"My ministry is working closely with the industry to develop India as an international trading centre for diamonds.
Considering that we are the largest purchaser of diamond roughs, there is no reason why India should not have a diamond trading centre at par with those currently in Belgium, Israel and Dubai," Nath said while addressing an international diamond conference in Mumbai.
Nath said the centre that would help in facilitating international diamond exchange, would be set up by the end of the current year but did not specify the location of the proposed project.
The government would encourage foreign direct investment and joint ventures between Indian entrepreneurs and businesses abroad in diamond exploration, mining and sourcing, cutting and polishing and sales and marketing, he added.
"There has to be an assured supply of rough diamonds for the industry to grow. There is a need for Indian investors to invest in foreign mines and the government is considering allowing such investments," Nath said.
The minister said that in order to maintain the continued supply of diamond roughs to Indian diamond industry the government was thinking about entering into economic cooperation agreement with supplier countries.