PremiumOver 250,000 workers employed in the diamond cutting and polishing industry have been asked to go on leave as supplies from Russian diamond miners—such as Alrosa—have been hit following western sanctions on Moscow due to Ukraine conflict
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Over 250,000 workers employed in diamond cutting and polishing industry have been asked to go on leave as supplies from Russian diamond miners—such as Alrosa—have been hit following western sanctions on Moscow due to Ukraine conflict.
Ramesh Zilariya, president of Gujarat Diamond Workers' Union said workers were furloughed this month as companies struggled with cash flow and supply disruptions after the western countries like the US and Europe stopped accepting Russian diamonds that have been polished in India.
The sanctions barred India's diamond exporters from importing rough diamonds from Alrosa.
India cuts and polishes 90% of the world's diamonds, with Russian miner Alrosa traditionally accounting for 30-40% of imported rough gems.
Diamond traders say Russian supply has fallen short since Western sanctions forced Moscow out of the SWIFT cross-border payments system, plunging the supply chain into uncertainty, news agency AFP reported.
Sripal Dholakia, director at the All India Gem and Jewellery Domestic Council said Russian supply is still disrupted and payments are mostly on hold.
Pitching to the Indian government to make future payments via India's UPI system, Dholakia said imports from Russia are "not adequate" at present, and Indian traders are facing higher bank charges while making direct payments in rupees or rubles.
India exported cut and polished diamonds worth $24 billion in the year ended March 31, data from the Gems and Jewellery Export Promotion Council showed.
Many Western buyers are now refusing to accept diamonds sourced in Russia for fear of violating sanctions.
"They have started asking for a bill which specifies that the goods we are supplying are not Russian," a Mumbai-based jeweller told AFP on condition of anonymity.
Prices too have turned volatile.
"Fifteen to 20% instability is a big thing for us because we work on a margin of two to 5%... It becomes difficult," the jeweller said.
The Gujarat diamond union has asked the state government to provide financial aid and re-skilling training to out-of-work polishers to help tide over the crisis.
"(We) asked the government to support workers in the diamond industry because this issue is not going to be resolved in one month," Zilariya said.
"This issue will go on for at least five, six or seven months."
India has called for a cessation of violence but has stopped short of condemning Russia's invasion of Ukraine.
The two countries have historically had close ties, with Moscow supplying most of New Delhi's arms.