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Ambarish Mukherjee

Conflict diamonds originate primarily from African countries where rebels or factions opposed to internationally recognised governments illegally mine and trade diamonds.

New Delhi , Dec 12

THE issue of `conflict diamonds' entering India in a large way has led to a `conflict' between the Ministries of Mines and Commerce and Industry on allowing 100 per cent foreign direct investment in the diamond mining sector through the automatic route.

While the Ministry of Industry favours placing diamond exploration and mining under the Reserve Bank of India's automatic route, the Ministry of Mines wants it to remain under the Foreign Investment Promotion Board where proposals are cleared case-by-case and conditions can be imposed.

This is because there is suspicion that despite the Government's commitment to the United Nations to prevent the entry of such diamonds into the market, conflict diamonds are entering India and getting into the global market unnoticed, highly-placed government sources told Business Line.

Conflict diamonds originate primarily from African countries such as Angola, Liberia, Sierra Leone and the Democratic Republic of Congo, where rebels or factions opposed to internationally recognised Governments illegally mine and trade diamonds worth billions of dollars, which fund military action against the legitimate governments.

The UN General Assembly recognised in November 2000 that conflict diamonds are a crucial factor in the ongoing wars in parts of Africa that have left an estimated three million people dead during the past one-and-a-half decade.

In January 2003, 54 countries including India, the world's largest processor and exporter of diamonds, endorsed a UN initiative called the Kimberley Certification Process that certifies the country of origin to prove that the diamonds do not come from Angola, Liberia, Sierra Leone and Congo.

On allowing 100 per cent FDI in diamond mining through the automatic route, the Mines Ministry's apprehension is that there would exist the possibility of some conflict diamonds being smuggled in to India for processing and onwards exports.

Since the current policy restricts FDI in diamond mining through the automatic route to 74 per cent, the view is that an Indian partner's involvement would lead to better supervision of the project.

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