The government on Wednesday approved to initiate the process of winding up Hindustan Diamond Company Pvt Ltd (HDCPL), a 50:50 joint venture of the government and De Beers Centenary Mauritius Ltd (DBCML).

The decision was taken in a meeting of Cabinet Committee on Economic Affairs (CCEA), which was chaired by Prime Minister Narendra Modi.

CCEA "has given its approval for initiating the process of winding up of HDCPL," the commerce ministry said in a statement.

It said that the winding up of HDCPL is not likely to affect supply of rough diamonds to Indian diamantaires as domestic diamond industry has grown in these years and several Indian players are sightholders with top diamond producers now.

The objective of formation of the company was to supply rough diamonds to diamond processing industry in India, particularly to small and medium diamond jewellery exporters, who had no direct access to rough diamonds from Diamond Trading Company (DTC), London.

The DTC is the marketing arm of De Beers which held a very large chunk of world’s rough diamonds market.

The statement also said with the objective to facilitate the constant supply of rough diamonds and to make India an International Diamond Trading Hub, the government has created a Special Notified Zone (SNZ) at Bharat Diamond Bourse, Mumbai last year.

At present viewing operations are being carried out in the SNZ at Mumbai wherein Foreign Mining Companies only display their rough diamond lots to the Indian manufacturers and then take them back.

Thereafter the sales are carried through e-auction from offices situated in other countries to Indian manufacturers.

This facility has enabled even smaller Indian players to have direct access of supply of rough diamonds.

The HDCPL was incorporated under the Companies Act, 1956 in 1978.