India imported a total of $3.35-billion worth of diamonds during 1997-98, marginally lower than the previous year's $3.38 billion. Adding 48 per cent value to the imported diamonds, the industry's exports touched $4.49 billion in 1997-98, up from previous year's $4.23 billion, wherein the value-addition was said to be about 25 per cent.

What the private sector could not do on its own, the government intends to do with the help of the exim policy--put India on the world diamond trading map, almost like Antwerp, the world's largest diamond trading centre. The diamond bourse at Bandra-Kurla complex is yet to come up after 10 years of infighting. Also, the new policy intends to pull the country's diamond industryout of the slump in which it has found itself for the past two years, take it into the next century with renewed gusto and vigour.

For this purpose, the government has freed the international trade in gems and jewellery, including rough diamonds as well as cut and polished diamonds, permitted setting up private/public sector bonded warehouses for the purpose, and has even retained the relatively high level of replenishment licences (through the five slabs) after the industry bigwigs lobbied hard for it.

However, these are the very issues which have divided the industry, and therefore, the desired impact is unlikely to materialise at least during 1998-99. For one, the country has not yet introduced full convertibility of its currency - vital for free international trade like in Antwerp. And the industry is divided over the possible impact of the new policy.

Confused as they are, all those who are anybody in the diamond industry and on the prestigious panels of the Gem & Jewellery Export Promotion Council(past or present) would not want to go on record on the exact implications of the new export policy.

"The new policy has added some new points and appears to be a simplified version of the earlier policy," is all that GJEPC secretary VSA Sury would to say. In a statement, soon after the policy was announced, GJEPC vice chairman MR Bhansali maintained: "The new policy has ushered in several important new provisions while at the same time fine-tuning the policy and procedures in several areas.

Sooner or later, therefore, the council will once again approach both the commerce and the finance ministries to get certain clauses amended in the otherwise "good" policy. The council awaits members' views on the new policy before it can present its case to the concerned ministry officials. "Even when the commerce ministry seems to be keen to see higher exports the finance ministry officials seem to be bent upon levying duties to maintain their revenue targets," quipped a top diamond trader not wanting to beidentified. "Officials from these ministries do not seem to see eye to eye and surely not jointly in the same direction that benefits the country", he added.

Add to this the relatively slow attitude of the customs officials, who, diamond traders say, have not permitted free import of gold since the past one year from the EOUs/EPZs despite the last year's Exim policy clearly permitting the same.

For reasons known best to itself, the customs department is not cooperative in free import of gold even when it was permitted in the earlier policy. "Will the customs authorities specify clear and simplified norms for free import and export of various items permitted under the new policy?" asks another diamond trader.

The provision of private bonded warehouse for importing, stocking and re-exporting rough diamonds was first made in Exim Policy issued on March 31, 1997. This was amended / enlarged to include `private / public bonded warehouse' for import and re-export of rough and polished diamonds as well asrough and polished coloured gemstones through notification issued in February 1998. The latest policy retains this amendment. About 80 per cent of India's rough diamond imports from Antwerp are by Indians and non-resident Indians settled in Antwerp. It may be possible for some large Indian houses to sell roughs in India as they do in Antwerp, following the bonded warehouse route. However, it remains to be seen whether this activity would take off in any substantial manner.

After all, such trading of roughs was possible even otherwise under the bulk licence route available to the trade for a number of years but not much progress has been seen in this area and direct purchase from the Antwerp market remains intact. But the extension of free imports of diamonds from roughs to cut and polished diamonds has raised a row among the diamond traders.

Says an office bearer of the GJEPC: We had suggested the ministry for a freer trade in roughs and even cut and polished diamonds, but only in phases, at least nottill we have full convertibility of the Indian rupee. That free trade in roughs and cut and polished diamonds has been permitted much before full convertibility, would go against the country's interest, the official maintains.

Fast forward

Some new clauses that may boost exports