India’s diamond industry may lose some of its luster due to the war between Russia and Ukraine

The sanctions imposed by the United States and European nations on Russia in the wake of its aggression against Ukraine are likely to have a direct impact on India’s diamond industry at a time when it is in post-pandemic recovery mode and targeting $24 billion Turnover in fiscal year 22.

Russia’s largest diamond miner, Alrosa, supplies about 30% of the world’s rough diamonds and is a major source for India.

India imports, cuts and polishes 80-90% of the world’s rough diamonds.

There is currently no major impact, although some banks are experiencing transfer issues. We’re keeping our fingers crossed and monitoring the situation as Alrosa is a critical source,” ED Sabyasachi Roy of the Gems and Jewelery Export Promotion Council (GJEPC) told PTI.

He said orders for the next two months were placed before war broke out and sanctions were imposed. “So far we know that Alrosa as a company is not subject to sanctions.”

Rating agency Crisil said in a statement that sanctions will have an impact on diamond industry growth.

“The sanctions have disconnected the Central Bank of Russia and two major banks from the SWIFT system. Although they don’t prohibit doing business with Alrosa, trade settlement has become difficult, which could lead to supply disruptions,” Crisil said.

India’s diamond industry, which is almost entirely export-oriented, is expected to post revenue of $24 billion this fiscal year, returning to pre-pandemic levels.

It was expected to post a 5-7% compound annual growth rate in the medium term as demand stabilized and prices hardened ahead of the start of the war between Russia and Ukraine, the note added.

“If the trading disruption lasts longer, next-quarter sales will fall by 25-30%, which will save about $2-2.5 billion,” said Rahul Guha, director of Crisil Ratings.

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