China challenges India’s position as world’s top diamond polisher India’s long-held position as the world’s top diamond polisher is being challenged by soaring output from China, compelling India to seek help from ally and top rough diamond supplier Russia to defend its market share. India has traditionally relied on the middlemen in trading hubs of Antwerp, Tel Aviv and Dubai for its supply of rough diamonds, which mainly come from Russia or Africa. Most of the world’s diamond output is sent to India for cutting and polishing before being retailed around the world. But China has managed to break the established trade route by getting diamonds directly from African mines in which Chinese companies have a stake. This has boosted the value of China’s net exports of polished diamonds by 72% in the past five years to $8.9 billion. China’s share of the global polished diamond market has tripled to 17% in the past decade, according to data from the United Nations. India’s share has fluctuated between 19 and 31%. China’s active procurement of rough supply from African countries was reducing the supply available to Indian manufacturers. During Russian President Vladimir Putin’s visit to New Delhi this month, Russia’s state-run diamond monopoly Alrosa signed a dozen deals to increase direct rough diamond deliveries to India that would help reduce the cut taken by middlemen in the secretive precious gems trade. The direct deals would also reduce risks linked to Western sanctions imposed over Russia’s annexation of Crimea, while our PM is additionally seeking arrangements that would allow Russian jewellery makers to send rough diamonds to India and re-import polished stones duty-free. Experts feel that to compete effectively with China, India will also need to streamline its tax and import rules. India is looking to build a special notified zone where companies can import rough diamonds on a consignment basis and re-export unsold ones, mirroring China’s investor-friendly trading zones that avoid complicated export and import taxes. Problems in China: Despite China’s upper hand in securing rough diamonds, its cutting and polishing industry is not as organised as India’s and rising labour costs are a problem. The Chinese diamond polishing industry works on a contract-basis and through joint ventures. They are consistent at mass producing small stones, but lack the expertise required for bigger and finer stones.
Posted on: Sat, 27 Dec 2014 15:48:15 +0000
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