What is more, India, the largest supplier of cut and polished diamonds to the world market is seeking new suppliers of rough diamonds in addition to De Beers and Argyle Diamonds. Its latest attempt in this direction saw the culmination of an agreement with Russia last December under which Russia has agreed to supply, for the first time, a small consignment of around $4.5 million worth of rough diamonds.

This move is a clear challenge to the global rough diamond major De Beers, which itself is undergoing considerable changes, including a takeover led by the Nicky F Oppenheimer, chairman of De Beers and leader of the consortium seeking to takeover De Beers.

However, its more than three months since the Russian deal was signed and the local buyers of roughs, the members of the Gems & Jewellery Export Promotion Council (GJEPC) are still awaiting the actual arrival of the Russian roughs in their hands.

Russian President Vladimir Putin, during his visit last October had endorsed the deal following which the payment for the maiden Russian roughs consignment has even been made by the MMTC, the nodal agency with whom Russia's Gokhran had signed the deal. Gokhran is the Russian agency that manages Russian stockpiles of precious metals.

There has been at least five visits of officials and representatives of Gokhran and MMTC, GJEPC since the past 18-20 months. And while the Russia's rough diamonds consignment is still awaited, GJEPC's top sources said ``there will be yet another visit to Russia in April this year to speed up the rough supplies.''

Well, it remains to be seen when would the maiden rough diamond supplies arrive in India. ``This is because there are few stronger international interested forces which may be interested in delaying the commencement of roughs supplies to India from Russia,'' said a top diamond exporter. The presence of De Beers in this is not ruled out, he said.

One of the major reasons for this delay is that the tenure of agreement between Russia and De Beers is to end by end-2001. The whole of 2001, therefore, will be utilised by De Beers to renew its contract with Russia.As per its current, existing contract, Russia is obliged to sell (through ALROS, the Russian diamond monopoly, rough diamonds worth $550 million and not more than 26 per cent of De Beers' overall sales of roughs. During 2001, De Beers expects 15 per cent lower sales.

As per available information, Valery Rudakov, Gokhran, told Russian daily Ivesta that a new deal with De Beers would probably signed though Russia intends to cut the amount of diamonds it is obliged to supply to De Beers.Further, ALROSA president Vyacheslav Shtyrov is said to have told that by 2002 Russia will be exporting 40 per cent of its rough diamond production, which is 49 per cent lower than in 200 and some 60 per cent lower than earlier sales. Shtyrov is understood to have said that Russia could cut up to 80 per cent of its diamond production.

ALROSA is expected to produce $1.634 billion worth of rough diamonds in 2001 and sell $1.736 billion of finished good. However, it is no secret that Russia's diamond exports have been entangled in government's red tape. It may be recalled that in mid-1996 it was Argyle Diamonds which preferred to break away from the Central Selling Organisation (CSO) of De Beers. By the end of 2001, it may be Russia and few other South African diamond producing countries.

De Beers is understood to retain some 10 per cent of the difference between the price of rough diamonds it buys and the price at which it sells to the processors, including diamantaries of India, Antwerp and Israel.

Thus, the fate of the actual supplies of Russian rough diamonds have direct connection and the outcome of the ongoing negotiations between De Beers and Russian diamond exporting entities that will go on throughout this year.

Budget removes import curbs on jewellery industry
Finance Minister Yeshwant Sinha has finally removed all possible restrictions for the import of the entire jewellery industry, whose exports is galloping each year.

The industry however, is perturbed, albeit temporarily, by the finance minister's announcement of 5 per cent import duty on rough diamonds which are allowed to imported duty free, but only on their commitment to meet their export obligations mentioned under the various import licences under which they are allowed to import roughs duty free. This however, restricted their imports of roughs.

However, the 5 per cent import duty levied on the import of roughs clears the need for licences and export obligations. The government has now created another channel for imports of roughs and met the World Trade Organisation (WTO) requirement in the entire gems and jewellery industry.

Following the budget proposals, the Customs authority however, have refused to clear the rough diamond consignment without the payment of the controversial 5 pre cent import duty. Industry sources say, in a crucial month of March, holding up consignments worth around Rs 500 crore is detrimental to the overall industry.

The new import duty on import of roughs is not for the exporting community but for anyone else not connected with the diamond industry and still wants to import roughs. ``We are negotiating with the commerce and the finance ministry to clarify on the issue,'' said Sanjay A Kothari, chairman, Gems and Jewellery Export Promotion Council (GJEPC).

A notification clarifying the situation is expected to be made available next week from the government, top industry sources say.