India, the world’s largest diamond-processing nation and Russia, the world’s largest rough diamond producer, have taken a significant step towards greater direct diamond trade between the two countries. India’s Gem & Jewellery Export Promotion Council (GJEPC) and state-owned Russian diamond mining firm Alrosa signed a memorandum of understanding to share trade and statistical data on the diamond trade between the two countries.
The MoU, inked by GJEPC Chairman Vipul Shah and Alrosa President Fyodor Andreev, is an evidence of warming trade relations between the two countries. The partnership is at the back of increasing trade between the two regions and burgeoning potential for trade. India has sought long-term contracts between Alrosa and the Indian cutting and polishing industry for a long time now. During the visit of Russian Deputy Prime Minister Dmitry Rogozin in February 2013, Indian Commerce Minister Anand Sharma proposed that the state-owned Minerals & Metals Trading Corporation (MMTC) be made a nodal Indian agency with a long-term contract with Alrosa.
High level of import and export activity
Russia produced 34.9 million carats of rough diamonds in 2012. India imported 163.11 million carats of rough worth $16.34 billion and exported 36.46 million carats of polished diamonds worth $20.23 billion during the calendar year 2013. Total Indian provisional exports of gems and jewellery during calendar year 2013 stood at $36.04 billion.
Need more direct supplies of Roughs to India
An Alrosa study team visiting India recently stated that that most of the rough diamonds produced in Russia are cut and polished in India. However, direct imports of rough diamonds from Russia to India are modest, with the fiscal 2013 figure standing at some $767 million.
Alrosa accounts for close on 25% of the world output, while the Indian diamond processing industry accounts for some 60% by value of global polished diamond output. An estimated 14 out of 15 polished diamonds studded in jewellery globally are cut and polished in India. An Indian think tank recently stated that more direct supplies of rough diamonds to India could easily boost the current figure to between $4– and $5 billion.
The Indian diamond industry has long said that the indirect routing of rough diamonds into India simply adds to cost and increases the complexity of sourcing steady raw material supplies. Direct imports would bring benefits to both Alrosa as well as the Indian cutting industry, Indian diamond dealers say.
Trade Relations and Procedures
Streamlining overall trade procedures could also see increased Indian exports of polished diamonds to Russia. Indian dealers already have a significant presence at the Moscow Diamond Bourse and relations between the diamond dealing communities of both nations are warm and close. Russian buyers have been consistently represented in India and particularly at the India International Jewellery Show (IIJS), one of the four largest gem and jewellery trade shows in the world.
Procedural matters are all that stand between the two countries and sharply increased trade in polished diamonds between the two countries. The engagement between the Commerce Ministries of both nations in sorting out these procedural matters has diamond industry watchers hopeful of a major increase in trade in coming years.