The Foreign Investment Promotion Board is believed to have cleared the proposal of the Netherlands-based Star Diamond group to set up a joint venture in India to undertake diamond business.
Initially, Star Diamond group proposed to set up the joint venture Firestar Diamond Pvt Ltd with up to 50 per cent stake, which amounted to Rs 1.12 crore (Rs 11.2 million), sources said.
In the second stage, the company will invest Rs 2.25 crore (Rs 22.5 million) to foray into the import of rough diamonds, sale of these to Indian diamond manufacturers, traders and exporters.
Other areas of operations of Firestar Diamond would be manufacturing of polished diamonds by setting up a factory, production of polished diamonds through outsourcing and export of polished diamonds from India, they said.
The company plans to sell polished diamonds to jewellers.
Firestar Diamond also proposes to undertake export of diamond indirectly through selling the precious jewel to other exporters and by selling it to jewellery manufacturers.
At present, Star Diamond group operates a branch office in Mumbai with permission from the Reserve Bank of India for importing rough diamonds and selling it to traders and manufacturers.
The Netherlands-based firm said, over a period of time, the activities of its branch office would be reduced and transferred to the proposed joint venture.
FIPB was of the view that setting up of the joint venture between Star Diamond group and Firestone of India would lead to availability of diamonds at reasonable prices, jump in employment and incremental export revenues.
The JV will not be allowed to retail and will have to adhere to the RBI and SEBI pricing norms.
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