Russia's state-controlled diamond monopoly Alrosa will sign a dozen deals with Indian buyers on December 11 to increase direct deliveries to Asia's third-largest economy, as financial capital Mumbai aspires to expand as a trading hub. Alrosa supplies India with around half of its output of rough diamonds, worth $700 million a year, typically via established trading centres like Antwerp, Dubai or Tel Aviv.
"A lot of our Indian customers buy rough diamonds through Antwerp or Dubai. For them it will be more comfortable to deal directly," Alrosa Vice President Andrey Polyakov told Reuters in New Delhi.
India does not produce any of its own rough diamonds but cuts and polishes around 80 percent of the world's output, its Gem and Jewellery Export Promotion Council (GJEPC) estimates.
"Only a few big diamond players are purchasing directly, otherwise most of the stones come through middlemen," said Sabyasachi Ray, executive director at the GJEPC. "That increases the transaction costs and adds (to) the burden on the industry."
While a direct sales route to India might reduce risks linked to Western sanctions imposed over Russia's annexation of Crimea and support for an uprising in eastern Ukraine, India will also need to streamline its tax and import rules if direct trade is to take off.
Alrosa is the world's leading diamond miner, accounting for 27 percent of global production by carats. Output totalled 36.9 million carats last year, the company says.
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