March 19, 2017

Speaking at International Diamond Conference: Mines to Market, Mumbai

Counsel, Russell Mehta, Vice Chairman, Andrey Polakow – honorable President of the WDC, Mr Stephanie Fisher – President of AWDC, Anup Bhai, Mr Sabyasachi Ray, Sanjay Bhai, all the distinguished delegates and guests from around the world, from the diamond sector, from the mining sector, also from the market place of diamonds, distinguished ladies and gentlemen. It truly is good to see the world converge in India to discuss an important subject which has impacted several lives both in India, several lives in Africa and businesses around the world, around a subject which, while it’s quite valuable, it’s also glittering, and, probably, one of the most beautiful gifts a man can give to a woman. And I don’t know whether at the end of this function Praveen Bhai is going to gift something to Namita for the successful conclusion and for getting the honorable Prime Minister to address all of you.

But certainly, I didn’t get my wife here today because it’s very dangerous to get wives to a diamond function, seeing all the glittering diamonds that the ladies here would be wearing would be very risky for a humble person like me. But taking a cue from the beautiful book that we just launched, the 2018 Jewellery Trend Book, and I must compliment Miss Metavyas of the NID for putting together some very beautiful concepts of what India can offer. I think we will have to reorient our own industry, our own way of doing business to add a different sort of value to this industry.

I was just listening very carefully to Russell’s very interesting introspective analysis of what’s happening in the industry, and clearly, it has gone through some very good times and is going through some kind of stagnation that was seen in the figures that were presented before us. And, clearly, this reflection is good for every industry. Every industry will need to look at what needs to be done to become more competitive, to add value. And I am delighted that the presentation did not really harp or focus only on what government could do. I think the presentation also brought out a lot of things which will have to be leveraged by Indian industry, by Indian business, to make the industry vibrant once again, growing successfully.

And in that sense, if one hears what the honorable Minister from Zimbabwe said carefully, and I think your Excellency it was a very very impassionate in fact, very compassionate speech from you. You addressed us very emotionally about the role of this industry and about what’s happening in Africa. And I have no doubt in my mind that as the African subcontinent and the African countries rapidly progress in the days and years to come this industry will have an important role to play. I am sure skill development in the African countries, more and more exploration, mining activities in an organized fashion, in a fashion where we do not encourage child labour, in a fashion where we take care of the safety and security of the people engaged in this industry will certainly help the people of Africa improve the quality of life, improve their own future, have a better progress and development for all the people of Africa.

And I can assure you on behalf of all the participants here that India will not be found wanting when it comes to expanding the business with African countries, particularly, with Zimbabwe. We deeply value the strong bonds of friendship and relationship between the two countries. We thank you for your support on several international fora and reassure you that India, Indian companies and Indian people will never ever think of exploiting what is available in Africa. We will only think in terms of supplementing and supporting the great strengths of Africa.

In fact, you are also celebrating 50 years of this Council and almost 19 years since you became an autonomous Council now. It’s been a great journey. You have grown from a very small business of a few million dollars to a multi-billion dollar business, over $24 billion of exports coming only from the diamond sector out of the larger pie of gem and jewellery, and huge amount of value addition. In fact, until Praveen Bhai just told me I honestly thought that the Indian Diamond industry is more about imports and little bit of processing here and exporting it back. The figures just shared with me where you add almost $8 billion of value in India is truly quite impressive. And while Praveen Bhai did highlight to me some of the issues that the industry is grappling with and I am sure your Council will take it up with the honorable Commerce Minister, with the honorable Finance Minister in the days to come.

I do believe that both of us, the industry and government, will have to work in partnership in a spirit of trust and that trust can only be generated out of action. There have been occasions in the past where I have also had a chance to interact with your industry. We have had this discussion about what needs to be done to generate more goodwill about the industry in the corridors of power in government. And, I think opportunities come for the industry to show that they truly believe in the Swaccha Diamond trade that Russell just talked about. And I do hope the industry will not be found wanting when such opportunities are there, when such issues come up. And some of you will understand that I am referring to the demonetization exercise that happened a few months ago. And what happened in the aftermath of that or during that period which has unfortunately led to a situation of not being able to bring in the kind of flexibility and the kind of simplicity in laws that one would have liked to see in the industry.

