Open letter to the Gem & Jewellery Export Promotion Council of India

Dear colleagues and partners,

The members of the Association of Diamond Manufacturers of Russia feel indignant in connection with the request of Mr. Anand Sharma, India’s Minister of Commerce, Industry and Textiles, to Elvira Nabiullina, the Minister of Economic Development of Russian Federation, to formalize a mechanism for the sale of diamonds to India from the stocks of the Gokhran of Russia.

We do know whose interests are being lobbied through by Mr. Minister Anand Sharma. We can understand the active position of our colleagues, but dear Sirs, here in Russia, there also exists a manufacturing industry, and not taking into consideration its interests is, to say the least, unethical.

Russia is one of the leading world diamond producing countries. The President of the Russian Federation, as well as its Prime-Minister, have determined processing of the recovered natural resources on its territory as the principal direction for the development of the country.

We carry on extensive work at creating conditions for the development of the processing industry from the legislative point of view. Assuming that, at the moment, the Russian diamond processing industry is not the most numerous, it is one of the most technology-intensive in the world. The Russian diamond manufacturing industry successfully uses the most advanced technologies and equipment, both domestic, and foreign-made.

Besides, we would like to inform our Indian colleagues, that the sales of rough diamonds from the stocks of the Gokhran of Russia are performed by virtue of the budget legislation only to Russian manufacturers, and are designated to narrowing of the short supply for the Russian polished diamond manufacturing companies. Typically, the amount of the marketed rough diamonds cannot satisfy the demand even from the part of the members of the Association of Diamond Manufacturers of Russia.

These are the very circumstances under which you are proposing to “formalize a mechanism for the sale of diamonds to India”, aren’t they?

Gentlemen, your appetites are understandable, but of all the nerve: Russia is not Zimbabwe; Russia operates in a civilized market, and according to civilized rules. It is quite enough, that Indian companies queuing at ALROSA are declaring their desire to force out all the other clients of company, claiming that they are ready to pay from 10 to 15 percent more. Such actions lead to unreasonable ballooning of the rough prices, and make this rough diamonds uneconomic for processing, as the resulting polished turns to be cheaper than the rough. The matter here lies exclusively in speculation, and not as it is accepted in the civilized market practices, – in processing costs, technologies and marketing of the finished product. Look back at what suchlike actions of yours resulted in 2008. Nobody, I think, would like a replay.

We are ready to discuss any options of co-operation in an open mode, so that to eliminate suchlike behind-the-scenes actions.

Please take the above into account in your further work.