Russian Diamond Cutters Seek State Intervention to Stay Competitive

08/07/2016 15:21

With the abolition of the 6.5% export duty on rough diamonds fast approaching on September 1, writes Kommersant Daily, the Russian diamond cutting industry is asking the government to provide large-scale support to withstand competition on international markets - in particular from Indian diamond manufacturers. In a letter sent to the Finance Ministry, Maxim Shkadov, CEO of Russia's biggest diamond polisher Kristall, writes that if measures are not taken, Russian diamond manufacturers - which export more than 90% of their output - will find themselves in an unbalanced competitive environment. Currently, the 6.5% customs duty serves to balance business opportunities for Russian diamond manufacturers in competition with their peers in India, and if it will be unilaterally cancelled the balance will be broken, says Shkadov.

He therefore suggests either keeping the duty in place or introducing new protective measures, such as preferences to residents of the Russian Federation for buying rough diamonds from Alrosa, financial support, customs benefits and a system of specialized banks to lend to the industry. Another option is, “differentiating the amount of customs duty depending on the size and weight of exported rough diamonds.” Deputy Finance Minister Alexey Moiseev confirmed to Kommersant that he received such a request on behalf of diamond manufacturers, saying, "We will certainly support them, but the question how this will be done exactly remains open,” adding that there a working group (that he chairs) has been established on the instructions of the government, which is seeking a solution to remedy the situation.