And I do hope everybody will reflect on it. I do hope the industry participants will also see what needs to be done to once again bring in that element of trust between government, the authorities and the industry. I had raised this issue if you recall when we met in Jaipur. And I don’t know why you still invited me today after all my comments in Jaipur, I would have thought that’s the last time you would ever have me on a function of the gem and jewellery trade. But I do believe that there is a lot we can do together. There’s a lot the government would like to do to promote this industry. You provide more than a million people jobs in Surat alone and …… (speaks in Gujarati).

Of course, because of the swearing-in ceremony in Lucknow, in Uttar Pradesh, he will not be able to join you in person. But I do believe a good programme has been drawn up where he will be interacting with you. And, हीरे की परख तो सिर्फ जोहरी ही जानता है तो मुझे लगता है आपने भी प्रधानमंत्री जी को बहुत समर्थन दिया है, बहुत आशीर्वाद दिया है | वह भी आपको अच्छी तरीके से समझते हैं, आपकी इंडस्ट्री को उन्होंने गुजरात में बहुत सहायता दी थी, बहुत सपोर्ट किया था |

Industry has grown in Gujarat quite significantly in the last few years. So I have no doubt that you will have a lot of sensitive cooperation and support from the government. But, I don’t know, you may also hear a few words from him later in the evening, I don’t know what he is going to talk about. But it’s truly an opportunity where in my own sector, the mining sector, I would urge all of you to look at participating on what we can do to increase the resources and the reserves that India has in the diamond sector. In fact, I was most surprised when I was told that diamonds originated from India as long as 4th Century BC, so we are really talking of over 2500 years ago when diamonds first originated in India. So the world’s first love for diamonds started in India. And, probably, until the 18th century, India was the only known source of diamonds. I don’t know whether we landed up exhausting that source but we certainly need to expand our exploration to see whether we can once again get back that pre-eminent position for this industry which we have enjoyed for so many years in the past. अभी तक हम सोने की चिड़िया बोलते थे अभी मुझे आज के बाद लगता है डायमंड की चिड़िया बोलना पड़ेगा भारत को |

In fact, some of our most prized diamonds that came out from the Golconda mines are even today recognized as the diamonds of Golconda, the Kohinoor and the Hope diamond, the Daria-i-Noor diamond. All of these diamonds came in from India, they went all over the world and in our own mythology and culture also we find reference to diamonds. Today, we talk about industrial diamonds in a big way and the strength of the diamonds, the hard capacity that the diamonds have, they were known for their hardness. And probably, in Sanskrit they call it ‘Vajra’, maybe somebody here may like to do some research, but Vajra is the word in Sanskrit for diamonds. And more particularly, because of their hardness and I am given to understand that Lord Indra’s weapons also derived their name from diamonds. The Lord Indra used to use weapons which had diamonds embedded on them for their hardness to be able to attack the enemy. And that Vajra, the weapons of Lord Indra, the word came in from diamond.

So truly you have had a huge role to play in Indian history, in our culture, in our tradition. And now we have an opportunity to further take this engagement to greater heights, even now with almost 70% of the world supply of diamonds in terms of value originating or atleast processed and polished in India. I think we have a great opportunity in India. Praveen Bhai was telling me about some concerns, some constraints that the industry faces even while importing diamonds directly from the African countries in setting up that special zone that was envisaged for diamonds to be brought in directly into India. I see a lot of people probably Europeans from Belgium here so I should not be commenting on our interests to kill the Belgium sector as a conduit to bring diamonds into India. But really, it doesn’t make sense to me why diamonds should have to go to Belgium first and then come to India. Just because of the tax structure or because of the inconsistencies in our own financing methodology. But that’s something which industry, bankers and government should sit down together. I hope the Export Promotion Council will be able to play a role to actually facilitate greater engagement with the African countries and also expanding the scope of the industry in India in the years to come.

