Russia’s Strategy to Compete with Indian Manufacturers

Manufacturing
12/09/2017 17:17

The Russian government wants Alrosa to offer more favorable terms to local cutters so they are able to compete in a market that’s dominated by Indian manufacturers.

Alrosa has chosen to focus on mining, where it can get bigger margins, leaving Kristall Production Corp. and other cutters to buy stones at similar terms as overseas competitors. They are struggling to compete with centers like India, the largest polishing center, due to manufacturing being cheaper - it manufactures 90% of the world’s diamonds - and a workforce of 1 million.

According to the new programme Alrosa would sell the diamonds at market prices, however would offer local cutters the benefit of buying only part of the contracted volume, as well as choosing certain stones and returning the remainder to the miner. In an interview with Bloomberg, Deputy Finance Minister Alexey Moiseev said the Putin administration expects this plan to lead to Alrosa selling nearly 10% of its gems domestically. “Cooperation currently is rather limited and it has to expand,” Moiseev said in an interview in Moscow. Russia isn’t the only diamond producing country to encourage domestic manufacturing, Botswana, Namibia and South Africa have encouraged De Beers to sell more diamonds which had been cut and polished locally.

Russia planned to support the diamond industry further by easing excessive controls for importing and exporting gems, as well introducing regulation identifying the origin of diamonds to make the market more transparent, said Mossiev.