India hopes to develop diamond trading hub

(File photo)

MUMBAI: India is the shining star in the world's diamond manufacturing industry. Worth about US$14 billion, India cuts and polishes 11 out of 12 diamonds traded globally. It mostly sources raw material from centres like Dubai and Antwerp.

However, to reduce its dependence on such centres for raw material sourcing, India hopes to develop itself into a diamond trading hub as well.

The Trade Ministry has formed a committee to look into how to do this. Among the recommendations -- setting up a special zone for the import and trading of rough diamonds, and duty-free incentives for imported cut and polished diamonds.

Dinesh Navadia, president of the Surat Diamond Association, said: "There are many companies in India that want to collaborate with miners of foreign countries and sell rough diamonds in India. But due to the lack of Infrastructure and the inefficient policies of the Indian government, they are not able to do so."

The Indian government is hoping the diamond industry will be one of the sparklers in its push to boost exports substantially, to rein in a ballooning fiscal deficit.

Gems and jewellery form around 15 per cent of India's total exports. However, it is facing fierce competition from China.

China intends to acquire expertise in cutting and polishing rough diamonds and has already started acquiring mines in Africa.

Hitesh Patel, a diamond merchant, said: "Chinese people are not great cutters and polishers. But for some political reasons, some miners are controlling Indian site holders and they are compelling them to go and do the operations in China."

India's cut and polished diamonds exports fell 29 per cent to US$21 billion in the first eleven months of the fiscal year. Total gems and jewellery exports fell 10 per cent to about US$38 billion.

The proposals recommended to the federal government, if accepted, will help India progress towards value-added exports and also boost employment in the sector.