The Hindu Business Line : India seeks suspension of 25% tolerance measure in rough diamonds

New Delhi, Nov 3 India today sought a suspension of the extant 25 per cent tolerance measure or price differential between the source country export price and the value perception of the authorities in the recipient countries in view of the “tremendous volatility in rough diamond prices in the next year or two”.

Kimberly certificates

Inaugurating the Sixth Plenary of the Kimberly Process Certification Scheme (KPCS), under which the diamond trade is regulated to ensure that rough diamonds are not exported from “conflict zone”, the Minister of State for Commerce and Power, Mr Jairam Ramesh, said that India imports a lot of rough diamonds, “we need immediately to put in place policies that will restore stability in the rough diamond market”.

He said, last month alone, some major primary producers have reduced selling prices of most of their rough assortments by between 35 and 50 per cent. In the absence of perfect information flows, India might see significant price differentials of rough, traded in different countries.

Mr Ramesh felt that the problems associated with the global settlements of monetary transfers among banks and the general tightening of available credit facilities might impact the diamond business and the flow of goods.

Permanent panel

Pointing out that 60,000 Kimberley certificates are issued a year, Mr Ramesh suggested the creation of a permanent committee for arbitration and meditation particularly to prevent erroneous judgement concerning administrative or human errors in the system’s implementation.

While acknowledging the stellar role of the non-Governmental organisation in the advent of Kimberley Process, Mr. Ramesh cautioned against any widening the scope and challenging the purpose of the Kimberley process by NGOs.

He said NGOs seek to look at issues such as money laundering, smuggling which the UN and the Security Council did not ‘mandate us to do”.

“For us to even think of changing this mandate would mean that we would infringe on the jurisdictions of finance ministries, customs, anti-money laundering and law enforcement agencies and fiscal authorities”, he said adding that “we would be intervening in the free trade of polished diamonds around the world”.

Direct procurement

Stating that in the $70-75-billion retail sales of diamonds the world over, the value of polished diamond from local production is approximately $20 billion he said that India figures in this slot “overwhelmingly”.

That is why he said, India has been stressing on direct procurement of rough from producer countries and also on the need to enhance value addition in Africa itself.

Working with S. Africa

He said India is fully committed to working with African producers of rough diamonds to assist them to move up the value chain and India has offered its expertise in mining technology with focus on beneficiation.

He said India had offered to establish diamond cutting and polishing facilities and train local people in this craft both in India and in the producing countries. In his welcome address, the Commerce Secretary, Mr Gopal K. Pillai, said “diamond remains vulnerable to money- laundering and illegal activity” and warned “loose oversight” would be “disastrous to diamond industry”.

He also catalogued the problems plaguing resources-regions which are characterised by “the sharpest inequality, under-investment in manufacturing and over-emphasis on trading extractive resources”.

He said India is transforming itself from a low-cost small producer to high-value cartage diamond jewellery maker and said both India and China with their fastest growing economies provide a promising market for diamond jewellery.

He said that out of $78-billion global trade in diamonds, conflict diamonds is just barely one per cent and with the successful KPCS, the diamond resource-rich countries could use this as an instrument for development.

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