Last Thursday, Russian diamond miner ALROSA and the Gem & Jewellery Export Promotion Council of India (GJEPC) signed a Memorandum of Understanding, which aims at expanding cooperation between the diamond industries of the two countries. The document was signed by Fyodor Andreev, President of ALROSA and Vipul Shah, Chairman of GJEPC after they exchanged speeches and the Russian and Indian delegations discussed areas of possible cooperation.
Under this Memorandum, ALROSA and GJEPC agreed to exchange information concerning the development of cooperation between the diamond industries in Russia and India, including overviews of the diamond market and diamond market forecasts, diamond import and export statistics, as well as market research reports. Both parties will also cooperate on the Kimberley Process issues and jointly work to ensure separate sales of natural and synthetic diamonds.
During a press conference after the signing ceremony, Vipul Shah, having stressed the importance of the Memorandum of Understanding, said that it would be a huge opportunity for the GJEPC members to establish closer relations with ALROSA. They will be able to get a lot of information that will help them to understand the Russian market. On the other hand, ALROSA will also be able to understand the Indian market better. According to Vipul Shah, having signed this document, GJEPC will share statistics related to the Indian retail market and diamond manufacturing industry in return for information on the Russian retail market. “We will be exchanging information, which we will be sharing with our members, so they can start thinking how to increase trade relations and business between the two countries,” he said.
Mr. Siddharth, Joint Secretary of the Ministry of Commerce and Industry of India, commenting on the signing of MoU said the document institutionalized the exchange of information between GJEPC and ALROSA, which previously was sporadic. "Basically, the idea is that both our countries complement each other. You have the biggest producer of rough diamonds on the one hand, and we have the biggest cutting and polishing industry on the other hand. So, this Memorandum brings in more understanding of each other’s points of view," he said, expressing the hope that this will lead to more business opportunities in the future.
Talking about the problem of market regulation with regard to natural and synthetic diamonds, the members of the Indian delegation confirmed that this was one of the main challenges facing the GJEPC, and said they had ordered a report on this issue from A.T. Kearney, a marketing consultancy, which would be released soon. It was stressed that the GJEPC calls on companies dealing with natural diamonds and companies dealing with synthetic diamonds to do their business transparently disclosing information about their goods to consumers.
The importance of this problem was also highlighted by Vladlen Nogovitsyn, Head of Marketing Department, ALROSA, who pointed to the need for timely action on the issue of synthetics.
Speaking about long-term contracts under which Indian companies are working with ALROSA, Vipul Shah said that it was very much desired for the Indian diamond industry to have long-term contracts, because once you have a long-term contract you can plan your business in a very proper manner, you can assure your retailers about supplies and about demand. “So it is a very good business model. At the Council, we prefer more of long-term contracts coming to India for the members so that they can ever have a consistent supply," said the head of GJEPC.
The Indian delegation also noted that the diamond manufacturing industry in India employs a huge workforce and consistent supply is absolutely necessary, otherwise if it is not there, then the problem is higher speculation, which cannot be permitted at this rough time. And it is good for rough diamond producers as well to have such a commitment even before mining, when such a contract is there.
Describing the situation with the current supply of rough diamonds to India Vipul Shah said it was much better compared to last year and supply was consistent across all the sources. “So, we see a good year ahead of us with demand always exceeding supply. It will be more challenging after 4-5 years because no new mines are coming. That would be challenging in terms of how we are going to tackle it. And this is to be discussed among the producing countries and manufacturers in a forum to understand the future prospects of the market,” he said.
Vladimir Malakhov, Rough&Polished, Moscow
