India’s historical dominance as the leading diamond polishing nation is facing competition from China, which is experiencing a significant increase in diamond production.
This has prompted India to turn to its ally and primary supplier of rough diamonds, Russia, for support in safeguarding its market position.
Let’s learn about the latest updates in the diamond industry.
The Role of India in the Global Diamond Supply Chain
Traditionally, India has depended on intermediaries in major trading centers like Antwerp, Tel Aviv, and Dubai to source its rough diamonds, primarily sourced from Russia and Africa.
The majority of global diamond production is shipped to India, where it undergoes cutting and polishing before being distributed to markets worldwide.
China Disrupts Traditional Diamond Trade Route
- As of now, China has disrupted the traditional diamond trade route by sourcing diamonds directly from African mines with Chinese company investments.
- This direct acquisition of diamonds from Africa has caused China’s net exports of polished diamonds to surge by 72% in the last five years, reaching $8.9 billion.
- In contrast, India’s diamond exports, which are supplied by firms like Asian Star Co. Ltd, Gitanjali Gems Ltd, and Venus Jewel, have increased by 49% to $14 billion over the same period.
- However, Indian diamond shipments have experienced a significant decline this year.
- Sandeep Varia, an executive from the Indian industry body Assocham, noted that China’s active procurement of rough diamonds from African countries has reduced the available supply for Indian manufacturers, resulting in layoffs in many manufacturing units across the country.
- Consequently, China’s share of the global polished diamond market has tripled to 17% over the past decade, based on United Nations data, while India’s share has fluctuated between 19% and 31%.
India Streamlines Diamond Trade to Compete with China
Indian Prime Minister Narendra Modi, from Gujarat’s diamond center, successfully convinced Russia to directly supply rough diamonds to India during President Vladimir Putin’s recent visit to New Delhi.
Russia’s Alrosa, the state-run diamond monopoly, signed multiple agreements to increase direct rough diamond imports, aiming to reduce intermediary involvement and mitigate Western sanctions risk related to Russia’s Crimea annexation.
Thus, To compete with China, India needs to simplify tax and import regulations.
India’s efforts to boost Diamond Trade
India is considering a special notified zone for companies to import rough diamonds on consignment and re-export unsold ones, similar to China’s investor-friendly trading zones, simplifying taxes. These initiatives should boost profit margins for Indian diamond manufacturing and enhance competitiveness.
Hence, if you want to start import export business of diamonds, now is the right time to get all the licenses such as Import Export Code Registration, AD Code Registration etc and take your business to another level.
While China excels in securing rough diamonds, its cutting and polishing industry lacks India’s organization. Rising labor costs in China also pose challenges. The Chinese diamond polishing industry operates primarily through contracts and joint ventures, specializing in mass-producing small stones but lacking expertise in larger, higher-quality stones, as noted by Martin Rapaport, chairman of the Rapaport Group.
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