Indian diamond processing units making a beeline for Botswana

“The biggest benefit of setting up a unit in Botswana is getting rough supply for +1ct polished goods. Rough supply is finite, and to stay competitive in the market, manufacturers need the right source of rough. Hence, many manufacturers are establishing processing units in Botswana to get more supply, and to get it easily” URMIL GAJERA, Laxmi Diamondne of the world’s largest sources of ethical diamonds, Botswana is going all out to welcome Indian diamond companies – this is proving to be hugely beneficial for both the parties, discovers Suneeta Kaul

In an interesting development, several Indian diamond processing units have started setting up their production centres in Botswana, with the African nation emerging as the biggest destination outside India for diamantaires to set up their production centres. Around 20 companies, including all the 12 DTC sightholders of Surat, have set up their polishing and manufacturing units in the southern African country.

Why Indian companies are flocking to Botswana
Botswana is an important country for the diamond industry as it mines around 30% of the global diamond supply, with the diamonds mined there being bigger in size than those found in other parts of the world. The African nation is offering several perks to Indian companies for setting up their units, including supplying natural roughs in requisite quantities. In return, Indian companies are bringing capital to Botswana, and also training the local populace and providing employment opportunities to it.
Says diamond baron Govind Dholakia, Founder and Chairman, Shree Ram Krishna Exports, “Moving to Botswana is advantageous to Indian companies as roughs can be procured

directly from De Beers and ODC (Okavango Diamond Company). Thus, more quantities of raw material can be obtained without much hassle. Being there also helps us to easily provide all the traceability information that today’s aware customers demand.” The capital required to set up a new unit in Botswana is turning out to be almost the same as in Surat, so it does not make much of a difference to diamond processing units. Plus, they get the advantage of proximity to raw material. “The biggest benefit of setting up a unit in Botswana is getting rough supply for +1ct polished goods. Rough supply is finite, and to stay competitive in the market, manufacturers need the right source of rough. Hence, many manufacturers are establishing processing units in Botswana to get more supply, and to get it easily,” explains Urmil Gajera of Laxmi Diamond. Having diamond operations right next to the diamond mining hub saves the cost of operations significantly. With prices having surged over the last year or so, this is turning out to be an important consideration. “Getting an assured supply of roughs is very beneficial to a company,” says Sanjay Kothari, Vice Chairman, KGK Group, adding, “A diamond manufacturing unit right in Botswana has multiple advantages. It confirms an uninterrupted flow of rough diamonds, as DeBeers can supply a certain amount of goods in bigger sizes to local beneficiaries only. They cannot export beyond a certain size.

The supply of good quality roughs is short worldwide, so it is important to secure it. As a miner, Botswana will not prefer to ship these better-quality goods in raw material form outside their country. Hence, it is an imperative to set up operations in Botswana to cut and polish these better-quality roughs. NILESH CHHABRIA, Finestar Jewellery and DiamondsProximity to the raw material is the main motivating factor for setting up units in the African country. Reiterates Nilesh Chhabria of Finestar Jewellery and Diamonds, “We get direct supply of roughs from De Beers. The supply of good quality roughs is short worldwide, so it is important to secure it. As a miner, Botswana will not prefer to ship these better-quality goods in raw material form outside their country. Hence, it is an imperative to set up operations in Botswana to cut and polish these betterquality roughs.”

Of late, Botswana has become not only a leading rough diamond sales location, but also a significant cutting and polishing sector that is responsible for manufacturing a substantial share of the world’s diamonds. This has also spurred Indian companies to move to Botswana. “We believe moving to Botswana is the next step in the diamond beneficiation process -- it will give us an assured supply of rough diamonds in the years ahead, thereby helping us expand our operations globally. Having cutting and polishing operations right where the rough diamonds are mined is, obviously, a huge advantage,” says Ghanshyam Dholakia, Founder & Managing Director, Hari Krishna Exports.

Botswana laying out the red carpet
Well aware of the importance of foreign capital, Botswana is pulling out all stops to welcome Indian companies. “The Botswana government is going all out to help diamond companies interested in setting up processing units there,” says Gajera. “It provides guidelines to foreign manufacturers, making the process easy for them. The government officials are very cooperative and quick to respond to any request. Moreover, the Botswana government prioritizes us over other buyers for rough diamonds, which gives us a competitive edge in getting the right type of goods at the right price,” he adds. Agrees Chhabria, “The Botswana government facilitates granting of the manufacturing license, helps in securing work permits, and helps to make the process fast with minimum delays.”

Additionally, the country also offers financial benefits. Explains Kothari, “Botswana provides several financial incentives for diamond exploration and development. The most advantageous offering is the reduced tax slab of just 15% for the diamond industry, which is lower than that for other industries. Besides, the Botswana government does not charge VAT for local rough diamond purchases by any local manufacturing company. Apart from this, the Special Economic Zones policy adopted by the government is designed to attract worldclass domestic and foreign investors and provide them with a hassle-free business environment across industries.

In return, the Indian companies are making efforts to benefit the local communities and improve the economy of the country. “More than 60% of our workforce in Botswana comprises locals,” says Gajera. “Bringing in foreign investors helps promote economic growth and benefits locals in getting more jobs, thus reducing unemployment. We have established a buddy program where a local is teamed up with a foreign professional staff. This helps in breaking the ice between the two cultures and increase communication, thus encouraging local talent and rewarding Image Source: Lucara Diamond The supply of good quality roughs is short worldwide, so it is important to secure it. As a miner, Botswana will not prefer to ship these better-quality goods in raw material form outside their country. Hence, it is an imperative to set up operations in Botswana to cut and polish these better-quality roughs. NILESH CHHABRIA, Finestar Jewellery and Diamonds it,” he adds. The outreach programmes taken up by Indian companies are proving to be very useful in transforming the lives of the local population and improving the overall economy of Botswana. According to Kothari, “Being the largest manufacturers in Botswana, we are consistently providing the best of training and employment opportunities to the local populace. We are transferring extensive global knowhow to the natives of Botswana, educating them and enhancing their competitiveness. “Besides, we have installed sustainable facilities like solar panels and water harvesting units in the areas where we work, further contributing to the local infrastructure. Our training academy is yet another outreach programme, through which we have been imparting training and skill development to a significant number of Botswana inhabitants. We are also constructing residential units for our employees there. Not just this, our jewellery manufacturing and retail boutiques further contribute to the economic development of Botswana.”

people is emerging to be training and skill transfer. Says Chhabria, “We have hired trainers to teach them the art of skilful polishing and the end result is of the same quality as that in our factory in Surat. We market the polished diamonds with a ‘Made in Botswana’ label to educate final consumers about the origin of the diamonds that they are purchasing. We have also introduced the ‘Meet the Artisan’ initiative to highlight the contribution of local people in the cutting and polishing of diamonds.” While most of the Indian units in Botswana are still small in terms of the scale of operations and the number of people they hire, they are in it for the long haul. With time, it could well turn out to be a win-win situation for both the parties, namely, Indian diamond processing units and the nation of Botswana.