The prospect of new G7 sanctions on the Russian diamond trade is weighing heavily on the port of Surat in the Indian state of Gujarat, a diamond hub that had been shaken by supply cuts and declining demand.
About 90% of the world’s diamonds are cut and polished in this port in far western India. Hundreds of thousands of artisans cut the precious stones in some 4,000 workshops in Surat, before creating the sparkling jewellery. In total, about a million people work in this industry in Gujarat, including traders and suppliers.
Russian mining giants, Alrosa among them, have traditionally provided more than a third of the rough diamonds cut in India. But after the invasion of Ukraine, supply decreased under the influence of Western sanctions, which excluded Russia from the international banking system, SWIFT.
In parallel, Indian exports of cut and polished diamonds collapsed, as American and European companies refused to buy diamonds from Russia. Today, the leaders of the Group of Seven countries meeting in Hiroshima are considering how to collectively strangle the Russian diamond trade, while this trade represents between 4 and 5 billion dollars. annually, and Britain went so far as to announce that it would completely ban Russian diamonds.
Rameshbai Zilria, head of the Gujarat State Diamond Workers’ Union, said the new sanctions would lead to the collapse of the industry. Worse… Eight workers committed suicide within about two weeks, and the situation is getting worse.”
Russia has been a strategic ally of India for decades, as New Delhi has not publicly condemned the Russian attack on Ukraine, but the largest buyers of diamonds are Western companies that are required to submit to sanctions regimes. According to dealers, major companies such as “Tiffany & Co”, “Chopard” or even “Pandora” refuse to buy Russian stones.
India’s exports of cut and polished diamonds reached $1.32 billion in April, according to data from the Gem and Jewelery Export Promotion Council, which indicated that they were down 39 percent, or more than $800 million, compared to the same period last year.
According to Council Chairman Vipul Shah, attention will be paid to the type of sanctions imposed on Russian diamonds. “Russia is one of our main suppliers… Supply will be restricted, we will have a big problem… The immediate issue is employment, which will be affected in a worrying way,” he said.