Sparkle and Shine: The Diamond Trade

1 Month agoAs India and Russia mark 70 years of diplomatic ties, both countries aim to give an added boost to 'diamond diplomacy'.

There are several natural synergies between India and Russia when it comes to the diamond trade. The two nations share a history of trade in diamonds that dates back to the 17th century, when merchants from Gujarat came to Astrakhan province and established trade relations, in 1615.1

Today, India – specifically Surat in Gujarat – is the world’s biggest manufacturing centre for cut and polished diamonds, while Russia is the world’s largest producer of diamonds. Paradoxically, there is no direct diamond trade between India and Russia, even though India is one the key trading partners of ALROSA – the Russian state-owned miner, and one of the world’s biggest diamond miners.2 Less than 20% of diamonds come to India directly from Russia, most rough Russian diamonds come to India indirectly through Antwerp and Dubai.3

The issue came up formally in discussion between Russian President Vladimir Putin and Indian Prime Minister Narendra Modi during the 15th India-Russian annual summit in New Delhi in 2014.4 Hours after the summit, twelve Indian companies signed three-year contracts worth $2.1 billion aimed at buying rough diamonds directly from Alrosa. The contracts were signed during the World Diamond Conference, the first conference of its kind in the world, which was opened jointly by PM Modi and Russian President Putin.

Prime Minister Modi pointed out at the conference that the gems and jewellery sector employs nearly 3.5 million people, of which 1 million people work in the diamond industry alone. Out of 10 polished diamond pieces sold world-wide, it is reported that 9 are processed in India.5 Ad PM Modi remarked, “The diamonds sparkle in the world because of the skills of Indian workers.”

Interestingly, the Bharat Diamond Bourse was established in 2010 in Mumbai, and has become the world’s largest diamond exchange. Prime Minister Modi referred to the Bharat Diamond Bourse at the World Diamond Conference, saying that he had made three proposals to the Russian President:

  • “First, I would like Alrosa to have direct long-term contracts with more Indian companies. I am pleased to know that they are moving in that direction,” Modi told the World Diamond Conference.
  • “Second, I want Alrosa and others to trade directly on our bourse. We have decided to create a Special Notified Zone, in which major mining companies can import rough diamonds on a consignment basis and re-export unsold ones. This is going to benefit Indian diamond industry and create more jobs for our youth.”
  • “Third, I asked President Putin to reform regulations so that Russian jewellery makers can send their rough diamond to India and re-import polished diamond without paying duty.”6

 

In 2015, India notified the Bharat Diamond Bourse as a Special Notified Zone, to facilitate the direct supply of diamonds from Russia. According to the framework, the zone is to have the facility for viewing, auction and sale of rough diamonds, and include the necessary, commercial, security and customs-related facilities.7

 

OPPORTUNITIES

 

During the India-Russia annual summit in Goa in October, 2016, the Indian Prime Minister and Russian president discussed measures for India to simplify taxation and customs procedures, that would enable Russian traders to directly export rough diamonds to the country.8 The Indian government has also shown interest in developing ties with Astrakhan region, where many people of Indian origin (specifically Gujarati-origin) have been involved in the diamond industry for centuries.

There is little doubt that ‘diamond diplomacy’ would be a boost to B2B ties, meaningfully involve the private sector, and be the natural progression of trade ties between the two nations.

Source:
1 http://www.russia-briefing.com/news/russia-india-boost-economic-cooperation-trade.html/
2 http://www.russia-briefing.com/news/russia-india-boost-economic-cooperation-trade.html
3 http://www.russia-briefing.com/news/russia-india-boost-economic-cooperation-trade.html/
4 https://www.rt.com/op-edge/214771-diamond-industry-russia-india/
5 https://www.rt.com/op-edge/214771-diamond-industry-russia-india/
6 https://www.rt.com/op-edge/214771-diamond-industry-russia-india/
7 http://www.business-standard.com/article/economy-policy/centre-designates-centre-at-bharat-diamond-bourse-as-special-notified-zone-115060100982_1.html
8 https://in.rbth.com/economics/business/2017/01/16/russia-india-turn-to-gujarat-to-help-increase-trade-turnover_681841