Post Your Comment
Diamonds in the rough: G7 ban on Russian-origin diamonds will reflect heavily on Indian exports
As part of measures against Russia's invasion of Ukraine, the G7 countries—US, UK, France, Germany, Italy, Japan and Canada—have just announced a ban on direct import of non-industrial diamonds, mined, processed or produced in Russia from January 2024, followed by restrictions on the import of Russian diamonds processed by third countries, majorly India, from March 2024. Home to 90 percent of the world's diamond cutting and polishing industry, India will face the potential disruption of livelihoods of lakhs of people employed by small diamonds firms in Surat and elsewhere
Image: Punit PARANJPE / AFP
This file photo shows a trader examining the diamonds at a trading market in Surat, Gujarat. Gem Jewellery Export Promotion Council (GJEPC), a leading Indian trade body, has strongly protested against G7's decision to impose a ban and has asked for more flexibility in these timelines as it risks complicating supply chains, which are already under pressure. India's polished diamond exports for April-October are down 29 percent to $10 billion. GJEPC advocates for the interests of SMEs and marginal diamond units and plans to coordinate with the World Diamond Council and other stakeholders to minimise disruptions in the industry
Image: FranÁois WALSCHAERTS / AFP
In Antwerp's renowned diamond district, labs like iTraceiT are turning to blockchain technology to prove their gemstones are traceable to legitimate non-Russian mines in Africa, Australia or Canada. The G7 plans to introduce a traceability-based verification and certification mechanism for rough diamonds by September next year. It means that a diamond would be tracked through the entire supply chain, from when it is mined until it adorns a consumer, to ensure it is not of Russian origin. This has led to a query: how and where would this process be handled? Belgium supports the idea of checks in Antwerp, the world's foremost diamond hub. Leading rough diamonds producer DeBeers has voiced concern that this will be to the detriment of responsible African producers, those who depend on the artisanal mining sector, and the industry at large.
Image: Stringer / Reuters
Visitors walk past a Topol-M silo-based intercontinental ballistic missile at the International Military-Technical Forum ARMY-2023 at Patriot Centre in Moscow, Russia, on August 18, 2023. The diamond ban is G7's essential step to greatly reduce the flow of money from the diamond trade towards Russia, which is funding President Vladimir Putin's war against Ukraine. It is also an attempt to close a loophole involving Indian trade. After Russian diamonds are cut and polished in India, they are considered to originate here rather than in Russia.
Image: Alexander NEMENOV / AFP
Employees inspect the Nyurbinsky diamond mining pit of Nakyn diamond ore field, one of Alrosa's main production sites in the permanently frozen ground of Yakutia, an isolated region in East Siberia, Russia. Mines in Russia's Siberia are the world's biggest producer of rough diamonds by volume, with a 30 percent share of the global supply, valuing around $4 billion. Over 90 percent of these diamonds are produced by the Russian state-owned Alrosa, the second-largest diamond producer in revenue after DeBeers. The US imposed sanctions on Alrosa last April, soon after Russia invaded Ukraine.
Image: Alexander NEMENOV / AFP
Rough diamonds in a bowl are seen at Alrosa Diamond Sorting Center in Mirny, Siberia. According to industry experts, over 30 percent of rough diamonds mined in Russia are imported to India, with Surat being the major cutting and polishing centre of smaller size rough diamonds. Though sanctions on Russian mining firm Alrosa were imposed in February 2022, the ban was on big rough stones, not small roughs, Surat's field of expertise. Alrosa is a major supplier of low-quality roughs, which are cheaper, low in volume and high in quantity. These are fast-moving diamonds and require high labour deployment. Russia contributes around 30 percent of total rough diamond imports in India. Due to sanctions, most of the rough import from Russia is being done through round-tripping from third countries, according to industry sources.
Image: Mike Segar / Reuters
A Tiffany diamond ring is pictured in a Christmas display window at its flagship store on 5th Avenue in Manhattan in New York City, US, December 5, 2023. Once the diamonds are cut and polished in India, they are studded into jewellery and loosely exported to other countries. The major consumers of polished diamonds are the US and Hong Kong, followed by Thailand, Israel, the UK, UAE, Belgium, Singapore, Switzerland and the Netherlands. The export of these polished diamonds from India to G7 countries is over 40 percent of the total, while the export to Belgium is over 9 percent. GJEPC data shows India exported polished natural diamonds worth $22044.58 million in 2022-2023.
Image: Sam Panthaky / AFP
Workers work polish diamonds at a small enterprise workshop in Ahmedabad on January 10, 2023. India's diamond industry, headquartered in Surat and spread in Mumbai, Saurashtra, Ahmedabad and Rajasthan, employs up to 800,000 polishers. The restrictions announced recently will significantly impact the cut and polished diamond exports from India. Indian trade body GJEPC has strongly advocated that the interests of SMEs (small and medium enterprises) and marginal diamond units be kept in mind while imposing the sanction, recognising their active contribution to the industry and the millions of livelihoods dependent on it. The artisans at the bottom of a highly valued, glamorous industry will be the ones to bear the brunt amidst this global upheaval.
