MUMBAI (Reuters) - The ambitions of Mumbai’s diamond traders are grand, even if their offices are not.
They nurse dreams of rivaling Belgium’s Antwerp as the world’s diamond trading capital while sitting in ageing tower blocks that are about as grimy as a cut diamond is sparkly.
Corridors are splattered bloody red with decades’ worth of spat-out chewing tobacco. Lift doors must be yanked shut by hand. Toilets must be entered gingerly. Traders’ offices, though somewhat cleaner than the public spaces, tend to be cramped.
But, barring any last-minute bureaucratic spanners, the bulk of the trade should soon shift across the city to a new home more befitting one of India’s biggest export earners.
India already polishes about nine in every ten diamonds, mostly tiny, cheaper stones less than a carat. Faced with growing global competition, India hopes to cling on to its position in polishing by spreading into an area in which it has lagged: the trade of rough diamonds.
“We’re trying to make India the largest trading centre and manufacturing centre for diamonds,” said Sanjay Kothari, the chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC). “Why should we go to Antwerp?”
A bullish confidence is common among Indian businessmen these days. Nonetheless, even if few see Antwerp being eclipsed any time soon, the ambition of Kothari and his colleagues is giving pause to at least some Antwerp traders.
In 2006-2007, India imported $8.8bn of rough diamonds and exported $10.9bn of polished gems, much of which is sent to Hong Kong and the United States to be set in jewellery.
But its dominance is under threat. Consultancy firm KPMG said in a 2006 report that India’s share of diamond polishing by value would drop to 49 percent by 2015, from 57 per cent today, as the global diamond industry spreads into new corners of the globe.
China is investing heavily in polishing mid-sized stones. Angola, Namibia and Botswana are increasingly determined to process locally some of the stones chipped from their mines, which once would have been promptly whisked off to the London clearing house of De Beers, the dominant player in rough trade.
To keep their foothold, India intends to spread out along the chain between mines and ring fingers. Indians’ success in cutting diamonds has given them advantages elsewhere: about 40 percent of the trade in Antwerp is controlled by Indians, according to the GJEPC’s Kothari, while Indians make up about half of De Beers’ elite customer list (much of the rest are Hasidic Jews).
The new Bharat Diamond Bourse — Bharat being the Hindi name for India — will house India’s first international diamond trading hall, and is intended to bring the trade back to the land where diamonds are said to have been first mined a millennia ago.
“Finally!” exclaimed Louise Prior, a spokeswoman for the De Beers’ marketing arm the Diamond Trading Company (DTC), when told by a reporter the bourse’s opening may be imminent. “It’s been under construction for a seriously long time.”
In fact it has been about 15 years, a few years less than it took to build the Taj Mahal, and its blue, glassy, cliff-sized facade already looks a little dated.
Disputes with contractors, local authorities and even its own members, who were increasingly reluctant to pay their dues as time dragged on, have all stalled the 9.5bn-rupee project.
Still, every year or so, for the last decade, newspapers have confidently run stories saying the bourse is nearly ready. But this time they really mean it, says Anoop Mehta, the president of the bourse, which will house about 2,400 traders.
An onsite electronic customs office will replace the present need for export forms requiring 35 signatures. There will be around 100 food outlets, none of which will serve meat or eggs, in keeping with the sensibilities of the Hindus and Jains from Gujarat state that have long dominated the trade. Musical fountains are planned for the garden.
Officially, Antwerp is unfazed.
“We’re not really afraid of the ambition of others,” said Philip Claes, spokesman for the Antwerp World Diamond Centre, which represents the city’s trade.
“We hear every day the diamond dealers say they like Antwerp, they do not intend to leave Antwerp, it’s nice living in Antwerp.”
Prior, the DTC spokeswoman, says India’s trading aspirations will “take some time” to be realised.
But some individual traders admit to feeling worried.
“I don’t see why they wouldn’t be able to take a big place in rough trading,” said Christophe de Borrekens, a sales director for the Antwerp-based diamond company IGC Group. “Since India became a very big manufacturing country, it’s a logical move ... It will take some part of the trade from Antwerp.”
The planned move comes at a tumultuous time in the diamond trade. For much of the 20th century, De Beers ran a cartel controlling the trade of the bulk of the world’s rough diamonds from its mines in southern Africa.
In the last decade, De Beers has buckled under scrutiny by anti-trust regulators while its mining rivals have found diamond deposits in Russia, Australia and elsewhere, hobbling the giant’s monopoly.
India thinks it can take advantage of this fragmentation, and its government has begun negotiating with mining countries, including Russia, to buy rough stones directly. This became all the more necessary after De Beers reduced the amount of rough diamonds it sells to India in January.
Last year, India reduced the 5 percent levies on the import of polished diamonds to zero to help the trade.
But doubters still feel India is moving too sluggishly. Dubai built its own bourse in a fraction of the time it has taken India, and has offered far more generous tax incentives.
Nor is it a particularly happy time for the Indian industry: polishers are increasingly disgruntled about being among the lowest-paid diamond workers in the world, and have organized sometimes violent demonstrations, while a bitter global economy has dampened jewellery sales in India’s main markets.
“The problem with that bourse is it was planned 15 years ago,” said Raj Mehta, a senior vice president at diamond giant Rosy Blue and a contented Antwerp resident. He thinks India lacks Antwerp’s handy geography and better infrastructure.
Even some of the more superstitious members of the bourse have grumbled.
“People were saying it’s marshy there, you’ll sink instead of being on firm ground,” said Mehta, the bourse president. “But all of Bombay is on marshy land, and Bombay seems to be doing pretty well.”
Editing by Alistair Scrutton