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A diamond trading hub in Mumbai? Does it make the cut? |
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Diamond could become a little cheaper for Indian buyers if the government allows setting up of a trading hub in Mumbai. With diamond miners like De Beers, Rio Tinto and Alrosa keen on dealing directly with India - which cuts and polishes nearly 85% of the world's rough diamonds - the government is exploring the possibility of setting up a trading hub. A clear picture on the matter will emerge only after a meeting between the industry and Union commerce secretary Rajeev Kher on November 21.
The industry expects the secretary to review the status of the gem and jewellery special economic zones (SEZ), which have been witnessing a gradual decline in business. Pankaj Parekh, vice-chairman of the Gem & Jewellery Export Promotion Council (GJEPC), said the Bharat Diamond Bourse in Mumbai has agreed to provide space for diamond trading."This will be treated as a notified zone. If this takes shape, then India's diamond trade will not have to deal with traders in Antwerp and Dubai. It will bring down their procuring cost," he told ET.
"Consumers will be benefitted as diamond will become cheaper as raw material cost will come down. Middlemen will also disappear from the trade."
Now auctions take place in Antwerp, Dubai and Israel and Indian traders participate in those auctions to buy rough stones. The proposed hub will allow local players to buy directly from miners, said GJEPC chairman Vipul Shah. Foreign miners now can't directly participate in local trade. India had imported 744.75 lakh carats of diamond worth Rs 56,471.46 crore in the first six months of the current fiscal year that started in April.
Meanwhile, the diamond industry is concerned about dwindling exports from SEZs. In the first six months of the fiscal year, exports from these industrial parks dropped nearly 23% to Rs 11,299.67 crore.There are eight SEZs in the country that export jewellery - in Nodia, Mumbai, Jaipur, Surat, Hyderabad, Kochi, Kolkata and Visakhapatnam. Consultancy firm Accenture, which GJEPC had hired to prepare a roadmap to turnaround SEZs, had identified policy paralysis and business hurdles as the main reasons for the drop in exports. Exports from SEZs are not counted under India's 80:20 rule and this made procurement of gold from nominated import agencies difficult for units in these parks. Under the rule, agencies have to ensure that 20% of the gold they import is exported after value addition, such as by turning them into jewellery. Since exports from SEZs are excluded under this rule, the agencies charge high premium from such units to provide gold. SEZbased manufacturers who require small quantities of gold - for instance, makers of diamond-studded jewellery - are affected by this as they find it difficult to get gold from importing agencies.
Source : economictimes.indiatimes.com
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