Earlier this month a delegation of senior officials from Russian diamond mining company Alrosa, led by its president Andrey Zharkov, visited India to interact with companies and trade bodies from the Indian diamond and jewellery manufacturing industry.
The company described it as a ‘working visit’, and in many ways it would seem to be a routine one with no important announcements or declarations being made. Yet the significance lay not in the amount of business deals struck but as a symbol of the growing ties between India and Russia in the diamond sector, propelled both by initiatives at the industry-to-industry, as well as the government-to-government level.
Last year Alrosa sold rough diamonds worth $1.5 billion to companies with Indian capital. Of this $575 million represented direct supplies to India. Though the figure was lower than the $ 767 million sold a year earlier, this can be attributed to the global slowdown faced by the industry. In relative terms, the share of direct supplies actually increased. Commenting on the relationship, a statement from Alrosa notes that “the share of ALROSA’s direct supplies to India in the Company’s aggregate sales increased from 10 per cent in 2010 up to some 17 per cent following the results of last year.”
The website of the Indian Embassy in Moscow says, “There is a natural complementarity between India and Russia in the area of trade in rough diamonds - Russia as a major producer of rough diamonds and India as the leading processing center.”
Russia produces about 25 per cent of the world’s rough diamonds with Alrosa being the largest producer in terms of caratage. India, on the other hand, manufactures above 65 per cent of the world’s polished diamonds in terms of value and nearly 90 per cent in terms of actual pieces.
Diamonds and precious stones account for about 1.3 per cent of Russia’s GDP, while in India the gems & jewellery sector contributes 6-7 per cent of country’s GDP. More importantly, the industry employs thousands of people – in India the figure runs into a few millions.
While Indian manufacturers and the Russian miner have been interacting for many years now, the first formal co-operation agreement at an industry level came a couple of years ago when The Gem and Jewellery Export Promotion Council (GJEPC) and Alrosa signed a memorandum of understanding (MoU) to share statistical data related to the diamond trade.
The matter of building stronger direct long term ties between the two was also discussed by senior government officials soon after this, and an Alrosa study team which visited India concluded that most of the rough diamonds produced in Russia eventually found their way to India to be cut and polished.
December 2014 marked a major turning point when during his state visit to India, Russian President Vladimir Putin and Indian PM Narendra Modi jointly inaugurated the World Diamond Conference in Delhi. Speaking on the occasion, the Indian PM made a plea for strengthening direct links between the two countries in the field of diamonds, and announced approval for a new path breaking initiative, the setting up of a Special Notified Zone (SNZ) for the trading of rough diamonds.
During the conference, Alrosa also signed long-term agreements for the direct supply of rough with 12 Indian companies.
Soon after the SNZ opened, Alrosa held a pilot tender at the SNZ to test the duty-free import-export system and noted high level of sales organization.
The Indian embassy site also says that Alrosa is planning to open an office in Mumbai “iIn order to encourage more direct trade between Alrosa and Indian diamond traders”.
In December 2014, PM Narendra Modi focused on three points that would strengthen bilateral ties between the two countries in the diamond sector. The first two, growth in direct supplies and a SNZ to further facilitate direct sales, are now a reality. Indian diamond companies now look forward to similar steps in the third area – regulatory reform in Russia so that Russian diamonds polished in India could be sent back to Russia “without extra duties”.
Columnist
He has been a journalist since the mid-1980s, and has spent close to two decades tracking the gem and jewellery industry while holding different editorial positions in industry specific publications and websites
.jpg)
