By Nayan Dave
The Surat-based diamond cutting and polishing industry has reason to smile amid overall inflation with the RBI’s recent sanction for payments in international trade in Indian rupees.
The move has ushered in a windfall specially for those diamond units which source rough diamonds from Russia. Nearly 30 to 40 % of the total diamonds being cut and polished in Surat and other parts of Gujarat are being sourced from Russia. Generally, diamond units used to pay Russian suppliers using the services of mandatory banks, most of which are based in the US. This was a complex process involving transfer of payment in rupees by the rough diamond importers to the designated bank US based bank, which would convert this into US dollars and finally deposit the payment to the Russian suppliers’ bank accounts.
In April this year the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) put sanctions on Russian diamond miners Alrosa PJSC in the wake of Russia’s invasion of Ukraine. As a result, mandatory banks cut off the Swift Payment System for Russian miners. Due to this development, diamond units in Surat were having issues dealing with Russian suppliers directly. This had led to a disruption in supply of roughs on account of payment related issues.
“The Surat-based diamond industry imports more than $ 400 million worth of rough diamonds from the Russian miners. The RBI decision would give big relief to the diamond industry,” said Dinesh Navadia, president of Gems & Jewellery Export Promotion Council (GJEPC) – Gujarat region, adding, “Most of the rough diamond importers believe that financial transactions would be faster now.”
Nine out of every 10 rough diamonds in the world are being cut and polished in Surat. Out of the total annual import of around $20 billion worth of rough diamonds, more than 30 % are being sourced from Russia. Rough diamond importer Nilesh Bodki said, “In the long run diamond industry in India would benefit due to the RBI decision which is a booster dose for not only diamond but all the industries which are dealing with Russian buyers and suppliers.”
Sources in the diamond industry believe that more than 8,000 diamond cutting and polishing units in Gujarat, especially in Surat will benefit from the RBI move as they would be able to directly deal with Russian traders in rupees. Apart from Russia, rough diamonds are also being sourced from South Africa, Namibia, Botswana and Canada.