Minister Says India Should Become a Rough Diamond Trading Center

May 25, 2005

Minister Says India Should Become a Rough Diamond Trading Center

Shri Kamal Nath, India's Union Minister of Commerce & Industry, said his ministry is working closely with the diamond industry to develop India as an international trading center for rough diamonds. "Considering that we are the largest purchaser of diamond rough in the world, there is no reason why India should not have a diamond trading center at par with the centers currently in Belgium, Israel and Dubai. We hope to have this established in the near future," he said, while speaking at the inauguration of the International Diamond Conference – Mines to Market 2005, in Mumbai on May 24. A trading center is slated to take shape by the end of 2005, according to news reports. Bakul Mehta, chairman of the Gem & Jewellery Export Promotion Council, which organized the conference, said the International Diamond Exchange is likely to be set up in Mumbai.

Speaking to India's Business Standard at the conference, Nath said the government is trying to ensure the Indian market does not suffer due to the increasing supply shortage in diamonds. Government and industry are working together to open up the process for Indians to source diamonds from abroad.

"We are quite open to the idea of entering into economic cooperation agreements with countries, especially the countries of Africa, that ensure the supply of rough diamonds to India, while also bringing value and investment in other areas (such as transport, communications and infrastructure) to supplier countries. We should place emphasis on the promotion of forward and backward linkages, including the consolidation of our position in the small diamond sector segments, in syndicating buying of rough diamonds, and creating controlling stakes in mine-heads through joint ventures and tie-ups. We believe that only such trade is sustainable as brings value and benefit to all concerned; and we want to work on this basis," said Nath.

Nath also told the conference about his recent visit to Australia in connection with a meeting of the Joint Ministerial Council and Joint Business Council in Sydney and Melbourne. He stressed his first stop was Perth in Western Australia – the heart of Australia's diamond mining area. Kath said he had extensive and promising discussions with mining companies as well as with the Western Australian prime minister regarding continued supply of rough diamonds to India.

The minister also called upon investors to set up enterprises in special economic zones dedicated to a single industry adding that "the gems and jewelry industry is best placed to take advantage of this." He said the government would encourage foreign direct investment and joint ventures between Indian entrepreneurs and businesses abroad in sectors all along the diamond chain, from exploration, mining and sourcing, cutting and polishing, jewelry designing and manufacturing, exports, and sales and marketing. He underlined that enormous opportunities existed, according to a press release issued by the government of India.

Festus Mogae, president of Botswana; Phymzile Mlambo-Ngcuka, minister of mines and energy, South Africa; and Ingele Ifoto, minister of mines, Democratic Republic of Congo, were among the other government leaders present at the conference, which continues May 25.

Mogae told the attendees that while Botswana is a major rough diamond producer, it is also the world's most "diamond vulnerable" economy, meaning that it depends too much on this one commodity, which accounts for four fifths of its export revenues, according to news reports. "Contrary to popular perception, diamonds have not transformed Botswana into a land of glamour. We are today among the poorest in Africa with poor infrastructure. We have also been hit by the burden of AIDS," said Mogae.

He stressed, however, that Botswana had no plans to supplant India as the world's biggest cutting and polishing center for diamonds. "We have an infant industry and only hope to slowly increase our share. There are no big fiscal incentives either and we will not let exports [of rough diamonds] become illegal or uneconomic. There will be a continued stability in the diamond market from Botswana." Mogae also said Botswana would not compel "domestic beneficiation," by requiring rough diamonds to be cut or set in jewelry within the country.

by Peggy Jo Donahue

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