The Hindu : Business : Diamond trading centre in offing

Online edition of India's National Newspaper
Wednesday, May 25, 2005

Business

Business

Diamond trading centre in offing

Staff Correspondent

India to invite FDI, joint ventures in exploration, processing

MUMBAI: The Union Government wanted to set up an international diamond trading centre in India and was also pushing for Indians to invest in diamond mines abroad, said the Union Minister of Commerce and Industry, Kamal Nath, here on Tuesday.

"The ministry is working with industry to develop India as an international diamond trading centre considering that we are the largest purchaser of diamond roughs. There is no reason why we should not have a diamond trading centre on a par with centres in Belgium, Israel and Dubai," said the Minister while delivering the keynote address at `Mines to Market', an international diamond conference organised by the Gems & Jewellery Export Promotion Council (GJEPC).

While the Minister did not specify the location of the diamond trading centre, he said it would be set up by the end of the current year. "Given that we are the largest buyer of roughs, our voice must be carefully heard and we must also listen to our suppliers." The Government would encourage foreign direct investment (FDI) and joint ventures in diamond explorations, mining, cutting and polishing and sales and marketing, he said.

"There must be an assured supply of diamonds for the industry to grow and there is a need for Indian investors to invest in foreign mines," said Mr. Kamal Nath, adding that the government was considering permitting such investments and would also consider economic co-operation agreements with supplier countries, especially African countries. The Minister emphasised the need for the Indian diamond industry to go in for forward and backward linkages in order to consolidate its position in the market.

Mr. Kamal Nath said while India's merchant exports in 2004-05 totalled $80 billion; the target for the current year is $92 billion. As exports had been moving up, there were new areas and new markets that were emerging such as leather, fruits and vegetables to markets like CIS and Asian countries, he added.

Earlier, Festus Mogae, President of Botswana, said Botswana was one of two largest suppliers (the other being CIS) of diamond roughs in the world supplying $2-3 billion of roughs. "But this is not reflected in bilateral trade with India and there is only an unrecorded, indirect trade between the two countries," he said.

Botswana `vulnerable'

The President of Botswana regretted that although diamond rough exports totalled around $2 billion, "Botswana is also the world's most diamond-dependent economy and also the world's most diamond `vulnerable' economy.

The $2 billion exports represent two-thirds of all our merchant exports. Contrary to popular perception, diamonds have not transformed Botswana into a land of glamour. It has been a relatively recent phenomenon and we are today among the poorest in Africa with poor infrastructure. We have also been hit by the burden of AIDS in recent years and against an envisioned a growth of 4-4.5 per cent for the economy, it is growing at only three per cent because of AIDS," Mr. Mogae said.

While laying to rest any fears of competition, Mr. Mogae said, "We will not be supplanting India as the world's leading cutting and polishing centre. We have an infant industry and only hope to slowly increase our share. There are no big fiscal incentives either and we will not let exports become illegal or uneconomic. There will be a continued stability in the diamond market from Botswana."

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