Russian oil weighs more than diamonds

This is doublespeak at its finest. The imposition of Western sanctions as part of the “punishment” package for Russia was selective.

On the one hand, the ban on the export of Russian diamonds destined for India was strictly enforced, which wreaked havoc on the cutting and polishing industry in Surat. On the other hand, Russian crude oil is in a period of slow production, which benefits some local and Western stakeholders.

What sauce is for a goose, sauce is not for a gander.

India does not produce rough diamonds. However, it is the world’s largest center for cutting and polishing rough materials, which it exports in the form of polished stones and jewelry.

Over the past few years, the bustling industry, mainly centered around Surat and Mumbai, has seen a sharp slowdown as international orders decline and competition from lab-grown diamonds increases.

Crisis in Gujarat

The Global Trade Research Initiative (GTRI) trade think tank says there has been a noticeable decline in rough diamond imports of 24.5% from $18.5 billion in 2021-2022 to $14 billion in 2023-2024, triggering insolvency , factory closures and massive job losses in Surat and other centers.

To worsen the situation, from December 2023, the G-7 countries first urged the European Union to stop importing Russian diamonds, and then from February this year they also tightened the screws on India. When things were going well, Surat, Navsari, Amreli and other diamond cutting and polishing centers built huge plants, employing thousands of workers and creating huge stocks of imported raw material.

The largest supplier of raw materials to Indian units is the Russian state giant Alrosa, producing over 31 million carats of diamonds and accounting for 31 percent of global production. In India, Alrosa accounted for almost 27 percent of its raw material supply by volume – the largest source for Indian companies.

But when the United States and the European Union declared polished diamonds and jewelry using Russian raw material persona non grata, it was a blow from which Gujarat’s center has yet to recover. Any export shipment requiring a “source certificate” resulted in Gujarat diamantaires being hit with rejected and canceled orders.

After the plants closed, thousands of workers were thrown onto the streets. Anecdotal evidence suggests that approximately 70 of them died by suicide. Diamond polishing centers in Gujarat employ over 8 lakh workers and as many as 25 lakh are indirectly engaged in ancillary industries. The human cost is staggering.