On May 25th Indian newspapers reported that the Mumbai Cargo Customs authorities had stopped a shipment of rough diamonds of one India's leading diamond manufacturer that was suspected to be undervalued. The shipment consisted of 23 parcels, valued at $429 million. All of them were held for further investigation.
The manufacturing company, which name is currently undisclosed, reportedly operates 6 offices worldwide. To continue their operation activity they now have to clarify some questions of the Customs service.
Due to large amount of undervalued shipments, the Gem and Jewellery Export Promotion Council, organization behind India's gem and jewelry industry and trade, had been notified about new regulations, which require to declare in advance all the details of origin of the diamonds, as well as their exact weight, color, and price. This resulted in 700 indian diamond companies lodging a complaint over these measures.
This story is a brilliant example, illustrating the inability of the closed diamond business to operate transparently and fairly. The manufacturers undervalue prices to pay lower taxes, while the markups for the end user continue to be very high. This together brings huge profits for the producers, but makes the diamond market a bubble, which implicably is going to collapse.
The world needs a new diamond market with fair and transparent pricing and this market is already here.