India’s GJEPC wants DTC to reconsider sightholders selection

India’s Gem & Jewellery Export Promotion Council (GJEPC) has expressed concern over the elimination of a number of Indian companies by the De Beers Diamond Trading Company (DTC) for the contract period 2008-2011.

DTC has pruned the number of its sight holders from 94 to 75 in its list for the period 2008-2011. The eliminated list contains eight firms in India and three Indian-owned firms in Belgium. However, the DTC has also included 6 new sight holders of which 3 are Indian companies.

DTC is the rough diamond distribution arm of De Beers and sorts, values and sells around half of the world’s rough diamonds. Its clients are known as ‘sightholders’ and are carefully chosen for their ability to add value to the diamonds it sells.

The GJEPC said that pulling the plug on established companies that have recently invested huge amounts in building infrastructure suddenly triggers a massive loss of trust and business confidence throughout the industry.

GJEPC chairman Sanjay Kothari said that these people (the sight holders whose name is excluded) have made heavy investments to diversify their business according to DTC guidelines in the cutting and polishing business. What will they do now? We already have over 150,000 people laid-off due to the rupee’s appreciation and other factors.

He, however, declined to comment on how the operations of the sight holders would be affected, other than having to source rough diamonds from a company other than DTC. He also said that 40-50 small businesses that received their business from these sight holders would be affected by the exclusion.

While making it clear that the DTC has the right to choose how it conducts its business, the GJEPC said its main concern is the sudden reduction of raw material supplies and the knock-on effect that it would have at the macro level.

We are concerned over the impact of the DTC’s decision on the industry as a whole, said Kothari.

The GJEPC said the DTC could cushion the impact of its decision on small and medium firms by increasing the allocation of rough diamond supplies to the Hindustan Diamond Company (HDC), the joint venture between De Beers and the government of India, which supplies rough to the ‘open’ market.

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