Russian Manufacturers Request State Support

man-cutting-diamondMoscow: On the eve of the abolition of the 6.5% export duty on diamonds coming on September 1, 2016, Russian diamond cutters said they would need large-scale state support. As the Kommersant Daily came to know, the largest local diamond industry enterprise, which is Smolensk-based Kristall, proposed to introduce new protective market mechanisms, stating that without them, Russian diamond manufacturers shipping more than 90% of their production for exports, will not withstand competition with their Indian counterparts. Kristall proposed to give preference to residents of the Russian Federation in the purchase of diamonds from ALROSA and provide financial aid from the state and customs exemptions, as well as to establish a system of specialized banks for lending diamond manufacturers. The Finance Ministry and ALROSA promised to support the industry.

Russian diamond manufacturers are in need of large-scale state support, says the letter sent by Maxim Shkadov, CEO of Kristall to Deputy Finance Minister Alexey Moiseev. On the 1st of September, Russia clears the customs duty on diamond exports under the agreement with the WTO, which, according to the author of the letter, puts Russian diamond manufacturers in unequal competitive environment. Currently, the customs duty of 6.5% 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, Maxim Shkadov says. In this regard, he offers either to save this duty, or to introduce new protective measures – for example, to consider a possibility of “differentiating the amount of customs duty depending on the size and weight of exported rough diamonds.”

Yesterday, Alexey Moiseev confirmed to Kommersant the fact of such a request on the part of diamond manufacturers. “We will certainly support them, but the question how this will be done exactly remains open,” he said, adding that there is a working group (headed by Alexey Moiseev) created on the instructions of the government, which is seeking a solution to remedy the situation.