of rough diamonds globally.

Set up in 1978 as a 50:50 venture , HDCPL aims at making rough cut diamonds available to the processing industry, especially small and medium jewellery exporters.

Earlier, such players had no direct access to rough diamonds from the Diamond Trading Company (DTC), London, the marketing arm of De Beers, which controls a large chunk of the world’s rough diamonds market. India is among the largest diamond exporters in the world.

“The winding up of HDCPL is not likely to affect supply of rough diamonds to Indian diamantaires as the industry here has grown in these years and several Indian players” have links with top diamond producers now, the commerce ministry said in a press release.

The decision was taken at a meeting of the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, said a PTI report.

To facilitate a constant supply of rough diamonds and to make India an international diamond trading hub, the government had created a special notified zone (SNZ) at Bharat Diamond Bourse, Mumbai, in 2015. Business has started moving to SNZ from HDCPL.

At SNZ, foreign mining companies display rough diamonds to Indian manufacturers and then take these back. Sales to Indian manufacturers happen through e-auctions from offices abroad. This facility has enabled even smaller Indian players to get direct access to rough diamonds, the government claimed.

After four months of subdued demand, the global diamond export sector had revived marginally, in September, raising Indian processors’ hopes of better margins.

India, which processes 11 of 13 rough diamonds mined globally, faced huge margins pressure in April–July because of elevated rough diamond prices and reduced realisation on weak demand. But demand was seen reviving in the US, which consumes about 45 per cent of global luxury items. There has also been a recovery in domestic demand of late.

India’s total diamond exports, including industrial diamonds, were $24.23 billion in 2014-15 but decreased to $21.77 billion to 2015-16.