Industry
G7 ban on Russian-origin diamonds to hit Indian exports
Summary
The forum has banned imports of diamonds made from Russian roughs from March. The US is India's biggest export market. It has also left the domestic industry guessing which sizes of polished diamond will be affected.
The Group of 7 nations’ plan to ban imports of polished diamonds made from Russian rough stones from March as part of measures against the country’s invasion on Ukraine has left Indian diamantaires on shaky ground.
The ban is expected to have major repercussions for Indian exports of diamonds, with the US being India’s biggest market.
The US accounted for a provisional 36% share of total diamond exports of $22.04 billion from India in FY23, ahead of Hong Kong at 25.16%. Japan accounted for a mere 1.18% of the exports from India, worth $260 million.
The G7 also plans to establish a traceability-based verification effective September. The intergovernmental forum includes the US, the UK, Canada, France, Germany, Italy, and Japan.
“Russia is no longer able to weaponize energy against us...," the G7 Leaders forum said in a statement after a virtual meeting on 6 December.
“We will also continue efforts to reduce Russia’s revenue from metals. We will introduce import restrictions on non-industrial diamonds, mined, processed, or produced in Russia, by January 1, 2024, followed by further phased restrictions on the import of Russian diamonds processed in third countries targeting March 1, 2024," it added.
Apart from this, G7 members would also be required to establish a robust traceability-based verification and certification mechanism for rough diamonds by September.
The development has diamantaires from India—which cuts 14 out of 15 of the world’s roughs—guessing which sizes of diamond polished in India will be impacted from March.
Initially, the fears centred around exports of polished diamond above 1 carat being restricted from January.
After the latest statement from the forum, while it has become clear that the measures would kick in from March, the industry is awaiting clarity on whether the ban covers all processed diamonds using Russian rough stones or only certain grades.
“The restrictions could have a material impact on our exports to G7, but we could find consumers from outside of the group, like China," said Anoop Mehta, president of Bharat Diamond Bourse, the country’s diamond trading hub.
“One good thing is that the measures will be effective from March next year, but trade is left anticipating whether it will apply to all Russian roughs polished in third countries, on which no ban exists now, or only certain sizes, say above 1 carat."
Vipul Shah, chairman of the Gem and Jewellery Export Promotion Council, said the ban raised concerns for the Indian gems and jewellery trade, and said the industry needed greater clarity as well as more time for implementation.
“We have reservations on the timelines announced for the implementation of restrictions. Recognizing the diversity of our industry, we believe there should be more flexibility in these timelines," Shah said in a statement.
“While respecting the G7’s decision, we would like more details on how such decisions will be implemented. We have questions about what is meant by a major rough diamond importer in the G7 and the powers it will have in determining the compliance of Indian diamond exports to the G7," he added.
India imported a provisional $8.48 billion worth of rough diamonds and exported polished diamonds worth $9.96 billion from April through October.
The quantum of Russian roughs processed cannot be ascertained as these are imported from other countries since Western nations clamped sanctions on Russian energy and mineral exports after it invaded Ukraine in February last year.
