Impact of Russian-Ukrainian war on Diamond Industry in India

Tags: Economics/Business

The Russian Invasion of Ukraine and the resultant sanctions by the western countries led by the United States on Russia has created uncertainty in the diamond sector in India.   

• India is one of the centres of global diamond trade and around 90% of rough diamonds in the world are cut and polished in India, especially in the Gujarati city of Surat. 

• India is the largest exporter of cut and polished  diamonds in the world.  During the April to January 2021-22 period the export of cut  and polished diamond was $20.06 billion which is around 6% of the total merchandise export from India. 

• India is totally dependent on imported diamonds and it imported $14.83billion of rough diamonds during the April to January 2021-22 period.

• The major supplier of the diamond to India is the world’s largest diamond company, Alrosa of Russia which contributes to around 30% of world’s natural production.

•  Major banks of Russia have been  banned from the SWIFT (Society for Worldwide International Financial Telecommunication) financial messaging system for international payment. This has created a problem of payment by the Indian importers to Russia as payment and settlement in American dollars and Euro is becoming virtually impossible. 

• This is likely to create a major problem for the diamond industry in India which creates lakhs of jobs in India.

Fact About Diamond 

•  Top producer of rough diamonds in the world 

•  The largest producer of natural diamond in the world is Russia followed by Botswana and Congo (2016 Data). These three companies control over 60% of the world's natural diamond  production.

• The world's largest diamond trading companies are Alrosa of Russia followed by De Beers of Luxembourg and Rio Tinto company of Australia and Britain.