Will the Gems and Jewellery Export Promotion Council (GJEPC) succeed in its endeavour of establishing Russia as a potential market for polished diamond export through the Indo-Russian buyers sellers meet (BSM) in Surat? It seems like a distant dream for many in Surat.
The official statistics of GJEPC is enough to support the claim that Russia could never become the potential market for polished diamond export for India. Because, in the past one decade India's total polished diamond export - from 2000 to 2010 - is pegged at $3.67 million (Rs 15 crore) and that the annual export in 2010-11 was at a meagre Rs 55 lakh.
On the other hand, the rough diamond imports from Russia have registered a phenomenal growth only after 2009. In 2009-10, India imported rough diamonds worth $250 million and that it increased to $400 million in 2010-11.
Other facts, according to the industry experts, that put Russia far behind the prospective list of emerging countries for polished diamond export is the import duty structure on polished diamonds. Polished diamond import in Russia attracts 15 per cent duty and with additional 18 per cent VAT it comes to 33 per cent.
Interestingly, for an Indian diamantaire wanting to directly export Rs 1 crore worth of polished diamonds to Russia the import duty payable is Rs.33 lakh. This could be a costly affair for the Russian buyer to directly import polished diamonds from India.
Industry sources said most of the polished diamond import in Russia is done through illegal channels and cartels via Dubai. The diamond carriers active in Dubai deliver the polished diamond consignment to Russia taking 1-2 per cent commission on the value of the consignment.
"Direct export of polished diamonds to Russia is not possible for the diamantaires. Only reason is the 33 per cent. However, the diamantaires could establish trade relations with Russia by diverting the polished diamonds via Dubai through illegal channels" said a leading DTC sightholder.
He added "If diamantiares wants to increase export of polished diamonds to Russia, as desired by GJEPC, they have to take illegal channel via Dubai."