G7 countries have collectively decided to impose fresh sanctions on Russian diamonds which has posed a direct threat to the livelihoods of around one million diamond workers in Surat.
The fresh sanctions are the latest in many since Russia invaded Ukraine last year.
India vs the West
NATO and most countries globally reacted as Russia began its invasion of Ukraine by imposing harsh sanctions to resist Putin’s advance.
This naturally affected Russia’s relations with the west but its relations with India remained intact.
India continued to buy oil from the country, and Indian refiners continued to buy Russian crude on discount and sell diesel extracted from it to European countries.
India’s status as diamond trading hub hit
However, trade with Russia may cost one sector dearly, as sanctions against diamonds from the country could leave more than a million workers in India jobless.
More than 90 per cent of the world’s diamonds are polished in Surat, and the sanctions on Russian gemstones could severely hit the supply chain.
Indian traders import Russian diamonds from Alrosa, a diamond mining company.
It reportedly accounts for 30 per cent of global rough diamond output.
Sanctions adding to misery
The sanctions are the latest setback for diamond workers in Surat on top of a fall in demand and global economic slowdown.
The slowdown in demand refers to the fallout of the current global recession along with geopolitical tensions.
Supply of rough diamonds has taken a hit due to the sanctions, affecting the work of diamond traders.
Gem and Jewellery Export Promotion Council (GJEPC) chairman Vipul Shah said, “If the sanctions continue, then there will be a lot of uncertainty in the employment of one million workers.”
He added that since demand is low currently the industry has been able to manage with less supplies.
He believes that the problem will rise when demand for diamonds increases.
G7
After the recent G7 meeting held in Japan, the attending countries said that they aim to target Russia’s revenue from diamond export.
“We will continue to work closely together to restrict trade in and use of diamonds mined, processed or produced in Russia and engage with key partners with the aim of ensuring effective implementation of future coordinated restrictive measures,” the grouping said.
Identify origin and movt of diamonds
To identify the origin and movement of Russian diamonds, G7 aims to improve traceability techniques it has at the moment.
However the GJEPC chairman said that there is no technology that can trace the origin of diamonds.
He pointed to the current mechanism of the Kimberley Process which was established in 2003.
Kimberley Process
“What we have now is the Kimberley Process certification,” he said.
Kimberley Process is a multilateral trade regime established in 2003 with the goal of preventing the flow of conflict diamonds.
The core of this regime is the Kimberley Process Certification Scheme (KPCS) under which states implement safeguards on shipments of rough diamonds and certify them as “conflict-free”.
