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Ukraine war impacting export cargoes, diamond industry unaffected so far

CIS countries include Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.

Published: 02nd March 2022 10:02 PM  |   Last Updated: 02nd March 2022 10:02 PM   |  A+A-

Exports

Image used for representational purposes only ( File photo | AP)

By PTI

NEW DELHI: Export cargoes to CIS (Commonwealth of Independent States) countries are impacted due to ongoing war between Russia and Ukraine as no shipping line is willing to take consignments there, exporters' body FIEO said on Wednesday.

CIS countries include Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.

Federation of Indian Export Organisations (FIEO) Director-General Ajay Sahai said shipments to these nations are stopped because no shipping line is willing to take cargoes as there is no movement of ships through the Black Sea.

To these countries, Indian goods move from the Suez Canal and the Black Sea.

"Banks are also reluctant to accept the documents for shipments which are already at the Russian ports," he said.

Exporters are suggesting the government to consider the possibility of trading in local currencies with Russia.

The commerce ministry is also holding meetings to discuss ways to minimise the impact of the war on trade.

Finance Minister Nirmala Sitharaman recently stated that India is more worried about the impact caused by the standoff between Ukraine and Russia, particularly on its exports.

Bilateral trade between India and Russia stood at USD 9.4 billion (USD 2.55 billion exports and USD 6.9 billion imports) so far this fiscal, against USD 8.1 billion in 2020-21.

India's main imports from Russia include fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical appliances; electrical machinery and equipment and fertilisers.

While major export items from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles.

India's bilateral trade with Ukraine stood at USD 2.3 billion (USD 372 million exports and about USD 2 billion imports) so far this fiscal, as against USD 2.5 billion in the last fiscal.

The main items of Indian import from Ukraine are agriculture products, metallurgical products, plastics and polymers, etc., while pharmaceuticals, machinery, chemicals and food products, etc., are the major Indian exports to Ukraine.

Surat's diamond polishing industry is so far shielded from the adverse impact of the Russia-Ukraine war as there is no ban on the transaction from Russian rough diamond mining company Alrosa, and demand for the polished diamond in main global markets remains unaffected, an industry representative said Wednesday.

Russia accounts for nearly 30 per cent of rough diamond exports to India.

With transactions from Alrosa so far not impacted by the US sanctions, the diamond polishing industry in Surat will not be affected by the war, said Dinesh Navadiya, chairman of Gujarat chapter of Gem and Jewellery Export Promotion Council (GJEPC).

Surat in Gujarat is the country's largest diamond polishing hub, accounting for nearly 90 per cent of polished diamond export from the country where nearly 65 per cent of the world's rough diamond is processed.

"A few days before the war broke out, around 45 Indian buyers were in Russia for the purchase of rough diamonds. Russia's Alrosa wrote to the chairman of the Surat Diamond Bourse that so far none of the American or European banks has placed any ban on transactions with it."

"But, I believe that if there is a ban on Alrosa on the transactions, the Russian rough diamonds, which are majorly polished in units in Gujarat's Saurashtra, will be in short supply," Navadiya said.

He stated that Botswana recently said it will increase the production of rough diamonds.

To some extent, this will fill in the gap created in the event of a ban on Alrosa, the GJEPC chairman said.

He said the industry will be affected if the demand for polished diamond is adversely affected in the US, Canada, the UAE, Hong Kong and Bangkok, which together consume nearly 75-76 per cent of diamonds cut and polished in India.

Even if the price of rough diamond goes up, selling it at a higher price will not be any problem for the industry as long as demand remains stable, he said.



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