India is considered to be the global hub for diamond cutting and polishing. The nation’s cheap workforce helps cut and polish millions worth of precious gemstones arriving from different corners of the earth before shipping the end products to other destinations for use in jewelry.
It therefore comes as no surprise to note that the nation is all set to sign some major deals pertaining to diamond exports with Russia. Considering the fact that Russia is the biggest diamond producer in the world, one would expect these deals to help India grab a lion’s share of the diamonds Russia exports.
Sources indicate that India would most definitely lobby for a position wherein the nation would be able to get the bulk of its diamonds directly from Russia instead of getting them from other middlemen like Dubai or the UAE. Currently, only a fifth of the total rough produce reaches India from the mines in Russia.
The conference held in India later this week to officiate these deals will see Alrosa, a state controlled mining group in Russia, sign various long-term contracts with several diamond companies in India. The contracts would facilitate the direct shipment of diamonds from Russia to its most valuable natural partner, India.
Issues with exporting diamonds to India
Issues like heavy taxations and bureaucratic hurdles have made diamond mining companies in Russia wary of shipping their rough stones directly to India. The same reasons also make these companies apprehensive of starting local firms within the country to facilitate easy export and import of diamonds. However, India’s increasing efforts to improve the business climate for foreign investors may be just what is needed to break the ice and encourage firms to open offices in the country.
Current Nature of the Diamond Industry
A few years back, recession had hit the diamond industry hard, pushing it to a volatile stage, a factor that drove down the demands for these stones drastically. However, as more and more consumers in China and India start opting for diamond jewellery, the demand for these stones have gone up again and is expected to peak within the next few years.
Demand vs. Supply
Many believe that lack of new diamond finds would make it hard for suppliers to meet demands for the stone. The shortfall in the global production of diamonds would then have to be met by transforming into a diamond jewellery merchant and retailer rather than simply sticking to cutting and polishing these stones. This is the stance India would have to take if it expects to stay in the race and compete with China, which is all set to become a bigger player of diamond jewellery.
India is all set to sign several deals with the Russia pertaining to diamond exports. The new deals will allow India to enjoy direct shipments of rough diamond stones from Russia, eliminating the intermediaries.