The Bharat Diamond bourse has done some good work in the last few years. We are right in the neighbourhood of the bourse, probably, one of the world’s largest diamond exchanges. And it took a lot of painful effort I think Anup Bhai and the whole team working over the years to make that bourse happen. But I have had some good interactions at the bourse in my visits in the past and I am sure, going forward, after the Chief Minister of Maharashtra made the announcements yesterday to help you set up a Jewellery promotion region and help you create more facilities to become a showcase for Indian strengths in the gem and jewellery business. I am sure we can take this business to the next level and, probably, make for the lost years since 2008, which is nearly 10 years of loss time as Russell just highlighted. Let’s all of us work together to change that graph and show it go up rather than stagnate for so many years.

In the mining sector, and I am glad that you are spending this day today to discuss what can be done in the mining sector. I understand that a lot of the large mining companies have concerns about coming to India and setting up business in India. And that emanates from the fact that we do not give a combined prospecting-cum-mining license. The new amendments in the MMDR Act do not permit us to give a license where the person who is exploring for a mine can also exploit that mine, should he find the diamonds. And I do agree that has been the typical way business has happened across the world. But then there are a lot of things we are doing in India differently than what happened in the past, and in many cases successfully. So I think this is another area where India plans to change the rules of the game in terms of exploration.

And I will share with you the reason why this amendment has been done, this change has been done. In fact, it may be interesting for the Minister from Zimbabwe also to consider what implications it has for Africa. The moment we are giving an exploration-cum-mining license, in effect, we are transferring the risk of exploration to the mining company and the upside of getting any diamond reserves or any other mineral reserve being found out of that exploration remains with the mining company for several years thereafter. But in the process, there is a huge ability to game the system, to bring in corruption, to bring in extraneous elements into the system. So when we are giving a license which allows you to prospect and then exploit a particular area, effectively, the government gets the ability to choose who will be given that mine and to choose which will be a potentially good mine, a potentially good reserve area, and give it to a person of choice which could also lead to corruption. And as you are all aware, this government led by Prime Minister Modi, has focused its efforts to eliminate corruption, to eliminate discretion in the working of government. And we would like the entire process to be most transparent and to be in a manner where the benefit of these natural resources, the benefit of whatever natural wealth India has is used to serve the poorest of the poor, to give them a better quality of life and the revenue out of these reserves are expected to work for the benefit of the poor.

And I am going into this detail only because the honorable Minister from Zimbabwe talked about the African countries and about poverty there, and about a better life for the poor of Africa. We have a similar situation in India, the glitz and glamour that you see today does not necessarily reflect the real India that lives in its villages, that lives in the villages of Uttar Pradesh, in the villages of Odisha, in the villages of Jharkhand, or the villages of Chhattisgarh and Madhya Pradesh where most of the diamond mines are also located.

And, therefore, what we plan to do is to have a separate contract for exploration where we will not give the risk to the exploration companies, we will pay for the exploration whatever it costs. An exploration is not a very expensive business. Over the years, the mining companies have on the garb of the risk of exploration probably exploited the places where diamonds were there and used this garb of ‘oh we are taking a very big risk and, therefore, we should have the full right to exploit the mine for 30 years or 50 years or 100 years because we took the risk.’ We are moving that needle. We are saying the government if necessary, will take the risk of exploration. Or we will pay for whatever are the exploration contracts that are given out and we are even going to incentivize the companies which do the exploration work. So should they find diamonds, should they find some good reserves or minerals out of the exploration work, we will give them some incentive for the effort they have put in even beyond their costs, even beyond the cost of exploration.

So we will have two separate contracts, a contract which pays for the exploration. It will have an element of incentive should that exploration come up with a valuable reserve, all the data that comes out of exploration or prospecting will be put transparently in public domain. It will be available for all of you to see what is the findings of that exploration, and then we will have a bidding process where everybody will have a chance to participate, everybody will have a chance to be a part of the exploitation of that reserve. You can study the data that they find out of exploration, you can infer from that what is the potential revenues, what is the potential business, what is the potential value that each of these mining areas has. And why not have some 50 Indian companies also bid for actually exploiting these mines. Why should the world only be exploited by 3 or 4 diamond companies?

