India likely to sign diamonds deal with Russia.

NEW DELHI: India could soon put in place regulations to end the role of intermediaries in the import of rough diamonds from Russia that would expand bilateral trade and boost this lucrative industry which involves hundreds of traders and workers from Prime Minister Narendra Modi's home state of Gujarat.

It has been learnt that the issue will be discussed when Modi meets Russian President Vladimir Putin when the two meet in Goa on Saturday at the 17th edition of the annual summit.

New regulations will relax the restrictive taxation and customs procedure which Indians had to follow when importing rough diamonds, according to persons familiar with the matter. Last year, India created a special customs zone in the Bharat Diamond Bourse in Mumbai in order to facilitate the direct supply of diamonds from Russia. India is trying to further develop the zone in order to upgrade its rough diamond auctioning mechanism, indicated a person familiar with the matter.

The Modi government has also shown special interest in developing ties with Russia's Astrakhan province that houses the Indian community from Gujarat that is involved with the diamond industry for centuries.

Merchants from Gujarat came to Astrakhan and established trade relations and a vibrant Indian community since 1615. The International North-South Transport Corridor via Iran hopes to bring Astrakhan closer to India. An Indian consulate could soon be opened there. Indian diamond traders were active in Moscow and St Petersburg in the early 18th century.Russia is the world’s largest producer of rough diamonds and exports diamonds worth $ 4.24 billion per annum.

Meanwhile, India is world’s largest diamond polishing hub. Indian diamond industry representatives recently showed renewed interest in the sector during the Innoprom-2016 Forum, held from July 11 to 14 in Yekaterinburg.

According to the Kimberley Process (KP) for 2015, India accounted for 37.77% of world imports of rough diamonds, slightly higher than the 37.55% in 2014. Going by the cost of diamonds, the share of India’s imports increased from 30.40% in 2014 to 31.69% in 2015. Russia, meanwhile, strengthened its leading position as the world’s largest diamond producer. Diamond mining in Russia rose by 9.4% in 2015 to 41.9 million carats, worth $4.24 billion.

Currently, more than 80% of the rough diamonds supplied to India from Russia come via third countries. The projected income from the expected potential diamond trade could reach about $2 billion a year, and go beyond just the diamond industry and involve the related services sector, according to persons familiar with the sector.

Source : economictimes.indiatimes.com