New Delhi,
In the recently concluded G-7 summit, the member countries have announced to impose more stringent sanctions on Russia. To increase the economic pressure on Russia, the G-7 countries have announced a ban on Russian ships, aircraft and Russian diamonds. According to the Economic Times report, due to this new ban, the employment of one million workers working in India’s diamond industry is hanging in the balance.
In fact, about 90 percent of the world’s diamonds are cut and polished in India. Russian diamonds are also included in these diamonds. India imports diamonds from Alrosa in Russia. About 30 percent of the world’s total diamonds are produced in Alrosa. Indian diamond companies export imported diamonds to G-7 countries by cutting and polishing them.
After the announcement of new sanctions on Russia by the G-7 countries, Gem and Jewelery Export Promotion Council (GJEPC) Chairman Vipul Shah has said that if the sanctions on Russia continue, then the employment of 10 lakh people in India will be at risk. Will go
G-7 countries imposed new sanctions on Russia
With the aim of weakening the Russian economy, Western countries have been imposing economic sanctions on Russia since the beginning of the Ukraine war. Due to this economic embargo, Russian revenue also saw a drop of about 50 percent. But Russia tried to compensate for this by increasing diamond exports.
According to the report, Russia had earned about $ 4 billion in 2021 only from diamond exports. That’s why it was being speculated long ago that America and European Union could impose strict restrictions on Russian diamonds.
“We will work together to restrict the trade and use of diamonds mined or produced in Russia in order to reduce Russian revenues,” said a joint statement issued after the G-7 countries meeting in Hiroshima, Japan. are doing. Tracing techniques will be used to ensure that this ban is implemented effectively.
The day the G-7 countries announced new sanctions against Russia, British Prime Minister Rishi Sunak announced a ban on the import of Russian diamonds. The US, UK, Canada, New Zealand and the Bahamas had banned trade with Russian Diamond Minor Company Alrosa in April 2022 itself.
Ukraine’s President Volodymyr Zelensky himself has been demanding a ban on the import of diamonds from Russia for a long time. He said in the Belgian Parliament in March, ‘I think peace is more valuable than diamonds. At present, Indian diamond companies buy diamonds from Russia and send them to factories in Surat for polishing. From here it is polished and supplied to the luxury store dealers of New York, Paris, Tokyo. After the ban it will be eclipsed.
Things can get worse: Vipul Shah
Unpolished diamonds are passed through 4cs (Color, Carat, Cut and Clarity) in factories in Gujarat. After this these polished diamonds are sold to America and other G-7 countries. Changes are made to the Harmonized System (HS) code to identify goods during cross-border. India’s diamond traders will not be able to sell Russian diamonds to G-7 countries after the new G-7 sanctions.
Diamond workers are already worried due to a drop in demand amid the global economic slowdown. In China too, the demand for diamonds has declined since the pandemic. In March 2022, Western countries excluded Russia from the SWIFT International Payment Network. After that, the supply of Russian diamonds in India has also declined. Vipul Shah, who is associated with the industry, says that the demand is less now, so the industry is able to handle this situation despite the less supply of rough diamonds. But if the global demand increases then problems may have to be faced.
Due to all the sanctions imposed on Russia, there is also a crisis of payment of import of diamonds. Shah said in a conversation with Economic Times, “Russia has not received any payment for the last six months because banks are not giving approval for money transfer. Government of India had selected some banks to open vostro account for trade in rupees with Russia but this system is not working properly. About 20 Russian banks have also opened Vostro accounts in India for making rupee payments. However, India’s imports from Russia have increased by 400 per cent due to oil and Russia does not want to hoard so much Indian currency.
In the midst of all these difficulties, the new G-7 ban has further increased the apprehensions of the diamond industry. However, there is no such technology so far to find out where the diamond has been mined. In such a situation, G-7 countries can adopt Traceability Techniques to identify Russian diamonds. With the help of this technique, diamonds can be traced from where the diamond came.
According to Vipul Shah, there is only the Kimberley Process Certification Scheme for diamond information. It is a type of multilateral trading system. This system was implemented in 2003. Under this, all the countries have to implement all the security measures in the diamond trade. Diamonds are certified under this scheme so that there is no dispute.
How harmful for India
India ranks number 1 in the export of cut and polished diamonds. India alone has exported about 33 percent of the total cut and polished diamonds exported in 2021. Whereas, the total gross exports of gems and jewelery between April 2022 and February 2023 stood at $34.86 billion. According to Gem & Jewelery Analytical Reports, India is the second largest exporter of gems and jewelery to the US after Switzerland. About 10 percent of the total exports have been exported by India only to America. America is the main country of G-7 countries.
Jayantbhai Sawaliya, president of the Surat Jewelery Manufacturers Association, says that due to lack of work, people have been sent on 10-day leave in many diamond processing units in the last six months. Union vice-president Bhavesh Tank told that the work of about 200 diamond companies has already come to a standstill. In such a situation, the challenges will increase further due to the implementation of new sanctions on Russia.
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