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New Delhi: Diamond traders in India are awaiting the fine print of G7 leaders’ commitment to work “closely together to restrict trade in and use of diamonds mined, processed or produced in Russia”.
Nine out of 10 precious stones in the world are polished in Indian diamond houses. According to the Ministry of Commerce and Industry, India imported $1.197 billion worth of diamonds from Russia in 2022-23. Of these, non-industrial diamonds (unworked) accounted for $1.156 billion — an increase of 48.3 per cent compared to the previous year. These accounted for 4.63 per cent of all diamonds imported by India in 2022-23.
Russian-origin diamonds continue to flow into global markets despite sanctions since rough diamonds are considered to be ‘substantially transformed’ if they have gone through the 4Cs — cut, clarity, colour and carat — in Indian hands.
According to Gem & Jewellery Export Promotion Council (GJEPC) data, India’s total gross import of rough diamonds grew by 88.51 per cent to 113.69 lakh carats in April 2023 from 60.31 lakh carats in April 2022.
Sabyasachi Ray, executive director of GJEPC, explains how rough diamonds cut and polished in India are considered an Indian product.
“Any rough diamond that arrives in India is substantially transformed and is considered to be a product of India. These diamonds conform to all current legal norms of the European Union, the UK and the US and are exported accordingly. If there are any changes to the status quo, the diamond industry will conform to those norms after understanding the changes,” he tells ThePrint.
In response to similar concerns about the export of refined fuels raised by an EU official, External Affairs Minister (EAM) S. Jaishankar pointed out last week that “Russian crude is substantially transformed in the third country and not treated as Russian anymore”.
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‘Peace more valuable than diamonds’
According to the US Department of Treasury, Russian diamond exports stood at $4.7 billion in 2021, with one Russian diamond mining company — Alrosa — raking in more than $4.2 billion in revenue that year.
In a joint statement issued at the G7 Summit held in Hiroshima, Japan, leaders of the Group of Seven countries, pledged to curb the trade in and use of “diamonds mined, processed or produced in Russia”. The statement added that the bloc will also coordinate future “restrictive measures, including through tracing technologies” to achieve its objective.
The UK, the US, Canada, New Zealand and the Bahamas had in April last year sanctioned Russian diamond mining company Alrosa. It was against this backdrop that UK Prime Minister Rishi Sunak on 19 May announced a ban on import of diamonds and metals from Russia.
Ukrainian President Volodymyr Zelenskyy has been pushing for a ban on the import of Russian diamonds. “I believe that peace is way more valuable than diamonds,” he had told the Belgian Parliament in March this year.
However, GJEPC chairman Vipul Shah feels sanctions are not the solution.
“It would harm the livelihoods of one million Indians employed by the diamond industry. Sanctions would make no sense as currently, there exists no technology to trace the origins of diamonds,” he says.
According to a report by Politico, Spacecode is in the process of developing a new technology that identifies ‘Diamond DNA’. The report added that the technology would not be ready for use anytime before the end of this year.
ThePrint reached Spacecode via email for comment but had not received a response by the time of publication. This report will be updated if and when a response is received.
In the absence of any such technology, the Indian diamond industry is awaiting the fine print of G7 measures against Russian diamond imports.
Though Indian exports of cut and polished diamonds fell by 38.86 per cent in April 2023, compared to the same month last year, Surat-based diamond traders say there is no reason to worry about the market in the long term.
They add that they are confident that jewellery exports will normalise by June or July, while the exports of cut and polished diamonds will normalise by August.
Krunal Soni, a marketing manager at Surat-based Star Diamonds, told ThePrint, “A lot of our exports are to the United States of America. As their markets have slowed down, our exports slowed down in the month of April. Cut and polished diamonds will pick up again from the month of August.”
Shah adds that “any sanctions would negatively affect the Indian gems and jewellery industry” and that “supply constraints to the diamond markets would only impact the workers in the Indian diamond industry”.
Jayanti Savaliya, president of Surat Jewellery Manufacturers’ Association, says the “economic slump” has forced many diamond houses to send their workers on 10-15 days of paid leave. “Any ban on Russian diamonds may lead to increase in prices for naturally occurring diamonds, but in the last three-four years, there has been a push for the growth of lab-grown diamonds, which we have more supply of than demand today,” he adds.
(Edited by Amrtansh Arora)
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