Once the sanctions kick in, uncertainty will loom over the employment of nearly three million workers in Surat, the diamond hub of India which cuts and polishes nine out of 10 diamonds in the world.
“We have been hearing from different sources that there will be fresh sanctions and it will start with large diamonds,” Gem & Jewellery Export Promotion Council (GJEPC) chairman Vipul Shah told ET. “However, we do not have any idea in what form the sanctions will come in. This will impact the employment of diamond workers in Surat as well as in Saurashtra, Amreli and Bhavnagar.”
Currently India, can freely export rough stones coming from Russia to the US and other G7 countries as long as they undergo substantial transformation by the Indian diamond cutting and polishing industry. In the process, the harmonised system code of the stone, a six-digit number used to identify goods in cross-border trade also gets changed.
On February 24, the G7 countries had said, “Given the significant revenues that Russia extracts from the export of diamonds, we will work collectively on further measures on Russian diamonds, including rough and polished ones, working closely to engage key partners.”
Industry executives, who have discussions with the G7 members, said the $80 billion oil that originates from Russia is going across the world without sanctions but Russian diamonds, which account for only $2.5 billion, are set to face sanctions. “The employment number is much higher in diamond cutting and polishing compared to the oil industry. Therefore, the G7 member countries should reconsider the issue,” said a senior diamantaire, who did not wish to be identified.
Exporters are worried that if fresh sanctions are put in place, then the movement of cut and polished diamonds from India will be further impacted. Gross exports of cut and polished diamonds in the first 11 months of 2022-23 stood at about $20.44 billion, down 7.25% from about $22.04 billion a year ago.