India and Africa: New Partners in Rough Diamond Exports

India is positioning itself to maintain a hold on the rough diamond market and increase revenue by eliminating the middleman. In a bold move, India is redirecting its focus from Antwerp, Belgium, where it has had a longstanding rough diamond import agreement, to African resources where rough diamonds can be directly imported.The Union Minister of State for Commerce, Jairam Ramesh, is aiming his efforts at increasing India’s relationships with major diamond-producing African nations, and has created a comprehensive plan to ensure direct rough diamonds imports from Africa instead of Europe.

Mr. Ramesh traveled to Namibia and Angola, the locations of two major rough diamond producers, in March 2008 to meet with officials. The Union Minister will then travel to Botswana and South Africa where more discussions will take place.

The reason for this shift in focus is directly related to the economy in India. The rough diamond imports industry provides employment and livelihood to over 10-lakh (1 million) families in the country, by providing cutting and polishing jobs.

Mr. Ramesh is convinced that if he does not establish strong relationships with diamond producing areas in Africa, the future of the people employed by the diamond industry in India may be in jeopardy.

India happens to be the world’s largest importer of rough diamonds, as well as exporter of cut and polished diamonds. With over a 90 percent market share, it is easy to see why Ramesh is concerned about India’s diamond employment sector.

The rough diamond market provides much needed income to the economy. India’s estimated imports of rough diamonds this fiscal year will hit the $10 billion mark, while exports of cut and polished diamonds are likely to pass $14 billion.

India has historically procured rough diamonds from a variety of sources, with the bulk of them being in the secondary market through Antwerp in Belgium. While a reliable source, the Union Minister is looking to establish primary connections that will help bring greater independence.

Hoping to present the country as a valuable buyer, Ramesh is concentrating negotiations in African countries that will help ensure India’s strong standing in the diamond market. Namibia accounts for about 6 per cent of rough diamond production, while Angola accounts for 10 percent. Botswana and South Africa account for 25 percent and 12 percent the world’s rough diamond production, respectively.

One of the greatest fears of Ramesh is losing the strong hold that India has on the rough diamond market and hopes to convince African nations that India will serve as a valuable ally. India’s long-term goals are to establish a firm relationship that will ensure a job market, as well as actively improve African nations moving up in the market.

India has embarked on exploration of diamonds on its own land, but Ramesh admits that it will be another decade before technology would allow commercial deposits in Chhattisgarh, Andhra Pradesh and Karnataka were proven and established. Until then, the diamond cutting and polishing industry will continue to depend entirely on rough diamond imports.

However, a step in the right direction is to eliminate the middleman of Europe which has a direct effect on the revenue generated by the rough diamond industry. By establishing direct relations with rough diamond producing regions, India will increase its chances for maintaining its current position in the market. Additionally, the stability of the rough diamond industry will continue to improve the quality of life for Indian families.

However, the Minister admits there is still much work to be done to help improve the economy and job market of India. Another major source for employment is the cashew food industry. India provides a large cashew processing industry, and is dependent on over five-lakh (50,000) tons of raw cashews from Africa. India has its own production, roughly equal the amount of import from Africa.

More than 60 countries all over the world receive cashew imports from India processing centers, including the United States, Australia, Germany, Hong Kong and the United Kingdom. In order to maintain their strong job market, demand must remain at high levels. Unfortunately, the cashews grown in India have caused concern in the market for poor quality over recent years.

Most of the quality issues can be attributed to incorrect cultivating techniques, as well as inadequate facilities to correctly dry and store them for exporting. Should the issues facing the cashew processing job market not be addressed, India is at risk for losing valuable exporting revenue.

Like any country, India has its challenges to maintain their export market position. As far as the diamond industry in concerned, India is in the number three position and is among company of some of the top countries in the world. Together with the US, Japan, Saudi Arabia, China and Italy, India will continue to be an important diamond exporter.

Related Posts:

• Growth in Diamond Export and Import
  
• Israel Sees Fall in Polished Diamond Exports
• Diamond Mines