Time and again, the Indian diamond industry has expressed its concern about the menace of ‘contamination’ in natural diamonds and has also taken several steps including formation of Natural Diamond Monitoring Committee (NDMC) that has recently developed some solutions which would help prevent undisclosed mixing of synthetic diamonds with the natural ones.
The solutions developed by the NDMC are outcome of one of the most comprehensive studies ever made in the diamond sector – spanning eight countries across three continents over a period of nearly four months. The study has incorporated inputs from a wide variety of players including manufacturers, retailers, equipment firms, testing laboratories, global Trade Bodies, legal firms, consultants and industry experts. The solutions evolved on basis of the study will ensure fair trade practices to curb the issue of undisclosed mixing and ensure full and fair disclosure to the purchaser, claims the NDMC.
Contrary to some earlier feedback, NDMC’s recent research-study shows that the current gem-quality synthetic diamond rough production is less than350,000 Carats compared to over 125 million carats of natural gem-quality rough. With this production quantity, undisclosed mixing today has a fairly small scale, claim the NDMC sources.
Based on this landscape, the NDMC has developed solutions to protect the sector from accidental or intentional mixing. The solutions have covered four key areas viz. Regulatory, Commercial, Process and Technology. The Committee will also continuously monitor the implementation of these solutions.
Regulatory: The ‘Regulatory’ system would target greater traceability of goods in the value chain and would inflict penalties on those found to be indulging in undisclosed mixing. All trade bodies and associations have been advised firstly have a more granular HS Code system to track the global flow of synthetic diamonds and secondly, to adopt amendments in their Articles and Constitutions to clearly outline undisclosed mixing as an unfair practice and to outline and implement strict penal measures against players found to be indulging in such activities. Apart from this, the NDMC has also proposed a change in the Consumer Protection Act to give greater protection to purchasers.
Commercial: The ‘Commercial’ solutions have been crafted to ensure greater accountability and trust within the trade. NDMC has worked in association with the World Federation of Diamond Bourses (WFDB) to develop these mechanisms and has already suggested standard declarations to accompany Trade invoices globally, which would provide clarity to buyers on the nature of the goods being purchased.
Process: The Committee has designed the ‘Process’ solutions to reduce potential of undisclosed mixing. These include rigorous testing protocols for goods as well as a thorough KYC process in line with the Prevention of Money-Laundering Rules. These measures would be supported by putting in place adequate machines for testing and systems for tracking and storing all transaction data – including test logs and invoices – and accompanying declarations.
Technology: The NDMC has ensured to take lead in driving more sophisticated, rapid and scalable technology to help the industry players in segregation of diamonds. A Centralized Testing Laboratory has already been set up within the Bharat Diamond Bourse (BDB) premises which can be utilized by any stake-holder wishing to test parcels or individual diamonds. More such laboratories will be setup soon. In addition, the NDMC would organize technology symposiums, seminars and interactions with technology players on individual and group levels to rapidly drive forward scalable and affordable solutions for the industry.
The solutions and initiatives suggested by the NDMC would surely prove to be effective in safeguarding the interests of all stake-holders, each of whom has a large interest in ensuring a transparent ecosystem.
Posted by Suresh Chotai
