Interview on the Hindu website
Having successfully tested the rouble payment mechanism with select Indian clients earlier this year, Russia’s state-owned Alrosa, the world’s leading rough diamond miner which last year supplied rough diamonds worth $700 million to India, plans to expand this mechanism further. At least five more clients of Alrosa, who are on its privileged “long-term client” list, could be soon paying in rouble for the Russian miner’s diamonds.
“As an experiment, this August we have tested transactions in roubles — one with a client from China and another with a client from India. VTB was in charge of the transaction in China, the payment was made through VTB branch in Shanghai. Our long-term client from India paid in Russian rouble from his account opened in the Delhi branch of one of Russia’s largest banks,” Evgeny Agureev, Board member and Director of United Selling Organization (USO) of Alrosa, told BusinessLine. Although Agureev did not name the bank, according to several sources aware of the development, Sberbank is likely to have carried out the transaction. Among four Russian banks having their offices in India only Sberbank and VTB operate as branches. In March last year, VTB has announced shutting down its Delhi branch in order to cut costs leaving Sberbank the only actively operational bank in India.
According to Agureev, the rouble transaction was carried out in just four hours. However, the company and its clients had faced few hurdles. “We had to get additional approvals from the regulator as well as Customs for the transaction to go through,” he said. He said Indian banks that often financed customers in consortium, created issues which going forward the company plans to resolve by meeting the top management of Indian banks.
At the moment, Agureev said Alrosa is preparing the ground to settle payments in rouble with five other long-term customers who are now in the process of opening accounts with the Russian bank. When asked whether Russia would consider the possibility of having an inter-governmental agreement for direct diamond imports as proposed by Commerce and Industry Minister Suresh Prabhu last Friday during the India-Russia bilateral summit, Agureev said the issue has been raised by India many times. “However, as a government-owned company which is also a public company we are guided by market principles. Fair trade with all customers is one of such principles,” he said.
Agureev added that Russia is focusing on developing its own cutting and polishing industry and hence Indian companies should consider investing in setting up facilities in Russia.
Last year, India’s KGK Group invested around $50 million in setting up a diamond cutting and polishing factory in Vladivostok in Russia’s Far East region. According to Agureev, at least two more Indian players are considering opening new manufacturing facilities in Russia.