Never mind that the Chinese import rough diamonds worth only $500 million and Indian rough imports are over $3 billion. What is terrifying Indian industry observers is the scorching pace of growth that the Chinese have shown in the last five years. This growth has been catalysed to a large extent by their inherent advantages. Like the fact that China has the advantage of extremely cheap labour. Some other Asian countries too offer cheap labour, but are no match to China for sheer numbers. The quality of workmanship is also impressive.

Equally helpful is a single window system that minimises bureaucratic hurdles. Added to this is the Chinese penchant to bulldoze their way through negotiations and the nonchalance with which they render competitors unviable by undercutting and dumping products.

Against this, the Indian red tape is legendary. Currently, about a third of the jewellery units at SEEPZ in Mumbai are lying idle. This includes a factory which once boasted of a 2,500-strong workforce. Rather than reviving this once-flourishing entity, the authorities there have decided to allot the unit to someone else. Things could only get worse. Reason enough for the Indians to fear history repeating itself. The way it did in the steel, textiles and the chemical industries.

Then there is De Beers to contend with. This conglomerate, which controls the sale of roughs through its CSO sights, may look at China to reduce its own dependence on India. India’s performance last year may have been just a bit too spectacular for comfort.

These fears have been compounded by the fact that the millennium boxes have gone to Hong Kong for processing. This, in spite of a millennium competition being held in India to promote sales.

De Beers, however, has a different story to tell. China currently has around 10,000 diamond workers compared with the 8-10 lakh in India. There are only two Chinese CSO sightholders, whereas our Indian clients make up a significant number of the total clients worldwide. The type of rough diamonds that the Chinese currently specialise in are more focused on the range of material historically cut in Belgium, Israel and the Far East. As far as we know, China is not interested in polishing what we call Indian-type goods. India has become a specialist in handling what we term `makeables’, `clivage’ and `rejection’ type rough diamonds, whereas the Chinese have tended to concentrate on what we term `sawn’ or `sawable’ rough diamonds. Because India and China specialise in areas different from each other, there is no clash or competition between them.

India will remain an extremely important centre, .....We have not been encouraging development of China as a cutting centre to the detriment of India.” De Beers adds that it has given the millennium boxes to the Indian NRIs based at Antwerp, those who do not wish to operate in India due to the archaic and potentially hazardous labour laws.

Moreover, the Indian markets have also to contend with De Beers’ aggressive promotional plan for 1999, which includes:

Vivah jewellery: The jewellery collection includes necklaces, earrings, rings, bracelets etc. De Beers has already commenced its advertisement blitz through TV, the print medium and by holding fashion shows.

Diamond Sampatti rings: This has been in vogue for the last year or so.

Diamonds for the millennium: Although Indian diamantaires have not been given the millennium boxes for processing, India has been targeted as the market for consumption of the millennium diamond collection.

The Indian industry, however, is not leaving anything to chance. Which is why, the Indian entrepreneurs are joining hands with their Chinese counterparts to set up processing units. They take advantage of the fact that the Chinese partnership is only restricted to operations (read cheap labour) and not to the profits from sale of polished goods.

But there are opportunities for the Indian diamantaires as well. The latest entrant on the diamond map, Canada has opened new doors for the Indian industry. Already, there are talks about Indians setting up cutting and polishing centres in Canada through the joint venture route. The terms are not clear yet, but with the Antwerp-based Indian NRIs moving in, and Canada being a lucrative market, this is definitely a bright spot for the industry.