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A sparkling dream

THE AMBITIONS of Mumbai's diamond traders are grand, even if their offices are not.They nurse dreams of rivalling 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.

Spreading out

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 per cent 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 per cent 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 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.

Long overdue

"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.

Change

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.