India has never sourced the precious stone from Russia. MMTC has had the right to exclusive sightings of diamond parcels every two months as per an agreement with the Russian agency Gokhran since 2000. The deal never resulted in actual sourcing all this time, because the Russians insisted on payment by cash, something that the Reserve Bank of India (RBI) wont allow. Whats changed all is a new RBI circular allowing cash transactions in countries where there no armed conflict is going on.
The first parcel of 5,000 carat of rough diamonds will come to India for little more that half a million dollars (about Rs 3 crore). Parcel is the technical term of a package of diamonds with a range of small, medium and big varieties.
Sources said this was the first time that India had been able to clinch such a deal since the first sighting was done for a parcel worth $4.5 million. We lost the deal because under the Russian decree, cash has to be paid, while under the Indian rules we cannot pay cash. By the time we got the permission from RBI, the deal was lost, a top MMTC official said on condition of anonymity.
Another tender of 22,000 carat was shown to MMTC after its first successful bidding, but India lost it to Israel.
All precious and semi-precious stones/metals are handled by the government in Russia. Gokhran, a government agency, manages these stockpiles.
Russian President Vladimir Putin, during his visit in October 2000, had endorsed the agreement between Gokhran and MMTC.
Sources in the MEA informed FE that with a view to operationalising the Protocol for Cooperation in the field of processing and trade of rough diamonds and precious metals which was signed during the visit of President Putin in October 2000, both sides had the first meeting of the joint working group for co-operation in the field of rough diamonds in February/March in 2001. Sources said the processing of rough Russian diamonds was a new and promising sector in Indo-Russian bilateral trade. Russia is the worlds largest producer of rough diamonds and India the worlds largest producer of polished diamonds.