Surat’s diamond sector braces for more job losses as EU and G7 countries discuss banning Russian diamonds

Surat : Surat, India, which houses the world’s largest diamond cutting and polishing centre, is bracing for difficult times ahead because the European Union (EU) and the Group of Seven (G7) nations are discussing ways to track Russian diamonds, supported by a watertight traceability system.

In Russia, $5 billion worth of diamonds are mined each year by the state-owned company Alrosa, and all of them end up in Surat. On February 24, 2023, after a full year of Russia’s invasion of Ukraine, the European Union and the Group of Seven began planning how to stop Russian diamonds from reaching international markets.

It is important to note that none of the European Union or the G7 countries have implemented sanctions against Russian jewellery. However, the government of Belgium (an international diamond trading centre) has been advocating that a ban supported by a foolproof traceability system would be the only effective way to stem the ongoing flow of Alrosa’s goods from Western nations, not just EU members.

Belgian Prime Minister Alexander De Croo was quoted as saying, “Russian diamonds are blood diamonds” in an interview with Politico. If Russian diamonds can’t get to Western markets, Russia won’t make any more money from them. Belgium is collaborating with its allies to build that united front.

In the wake of US sanctions that kicked Moscow out of the SWIFT cross-border payments system, leaders in Surat’s diamond industry claim annual imports of Russian diamonds are less than $300 million. About 40% of India’s total diamond imports come from Russia.

After Moscow was kicked off the SWIFT cross-border payments system in 2021 due to the Russian invasion of Ukraine, leaders in the industry claimed that about $1 billion in capital of the diamond companies in Surat and Mumbai was blocked in the foreign banks.

Due to their small size, Russian diamonds require the expertise of artisans in Surat, as well as those in the North Gujarat and Saurashtra regions of Gujarat State. Approximately 60 percent of Russian diamonds shipped to Surat are destined for the local cutting and polishing centres in Bhavnagar, Amreli, Savarkundla, Rajkot, etc. The Russian diamonds are cut and polished into tiny gems in the minus sizes and exported to the Western markets and China.

Nilesh Bodki, a diamond manufacturer and exporter told The Blunt Times, Due to sanctions and SWIFT problems, Russian diamonds are no longer entering Surat, so De Beers has increased prices for smaller sizes by up to 25% in the past year. The EU and the G7 countries, as well as the West, will not be able to impose a ban on diamonds mined in Russia. Once a diamond has been cut and polished in Surat, it is nearly impossible for any laboratory in the world to determine where it originally came from.

Dinesh Navadia, chairman of Indian Diamond Institute (IDI) said, We condemn the Russian invasion of Ukraine and the deaths of countless innocent people on both sides of the conflict. However, if Russian diamonds are banned, it will lead to more problems for the small-time diamond workers in Surat and across Gujarat, who will be forced to commit suicide due to a lack of employment opportunities.