Russia- India trade relations
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India and Russia diamond deals
December 10, 2014
Both sides stand to gain from greater cooperation in diamond. Russia, facing global sanctions over Ukraine, has the opportunity to help India emerge as a key diamond-trading hub and an alternative to European centres.
India is the world's largest manufacturing hub for cut and polished diamonds, accounting for 60% of global supply on value and 85% in volume. Employing nearly 1million workers, she has skilled manpower to expand business.
The diamond business will emerge as a major source of lending for Indian banks whose exposure in Belgium, a key diamond trading centre, was about $1.5 billion.
“Moscow is a natural partner. We are trying to bring Russian business to India. Now Russian rough diamond comes to India via Belgium and Dubai. Once they start sending them here directly, it'll reduce our transaction costs,“ says Vipul Shah, chairman Gem and Jewellery Export Promotion Council.
Russia is the largest diamond producing country in terms of volume and in 2013 it produced 25% of total car ats and 26% of overall rough diamond. Industry data shows India imports roughly 90% of rough diamonds from the European Union, Israel and UAE. Only about 10% Indian imports come from Russia, Australia, Canada and Africa.
Russia exports 63% of rough diamonds to EU and 16% to India which is a global polishing centre. Industry officials point to the potential that exists for raising business levels.
Shah says Russia is expected to sign 12 long-term contracts with Indian companies during Putin's visit.He says several factors demonstrate that India and Russia can deepen their linkages on diamond.
Putin and PM Narendra Modi kicked off the World Diamond Conference on December 11, 2014 where global leaders from the industry brainstormed on the country's potential to emerge as a global diamond centre.
The industry has been urging the government to set up a special notified zone (SNZ) and a simplified taxation system to encourage the industry and help it expand.An SNZ is expected to attract global companies such as De Beers, Rio Tinto, Alrosa to set up base in India and not sell rough diamonds to India via Antwerp, Dubai and Hong Kong.