In order to boost the diamond trade and inter-country relations, Russian President Vladimir Putin met with Indian Prime Minister Narendra Modi this past week to discuss a long-term contract that could potentially make Russia a legitimate contender in the diamond industry.
The Indo-Russian deal also looks to bypass imposed sanctions due to Russia’s role in the Ukrainian conflict.
Last April, the two leaders signed a memorandum to share diamond trade data. The agreements reached this week will expand upon that contract, as Russia hopes to strengthen its ties with the world’s largest diamond processor.
Over the past year, India has both imported and exported more than $36 billion worth of the precious stone, making it one of the most influential countries in the diamond industry.
What’s In the Contract?
Naturally, the deal comes with a few stipulations.
First, Prime Minister Modi would like Russian mining companies to have direct long-term contracts with Indian firms. Currently, only about a fifth of rough Russian diamonds are sold to India, while the rest are transported through various diamond hubs. Because India is considered one of the world’s largest diamond processors — while Russia acts as the largest producer of rough diamonds — the partnership between the two countries is a natural fit.
The agreement also looks to ease regulations, encouraging Russian jewellers to have rough diamonds processed solely through Indian businesses.
Primary Benefits
While such an agreement primarily benefits India, direct supply between the two countries would give Russia an edge over other European competitors. It should also boost bilateral trade, and create more jobs within both the Russian and Indian economies.
The Diamond Trade: A Sparkling Future?
Although Indo-Russian ties will obviously be strengthened by the deal, cooperation between the two nations is still a work in progress.
Both countries have reached an understanding regarding the diamond industry, but there are a number of issues yet to be addressed. Therefore, it is vital that both the Russian and Indian governments maintain consistent communication — or existing agreements will falter and new contracts will fail to be drafted.
While the United States may appear far removed from these developments, it is of some consequence to note that both Russia and India do significant influence on the diamond industry here.
Their cooperation — or lack thereof — could affect the export of diamonds to the U.S. and countries around the world. In the meantime, investors have the ability to take delivery of diamond bullion products through Provident Metals.
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