India may source diamonds directly from African nations

India has offered African countries, like Botswana, Angola, South Africa and Namibia, incentives to strengthen their jewellery industry in return for direct procurement of rough diamonds from these countries, Minister of State for Commerce and Industries Jairam Ramesh said.

The assistance will be provided through the Indian Technical and Economic Cooperation (ITECH) programme of the Ministry of External Affairs.

According to Sanjay Kothari, chairman of Gems and jewellery Export promotion Council, the move would result in cost benefits of the order of 4-5 per cent.

"More over, we will have an assured supply of uncut dimonds. Currently, the supply of un cut dimonds depends on the markets forces in Antwerp," said Kothari.

In 2006-07, rough diamonds worth $9 billion was imported by the country. The total size of the market for uncut stones has been estimated to be $13.4 billion a year.

According to Ramesh, these countries, which are a major source of rough diamonds, are pursuing avenues to add value to the industry. The major constraint faced by the diamond companies in Africa for getting in to value added products is the shortage of skilled labour.

As a result, the cost of cutting or polishing a diamond in a country like South Africa is $40 to $60 a carat, compared to $10 in India and $17 in China.

India has been looking for sourcing rough diamonds directly from the countries, where they are produced. In fact, in the past six months, rough diamonds worth $15 million to $20 million has been procured directly, of which, a major share was from the Russian company Alrosa.

The Ministry of Commerce is also in touch with Azerbaijan, Uzbekistan, Kazakhstan, Venezuela, Canada, Australia, Congo, and Ghana for direct sourcing of rough diamonds.

India is the largest centre for cutting and polishing of diamond in the world, with a 60 per cent share in terms of value, 85 per cent in terms of volume and 92 per cent in terms of pieces. According to commerce ministry estimates, out of every 12 cut and polished diamonds in the international market, 11 are from India.