AHMEDABAD: Following US sanctions on Russia over the latter's invasion of Ukraine, diamond traders in Gujarat are facing a major hit as American clients are demanding a declaration that the polished stones exported from the state do not originate in Russia. About 30% of all imported raw or rough diamonds imported into India come from Russia, with the lion’s share coming to Surat for further processing.
Naimesh Pachhigar, a diamond merchant, said, "The US government has issued a circular to local American traders asking them to check the origin of the diamonds before buying or selling them." He said the circular has advised US traders not to accept the diamonds if they originated in Russia.
“Due to this circular, there is a lot of difficulty in the diamond market. Rough diamonds were originally provided by Russian company Alrosa, accounting for 28 percent of global diamond mining. It is the world’s largest diamond mining company. The diamonds were sold by various diamond traders in Gujarat to foreign markets after polishing them in India. This circular from the US government will cause trouble to every diamond trader in India as there is a shortage of rough diamonds after the war broke out,” he further added.
According to the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) media statement, "The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Alrosa, a Russian state-owned enterprise (SOE) and the world’s largest diamond mining company, which is also responsible for 90 percent of Russia’s diamond mining capacity. The Department of State also redesignated Joint Stock Company United Shipbuilding Corporation (USC), as well as its subsidiaries and board members. USC is a Russian SOE that develops and constructs the majority of the Russian military’s warships, likely including many of those used to bombard Ukraine’s cities and harm Ukraine’s citizens. These actions were taken pursuant to Executive Order (E.O.) 14024. Through these designations, the Treasury is cutting off additional sources of support and revenue for the Government of the Russian Federation (GoR) to wage its unprovoked war against Ukraine."
“These sanctions will continue to apply pressure to key entities that enable and fund Russia’s unprovoked war against Ukraine,” said Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence. “These actions, taken with the Department of State and in coordination with our allies and partners, reflect our continued effort to restrict the Kremlin’s access to assets, resources, and sectors of the economy that are essential to supplying and financing Putin’s brutality,” he added.
Now American clients are demanding that Gujarati traders furnish certification to show that the stones they procured were not sourced from Russia. This has affected business, with local traders having been forced to shut shop and give employees an unscheduled two-day break, despite the otherwise growing demand for 'finished' or polished diamonds.
“American buyers have refused to buy finished diamonds that started as raw ones mined in Russia. They’ve written to Indian traders threatening to ‘ban’ anyone found selling such stones,” said Dinesh Navadiya, Gujarat Region chairman of the Gem Jewellery Export Promotion Council (GJEPC).