Business
Updated : Mar 19, 2018, 05:46 AM IST
The diamond industry in India is reputed to cut and polish 11 out of 12 stones in the world. It is the ultimate diamond cutting and polishing centre in the world. Yet, when DNA began collating numbers from the Gems & Jewellery Export Promotion Council (GJEPC) and the government's own reports, we found some disconcerting trends.
1. Instead of cutting and polishing all diamond roughs in India, a sizeable quantity of roughs get re-exported ($9.6 billion over the past decade). This is curious, because it undermines India as a cugtting and polishing centre of the world, and actually creates such job opportunities elsewhere. The fact that many De Beers sightholders have cutting and polishing centres in other countries as well adds to the discomfort. Instead of "Make in India", this trade has been following an "unmake in India" strategy.
2. Since 2007, more diamonds are being imported and exported. No satisfactory explanation has been provided to DNA despite emails being sent both to the ministry and the GJEPC over 10 days ago. The cumulative excess of import over export during the decade is $12.4 billion. But the difference between 2007 and 2014 is even greater - $14.9 billion.
3. When DNA uses broadly acceptable norms of value addition, we discovered that the gab between actual exported figures and our own estimated export figures is excruciatingly large -- almost $38 billion.over the last decade.
Obviously, there are many questions that need to be answered both by the trade and the ministry.
Diamond trade in India – does this point to Hawala transactions? | ||||||||||
In USD Mn | 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-09 | 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
Import (Rough) | $7,648 | $8,698 | $8,767 | $9,797 | $7,960 | $9,048 | $11,994 | $15,163 | $14,927 | $16,716 |
Import (CP) | $2,839 | $2,992 | $2,027 | $5,461 | $8,982 | $11,610 | $20,808 | $14,472 | $5,559 | $6,541 |
Total Import | $10,487 | $11,690 | $10,794 | $15,258 | $16,942 | $20,658 | $32,704 | $29,617 | $20,487 | $23,257 |
Export (Rough) | $357 | $566 | $565 | $567 | $776 | $744 | $1,137 | $1,772 | $1,579 | $1,584 |
Export (CP) | $11,163 | $11,831 | $10,910 | $14,205 | $14,804 | $18,244 | $28,221 | $23,356 | $17,431 | $19,643 |
Total Export | $11,520 | $12,397 | $11,475 | $14,772 | $15,580 | $18,988 | $29,355 | $25,091 | $19,010 | $21,219 |
Export-Import | $1,033 | $707 | $681 | -$486 | -$1,362 | -$1,670 | -$3,350 | -$4,526 | -$1,477 | -$2,037 |
VA assumptions | ||||||||||
For Rough to CP | 30% | 30% | 30% | 30% | 30% | 30% | 30% | 30% | 30% | 30% |
For CP asst and valuation charges | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% |
Less: For Export of rough | 10% | 10% | 10% | 10% | 10% | 10% | 10% | 10% | 10% | 10% |
Expected VA | ||||||||||
Rough to Cut & Polished | $2,294 | $2,609 | $2,630 | $2,939 | $2,388 | $2,714 | $3,598 | $4,549 | $4,478 | $5,015 |
CP assortment and valuation charges | $199 | $209 | $142 | $382 | $629 | $813 | $1,457 | $1,013 | $389 | $458 |
Less: For Export of rough | $36 | $57 | $57 | $57 | $78 | $74 | $114 | $177 | $158 | $158 |
Expected Minimum Total Value Addition | $2,457 | $2,762 | $2,715 | $3,265 | $2,939 | $3,453 | $4,941 | $5,385 | $4,709 | $5,314 |
Expected Minimum Value of Export | $13,977 | $15,159 | $14,190 | $18,037 | $18,519 | $22,441 | $34,296 | $30,476 | $23,719 | $26,534 |
Expected Minumum Value of Export - Reported Exports | $2,457 | $2,762 | $2,715 | $3,265 | $2,939 | $3,453 | $4,941 | $5,385 | $4,709 | $5,314 |
Notes: VA=value addtion ( (labour + interest + service charges + profit); CP=cut and polished; | ||||||||||
Source: GJEPC data, and "Report of the Task Group for Diamond Sector to make India an International Trading Hub for Rough Diamonds", Govt of India, Feb 2013 | ||||||||||