Ministry of Commerce launches African diamonds initiative

March 24, 2008 - India

As the first-ever India-Africa conclave organised by the Ministry of External Affairs approaches, the Union Commerce Ministry has, for the first time, taken the initiative to establish systems for the direct imports of rough diamonds from Africa.

To kick-start this initiative, the Minister of State for Commerce, Shri Jairam Ramesh is leading a high-powered delegation to Namibia and Angola beginning March 26th. Joining him are senior representatives of the Gems and Jewellery Export Promotion Council (GJEPC).

India must buy rough and uncut diamonds directly from these and other African countries, Shri Jairam Ramesh said on the eve of his six-day trip. He also said that in the next couple of months, he would be visiting other important diamond producing countries like South Africa and Botswana as well.

He emphasised that in future India will find it difficult to source rough diamonds unless it demonstrates to African nations that it will collaborate actively in helping them move up the value-chain and assist in value-addition in these producing countries itself. The Africanisation of the diamonds processing industry is not a threat to India but a great opportunity which we must proactively embrace, Shri Jairam Ramesh explained.

India’s estimated imports of rough diamonds in 2007/08 is around $ 10 billion, while estimates of exports of cut and polished diamonds in 2007/08 are about $ 14 billion. It is the world’s largest importer of roughs and exporter of cut and polished diamonds with over 90% market share.

“I started this initiative largely because the diamonds cutting and polishing trade is very employment-intensive and provides livelihoods to over 10 lakh families in our country”, Shri Jairam Ramesh added. Rough diamonds are procured presently through a variety of sources with the bulk of it coming into India through Antwerp in Belgium.

Shri Ramesh pointed out that it is in India’s long-term interests to establish direct relationships with supplier countries, cutting out all the middlemen. He said that he had opened a dialogue with all major diamond producing countries and Alrossa, the Russian diamond producing company has recently sold roughs directly to Indian buyers. The quantities are small and need to be built up quickly, the Minister of State of Commerce said.
Angola produces about 10% of the world’s rough diamonds and is also a country with which India has been trying to establish a relationship in the oil industry since Angola is rich in oil. Namibia accounts for about 6% of world rough diamonds production. Angola and Namibia are the world’s fifth and sixth largest producers of diamonds respectively after Botswana (25%), Russia (22%), Canada (12%) and South Africa (12%).

India has embarked on exploration of diamonds but it will take at least a decade before commercial deposits in states like Chattisgarh, Andhra Pradesh and Karnataka are proven and established. The diamond cutting and polishing industry will continue to be entirely dependent on imports of rough diamonds for a long time to come, Shri Jairam Ramesh said.

Shri Jairam Ramesh said that rough diamonds is not the only area where we must change our approach to Africa. He said that India’s cashew processing industry—another employment-intensive industry—depends crucially on imports of over half a million tonnes of raw cashews from Africa with India’s own domestic production itself being roughly of that amount.

India is now the world’s largest importer of raw cashews, largest producer of raw cashews and the largest processor and exporter of cashews but that position now depends crucially on how its relationship with countries like Tanzania, Guinea-Bissau, Benin and Ivory Coast evolves, Shri Jairam Ramesh pointed out. Here too, African nations are keen on moving up the value-chain themselves and India must see this not as a threat but as an opportunity, Shri Jairam Ramesh added.

India must take care to see that it is not perceived as being interested only in Africa’s raw materials and resources, Shri Jairam Ramesh said. India’s is uniquely placed to respond to the challenge of building up human skills and human resources in Africa in different areas and it should leverage this to build long-term partnerships in diamonds as well, Shri Jairam Ramesh added.

Partnerships, not procurement should be our strategy, he said. And partnerships in diamonds must be embedded in the framework of broader economic and technological cooperation, he noted. That is why the diamond delegation has representatives of other public sector companies like STC, MMTC, BHEL and ONGC-Videsh as well.