India Stipulates Stricter Norms to Detect Synthetics

diamond light returnThe global diamond industry has in past detected several cases of undisclosed mixing of synthetics with natural diamonds. Many diamond producing countries including South Africa and manufacturing countries like India have taken the issue very seriously and introduced strict measures to prevent such illegal and immoral practice.

As far as India is concerned, it has already formed Natural Diamond Monitoring Committee (NDMC) to eliminate the practice of undisclosed mixing and enhance confidence of the global trade. The NDMC consists of representatives from India’s Gem & Jewellery Export Promotion Council (GJEPC)Bharat Diamond Bourse (BDB), All India Gems & Jewellery Trade Federation (GJF)Gemological Institute of America (GIA) and other Trade Bodies in the Gems & Jewellery sector. NDMC, after its formation, has undertaken a study to effectively address the issue of undisclosed mixing.

Authentic feed-back from the GJEPC reveals that this is one of the broadest studies ever carried out in the sector – spreading over 8 countries across 3 continents over a period of nearly 4 months. The study incorporates inputs from wide varieties of industry players including manufacturers, retailers, equipment-firms, testing laboratories, global Trade Bodies, legal firms, consultants and experts. GJEPC says that the NDMC, based on this study has finalized solutions that would ensure fair trade practices to eliminate the issue of undisclosed mixing of synthetics.

NDMC firmly believes that production of gem-quality synthetic rough is about 350,000 carats as compared to over 125 million carats of natural gem-quality rough. “With this production quantity, we, at NDMC, find that undisclosed mixing today is being done at fairly small scale,” the study says.

Based on findings of this study, the NDMC has developed solutions to protect against either accidental or intentional mixing of synthetics with natural diamonds. These solutions cover four key areas viz Regulatory, Commercial, Process and Technology.

Regulatory: NDMC says that Regulatory solutions would target larger traceability of diamonds in the value chain and stricter penalty for those who are found to be indulging in undisclosed mixing. Two most important solutions the NDMC has proposed are:

1) To have a more granular HS Code system to monitor the global flow of synthetic diamonds

2) To empower and encourage Trade bodies to make amendments in their Articles and Constitutions to prominently outline undisclosed mixing of synthetics with the natural ones as an unfair practice and to outline and implement strict penalties against wrong-doers found to be involved in such practices. Apart from these measures, the NDMC has also proposed to amend the Consumer Protection Act to give greater protection to buyers.

Commercial: These solutions developed by the NDMC ensure greater liability and trust within trade fraternity. World Federation of Diamond Bourses (WFDB) has cooperated with the NDMC on these mechanisms by suggesting standard declarations to accompany Trade invoices globally, which would ultimately provide greater clarity to buyers on the nature of the goods.

Process: The Committee has developed solutions for the industry players to reduce potential risk of undisclosed mixing. These solutions include severe testing protocols for diamonds as well as an in-depth KYC process similar to the Prevention of Money-Laundering Rules. These measures would be backed by putting in place sufficient machines for testing and systems for pursuing and storing all operational data – including test logs and invoices – and declarations.

Technology: The NDMC would play a pivotal role in driving more sophisticated, rapid and scalable technologies to assist the industry players in segregation of diamonds. GJEPC has already set up a centralized testing laboratory in the BDB premises which can be utilized by any player wishing to test parcels or individual diamonds. More such laboratories are coming up in the near future. At the same time, the NDMC is also planning to organize technology symposiums, seminars and interactions with technology players at an individual and group level to quickly spear ahead scalable and affordable solutions for the industry.

Several companies and trade bodies like De Beers, GIA, HRD etc. have introduced different models of machines to segregate diamonds. Of course, all these machines are claimed to be highly effective and have been in use for several years within the Trade – though not on a systematic basis, the pre-cautionary measures stipulated by the NDMC would prove to be quite effective in curbing the mixing-menace.

Posted by Suresh Chotai