India wants Russia to allow the latter’s diamond companies to sell rough diamonds to India and buy polished ones from here without any duty. Russia, on the other hand, stressed that India needs to improve its custom procedures, enhance security, and ease of doing business.

“This (import of rough diamond to India and export of polished diamond to Russia) will give a boost to our diamond industry. These measures will also boost India-Russia economic ties,” Prime Minister Narendra Modi said at the World Diamond Conference in the presence of Russian President Vladimir Putin here on Thursday.

India is the biggest exporter of polished diamond with a value of nearly $20 billion. It handles 14 out of the 15 diamonds traded world-wide.

Modi asked Russian companies to sell diamonds directly in India, instead of routing it through Antwerp and Dubai, and turn the country into a diamond hub. Modi also announced setting up of a Special Notified Zone, in which major mining companies can import rough diamonds on a consignment basis and re-export unsold ones.

This announcement was especially in reference to Alrosa, which is the biggest miner in Russia. It contributes significantly to India’s rough diamond imports from Russia whose share is around 30 per cent in total import.

The Prime Minister said that he would like Alrosa to have direct long-term contracts with more Indian companies. “I am pleased to know that they are moving in that direction. I want Alrosa and others to trade directly on our bourse,” he said. The Russian company has signed agreements with 12 Indian companies for direct trade.

Job potential

Modi said diamonds are also an important source of jobs. The Gem & Jewellery sector provides employment to nearly 35 lakhs people, out of which around 10 lakh people work in the diamond industry.

However, India’s biggest concern is lack of direct trade of diamond as the trade is routed through Antwerp and Dubai. This cuts into margins as traders have to pay commission. Modi said, “While most of rough diamonds from Russia come to India, less than 20 per cent comes directly to India,” he said.

The biggest obstacles in direct trade in India are the complicated procedures and high duty structure. Putin, in his address, asked India to clean up its act by improving custom procedures and business environment and enhancing security.

Echoing the sentiments, Gems & Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah pointed out that for encouraging foreign companies to sell diamonds directly to India, “the country needed a conducive taxation regime which is at par with other countries”.

The Government is moving towards such a regime, he added.

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