And I am glad that an Indian has finally made the effort to takeover, or not takeover, but atleast get involved with one of the world’s large companies in the mining, including the diamond sector. You must have read Vedanta looking at participating in the growth story of De Buers and why should 50 Indian companies not be in this business. Why are you finding yourself dependent only on 3 or 4 large companies, I don’t know whether I am being inappropriate. My apologies if the gentlemen from the WDC or the AWDC do not like what I have said, or the distinguished guests from other centres who may not like some of my comments.

But truly the time has come for India to lead the world and not follow the world. We need not live in the lost glory of 2000 years ago or a 1000 years ago and take happiness and pride in what we were once upon a time. Let’s now plan for the present and the future and make this country what we want it to be. And, therefore, we are going to explore the mineral wealth of this country at cost even with an incentive structure for those who help us in the exploration process. And then we will invite everybody, both Indian and internationally, to come and bid in an honest, transparent bidding process for exploiting those mines. And the revenue that comes out of those mines, out of the bidding process will go to serve the poor of this country, will go to give them a better quality of education, will go to give them electricity, will go to give the poor a decent shelter on their head. And I am sure Praveen Bhai your industry will be happy to be a part of this development of India, this truly inclusive development of all of India.

And I would urge the African countries to also revisit your own way of doing business on the mining sector. Because truly, it pains me and I would like to share with all of you. I go all over the world, we discuss in the United Nations, we discussed in Paris at length, we discussed at Davos about caring for the world, about caring for the developing world, caring for the underdeveloped world and then what do we do? You have these big presentations by developed countries or companies from the developed countries who say, you know look we are giving a million solar lamps to children in Africa, we have brought light into their life. One solar lamp, it costs $10, in fact, $10 is also an exaggerated price, I think if we do it in volume it should cost probably $4 or $5. You give them a $10 solar lamp in a impoverished or a very backward country in Africa and you take pride in yourself that you have brought light into the life of an African. You have given them connectivity. You have given them a solar lamp. And then they say, ‘you know what, we have put up a mobile charging socket so that’s great, we have done two things, we have given them mobile charging and one solar lamp.’

Is that what true development of the world is? I would think if we really want to develop the world, first we stop the waste that is there in the western world. We stop the lights glittering all over the capitals of America and Europe, which waste tonnes and tonnes and thousands and thousands of energy sources leading to all the pollution, all the greenhouses which the world is worried about today. We save all the waste that we see in the developed world and give a good quality life to the people of the world who are left behind in this development process. Not just by giving one solar lamp, but if at all we have to give let’s give them energy access which gives them access to the whole family, which gives them access to have better cooking mediums, which gives them access to lead a better quality of life in terms of healthcare, in terms of education, in terms of adequate supply of electricity, in terms of better sanitation facilities. That’s true inclusive development of the world and I think when we give out these mines through an auction, through a transparent bidding process, that revenue will go to serve the people of India, to serve the poor of India. And that’s the process this country is going to follow.

I would urge even the mining companies which are engaged in mining in a big way internationally to look at participating in both aspects – exploration, prospecting aspects separately through a contract and then to look at mining through efficient, modern methods, to bring that mineral wealth out, make India provider of diamonds to the rest of the world, push up the possibilities of business for your trade and, hopefully, then that $8 billion of value addition that you are doing will become an $18 billion of value addition in the next 5 years and then further grow from there.

We do have 2 operating mines in Madhya Pradesh, but both are in the public sector. To my mind, that’s not the most efficient way of mining. I don’t even know how much of that really is effective, really is efficiently mined. We would like all of you to see how you all can participate in the mining activity, get hold of some experts, get people who understand mining, start setting up units within yourself which can get engaged in exploration of mines. It’s a very simple thing, by the way, extremely simple, it’s just being made complicated by probably propaganda. Exploration is basically drilling activity and nothing else. It’s the interpretation of the findings of that drilling which is probably intelligence or which is probably where real technical knowledge comes in. But we can hire the best in the world, they are available, hire the best in the world for the interpretation of the findings of the exploration. And I would love to see if maybe the next time around you still invite me for a function of GGEPC after all this, I would like you to come and tell that look these are the 40-50 people in India who have decided to get into mining, into exploration, into exploitation of mines and make India truly self-reliant, truly a country where we can say we have not run out of diamonds in the 18th century, but diamonds are forever in India.

Thank you very much.



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