The Hindu Business Line : DTC move may hit rough diamond supplies to India

In its review for the 2008-2011 contract period, DTC has discontinued supplies to eight Indian companies. On the other hand, the company has added three new Indian companies as sight holders and increased supplies to existing few sight holders for the new contract period.

The total number of Indian sight holders would, thus, be 29 for the new contract period down from the previous 34.

Of the many reasons for DTC to discontinue the privilege to the eight sight holders could be refusal of sights (roughs) allocated to them, said a Council member.

Also three Antwerp-based Indian trading companies that supplied roughs to Indian manufacturing companies have also not secured supplies for the new contract period.

DTC has been the father figure for the Indian cutting and polishing industry with its consistent supply of roughs to the Indian diamond processors, said Mr Sanjay Kothari, Chairman of the Gem and Jewellery Export Promotion Council, at a press conference here on Wednesday.

With the restructured allocation to Indian companies, the Council contests that the cuts instituted by DTC would amount to 25 per cent of the installed capacity in India.

This move by DTC will, therefore, consolidate the business in the hands of few which would lead to an unhealthy trading climate, with the few dictating prices, said Mr Kothari.

He also added that infrastructure investments made by these delisted sight holders would suffer without secured supply of roughs.

The Council Chairman was of the view that the overall negative impact on the industry would have been reduced had DTC increased allocation to Hindustan Diamond Company, a joint venture between De Beers and the Government of India.

The companies that have been unable to secure sights from DTC will now be forced to procure roughs from the open market where the premium could be higher by anywhere between 10 and 20 per cent, said Mr Kothari.

Last year, DTC made huge cuts in Israel and some other sight holders but then India was spared, said Mr Praveen Shankar Pandya, Chairman, Diamond India Ltd. However, the cut on India has been drastic and more than anywhere else, he added.

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