Representatives of the Indian diamond industry are getting ready with their proposals for the expansion of direct purchases of rough diamonds from ALROSA.
The Russian-Indian cooperation in the diamond trade received a significant boost after the meeting of Indian Prime Minister Narendra Modi and Russian President Vladimir Putin in December last year. ALROSA then signed 12 contracts for the direct supply of diamonds to Indian companies. The next meeting between the Russian president and Indian prime minister may be held in Astrakhan this fall. At this meeting, it is expected that Russia may be presented with new proposals making it possible to increase diamond trade between the two countries.
The current crisis in the diamond market gives a new impetus to the cooperation between India and Russia. According to industry players, the prolonged fall in diamond prices is largely the result of speculation. Direct shipments of rough to Indian diamond manufacturing companies could provide a good hedge against market fluctuations. Russia and India have a common interest in this field: the slump in diamond prices does not do any good to ALROSA or diamond cutting factories in India, which are involved in production and not in re-selling rough. Stable diamond prices guarantee stable jobs and stable social environment.
In preparation for the future summit, Indian industry members are considering the possibility of introducing a formula of fair rough diamond prices to which ALROSA and Indian diamond manufacturers would stick in their pricing policies. One of the possible steps would be to introduce governmental guarantees for the purchase of Russian diamonds to be supplied to the largest Indian diamond manufacturers.
Administrative barriers in the Indian law and customs regulations among them in the first place have long prevented Indian diamantaires from direct cooperation with ALROSA. This problem will be solved by the special free customs zone in Mumbai, which is already being created by the Gem and Jewellery Export Promotion Council (GJEPC) and the Mumbai diamond bourse. The proposed pricing formula and governmental guarantees will ensure stable funding of the sector and restore confidence on the part of banks.
India is ready to expand its cooperation with Russia not only by way of purchasing rough. Indian diamond manufacturers are ready to take part in the operation of diamond cutting factories in Russia. Mutual abolition of customs duties could expand cooperation between the two countries facilitating duty-free export of Russian rough diamonds to India and duty-free imports of polished goods made of them back to Russia.
Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough & Polished
