Russian crude oil weighs more than diamonds

It’s doublespeak at its best. The imposition of Western sanctions, part of the Russian ‘punishment package’, has been selective.

On the one hand, the ban on the export of Russian diamonds destined for India is being strictly enforced, which has wreaked havoc on Surat’s cutting and polishing industry. On the other hand, Russian crude oil has had a free run, benefiting some local and Western stakeholders.

What is sauce for the goose is not sauce for the goose.

India does not produce rough diamonds. However, it is the world’s largest hub for cutting and polishing raw materials, which it exports as polished stones and jewelry.

In recent years, the vibrant industry, which is mainly concentrated around Surat and Mumbai, has seen a sharp slowdown due to declining international orders and increasing competition from lab-grown diamonds.

Crisis in Gujarat

A trade think tank, Global Trade Research Initiative (GTRI), says there has been a discernible 24.5 percent drop in rough diamond imports, from $18.5 billion in 2021-22 to $14 billion in 2023-24, leading to bankruptcies, factory closures and widespread job losses. in Surat and other centers.

To worsen the situation, since December 2023, the G-7 countries have first urged the European Union to halt all imports of Russian diamonds, and from February this year they have also blamed India. When business was booming, Surat, Navsari, Amreli and other diamond cutting and polishing centers had built huge facilities, employed thousands of workers and created a huge supply of imported rough diamonds.

The largest supplier of rough diamonds to Indian units is Russian state-owned giant Alrosa, which accounts for more than 31 million carats of diamonds and 31 percent of world production. As for India, Alrosa accounted for almost 27 percent of crude supply by volume – the largest source for Indian companies.

But when the US and the European Union declared polished diamonds and jewelery containing Russian rough diamonds persona non grata, it was a blow from which the Gujarat hub has still not recovered. With each export shipment requiring a ‘source certificate’, Gujarat diamond merchants suffered with rejected and canceled orders.

Thousands of workers have been thrown out as units were closed. Anecdotal evidence showed that about 70 of them had died by suicide. The diamond cutting centers in Gujarat employ over 8 lakh workers and as many as 25 lakh are indirectly involved in allied industries. The human costs have been enormous.