India Sees Sanctions On Russia As Chance To Create Direct Supply

(IDEX Online) – The Indian diamond industry believes the threat of sanctions against Russian rough diamonds due to Russia’s involvement in Ukraine could provide the sub-continent with an opportunity to receive a direct supply of rough stones from Russia.

The supply of rough goods from Russia to Belgium, and also to Dubai, would be severely impacted by international sanctions on Russia, say Indian diamond industry leaders.

Vipul Shah, Chairman of the Gem and Jewellery Export Promotion Council (GJEPC), said that apart from the issue of sanctions, it is in any case in India’s interest to work for the sourcing of diamonds directly from Russia, The Hindu reported.

The Indian gem and jewelry industry has urged the government to set up special zones to enable global miners, such as Alrosa, De Beers, Rio Tinto and others to bring in rough diamonds for auction in India. Though rough can be imported and exported duty-free, miners are reluctant to set up base in India, or trade with India directly, due to the country’s complex tax structure.

Consequently, they sell rough to India via other major trading centers, such as Antwerp and Dubai, said Shah. The GJEPC has suggested that the government set up a special trading zone at the Bharat Diamond Bourse in Mumbai, and create a similar facility in Surat at a later stage.

Direct imports by Indian firms of rough diamonds from Russia annually amount to just $767 million, according to the report.

Speaking at the opening session of the 36^th World Diamond Congress on June 16, Minister-President of Flanders, Kris Peeters, warned of the "catastrophic" impact that sanctions relating to the diamond industry could have.

Peeters said that "economic sanctions related to diamonds cannot be allowed to happen. Diamonds are our region’s [Flanders] and country's calling card. They provide work for 35,000 people in the Antwerp area alone. Sanctions would be a catastrophe."

The European Union has discussed possible sanctions against Russia. Around 70 percent of Alrosa's diamonds are marketed in Antwerp.

Speaking at a session of the World Federation of Diamond Bourses at the Congress, AWDC President Stephane Fischler said that he did not believe that sanctions would be imposed by the European Union on Russian diamonds.