While the Russian diamond miner Alrosa has decided to expand its sales activity in Israel over the coming year holding several auctions of rough diamonds larger than 10.8 carats, Indian diamantaires are wary that Israel could eat away into its rough diamond supplies, Melvyn Thomas writes from Surat in an article published by the Times of India at articles.timesofindia.indiatimes.com.
Industry sources said the diamantaires have been eyeing the rough diamond stockpile worth over $2 billion with Gokhran, which functions under the Russian ministry of finance. The Russian state repository had suspended the sale of diamonds since 2008 following the global financial crisis when the demand for diamonds slumped.
Last year, Gokhran had announced that it will start selling the stockpile of rough diamonds in 2012 to the prospective buyers.
"It is due to the tax policies of the Indian government that the diamond mining companies like Alrosa and De Beers are not setting up their sales offices in Surat and Mumbai. India is the world's biggest diamond manufacturing centre supplying over 65 per cent of diamonds by volume and 80 per cent by value. The rough diamond requirement is on the very high scale in India then in Israel," said a DTC sightholder.
Nevertheless, few months ago diamond manufacturers of Russia had criticized the move of the Indian diamantaires and the ministry of finance for lobbying with the Russia's ministry of finance to work out a mechanism for the long term supplies from Gokhran.
As per the official statistics of the Gems and Jewellery Export Promotion Council (GJEPC), India imported rough diamonds worth $370 million from Russia in 2010-11. Most of the rough diamond import was through the long term contracts and auctions by Alrosa, the world's biggest diamond mining company operating in Russia.
Industry leaders said that big diamond miners like De Beers and Alrosa are not setting up shops in India following the 10.2 per cent service tax levied on the procurement of rough diamonds on consignment basis.
While in Israel and China, there is no duty whatsoever on the consignment import of rough diamonds.
"The Central government must allow consignment import of rough diamonds at remove 10.2 per cent tax in order to attract the diamond mining companies to India" said a senior office-bearer of GJEPC.
Alrosa sells its rough diamond stock through long term contracts to about 22 clients in the world including from India, Israel and Belgium. Now, the Indian diamantaires are eyeing the huge stockpile of rough diamonds lying with Gokhran.
