NDMC suggests solutions to tackle undisclosed mixing of diamonds

When in the recent past cases of undisclosed mixing of synthetic diamonds with natural diamonds were being reported, the Indian gem and jewellery sector decided to combat this with the formation of the Natural Diamond Monitoring Committee (NDMC), considering India’s lead position in the global trade. The objective of the NDMC was to eliminate such undisclosed mixing and ensure confidence of the international trade in the Indian industry.

The NDMC consists of representatives from the GJEPC, BDB, GJF, GIA and other Trade Bodies in the Gems & Jewellery sector.

It recently undertook a comprehensive study to analyse the subject of undisclosed mixing and to arrive at a solution of fair trade practices to curb the issue of undisclosed mixing. The study spanned 8 countries and over 4 months, and included feedback from industry professionals including manufacturers, retailers, equipment firms, testing laboratories, global trade bodies, legal firms, consultants and industry experts.

The study indicated that:

- Contrary to some previous publications, the current production technology, gem-quality synthetic diamond rough production is less than 350,000 carats compared to over 125 million carats of natural gem-quality rough.

- Several major firms manufacture and employ various machines to segregate diamonds, which are highly effective and have been used within the trade, albeit not on a systematic basis.

The report suggests its solutions based on four key areas

– Regulatory – which target greater traceability of goods in the value chain and penalties for those found to be indulging in undisclosed mixing. For this the NDMC suggests a more granular HS Code system and that trade bodies be empowered to amend their articles and constitutions to outline undisclosed mixing as an unfair practice and state penal measures. The report also suggests the Consumer Protection Act give greater protection to purchasers.

- Commercial: The NDMC has worked with the WFDB on mechanisms and already put in place suggested standard declarations on Trade invoices globally, which would provide buyers a clarity on the nature of diamonds they buy.

- Process: Rigorous testing protocols for goods as well as a thorough KYC process in line with the Prevention of Money-Laundering Rules. Also, there would be adequate testing machines and systems to track and store all transaction data.

- Technology: The intent is to provide more sophisticated, rapid and scalable technology to help in segregation of diamonds. NDMC has set up a centralized testing laboratory within the BDB premises to test parcels or individual diamonds. More such laboratories will be setup soon. Also, a dialogue with industry people through technology symposiums, seminars will enable further solutions.