Rough diamond trading might start in India soon

Currently, Indian diamantaires source rough diamond through direct sightholding and participation in global auctions overseas

Rough diamond trading might soon start in India. The government has assured support to global miners for them to commence import and sale in the India’s first special notified zone (SNZ) inaugurated here on Sunday.

Currently, Indian diamantaires source rough diamond through direct sightholding (taking membership of global miners through assurance of minimum annual purchase) and participation in global auctions overseas. This raises cost of rough diamond and uncertainty over its continuous availability.

Three global miners — De Beers, Alrosa and Rio Tinto — contributing 90 per cent of global rough diamond sales have already completed their trail runs in the SNZ through import of rough diamond for display. Because of high taxation, however, they book orders from Indian diamantaires and execute orders from their overseas operations.

“Once issues of presumptive tax are resolved, they would be able to sell their goods from SNZ here, which would bring gems and jewellery exports back into major growth trajectory,” said Praveenshankar Pandya, chairman, Gems and Jewellery Export Promotion Council (GJEPC).

While inaugurating the SNZ, Nirmala Sitharaman, minister of state (independent charge) for commerce and industry, said, "Setting up of an SNZ was first discussed by Prime Minister Narendra Modi in December 2014 with Russian President Vladimir Putin to lay emphasis on his dream of Make on India and ease of doing business. But, within a year of his first discussion and, coincidentally, with his scheduled meeting with Putin, the SNZ was launched. The government is ready to extend all possible support to this industry." She further said that global environment is very challenging as exports from India have declined. “The government will speak to the finance ministry over presumptive tax and interest subvention.”

Gems and jewellery contributes 13 per cent of India's overall merchandised exports and, therefore, assumes significance. India's gems and jewellery exports have grown from $29 billion in 2009-10 to $40 billion in 2014-15. But, overall, gems and jewellery export declined so far this year by around 10 per cent due to global economic slowdown.

GJEPC in collaboration with the Bharat Diamond Bourse (BDB) has set up a special purpose vehicle (SPV), which will operate within the premises of BDB named 'India Diamond Trading Centre (IDTC). Both these bodies will have equal share in the SPV and an equal number of representatives on the governing body of IDTC.

The trail runs on SNZ started mid-November with participation from large global miners, including Rio Tinto, De Beers and Alrosa. The progress in the trial stage has been encouraging. GJEPC has successfully completed two test shipments at IDTC-SNZ. It imported test parcels of rough diamonds from the miner's home country and re-exported the same back to their home country.

"The creation of SNZ and regular availability of direct supply of rough diamonds save time and effort of travel by diamond manufacturers and will also minimise commissions and eventually costs. The wide array of rough diamonds on offer to Indian buyers will be unprecedented; as will be the number of companies, including medium and small enterprises, who will have the never-before opportunity to procure directly from mining companies. This project will also further GJEPC's endeavour to make India a major trading hub similar to Israel, Dubai and Belgium," said Praveenshankar Pandya, chairman, GJEPC.

On successful run of this SNZ, GJEPC would set up similar zones in other states. The Gujarat government has already proposed to set up a gem bourse with GJEPC.