100% FDI likely in diamonds mining

By agencies   |   Monday, 25 July 2005, 07:00 Hrs
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NEW DELHI: The government is set to permit 100 percent foreign direct investment (FDI) in mining of diamonds and precious stones, where FDI cap at present is 74 percent. The move is expected to facilitate induction of modern mining technologies and reduce the dependence of thriving gems and jewellery industry on raw diamonds imported from Australia and South Africa.

Global diamond majors like Rio Tinto and De Beers who are already operating in the country through subsidiaries would be encouraged to step up their investments in the country once the FDI cap is knocked off, according to senior officials.

The department of industrial policy and promotion (DIPP), which has proposed 100% FDI in diamond/precious stones mining in a Cabinet note has, in fact, favoured a “rationalisation” of the FDI policy in the mining sector by total opening up. 100 percent FDI would be permitted in coal mining by cement and steel companies, sources said.

“Diamond deposits in South Africa are being depleted fast. There are few new mining ventures in Australia and Canada too. In this context, India will have to aggressively tap domestic resources for raw diamonds,” a senior DIPP official said, adding that there was tremendous scope for reducing wastage of the non-metallic resource during mining, if modern technologies are employed.

The DIPP’s proposal to allow 100 percent FDI in the sector is regardless of some reservations expressed earlier by the mines department.

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