Russian mining company Alrosa has resumed exports of rough diamonds to India despite economic sanctions imposed on the country by the United States and the EU.
Diamond exporters are now processing euro payments through German banks to avoid problems with sanctions imposed on Russia in response to February’s invasion of Ukraine.
Colin Shah, Chairman of the Gem & Jewelery Export Promotion Council (GJEPC) said The economic periodâOrders for these diamonds were placed in early March, according to sight holding Alrosa timetable. They are coming now.
“Exporters channel payments through various banks that deal in euros or other currencies,” Shah said.
Although routing payments through German banks has been known to delay the payment process by a week, it provides a temporary solution to continue trading while sanctions are in place.
Exporters hope that the Indian government will soon be able to act on the traditional ruble-to-ruble payment mechanism as a long-term solution when trading diamonds with Russia.
The trade deal – which was halted years ago – allowed India and Russia to exchange currencies directly before the implementation of the global financial messaging system known as SWIFT, which has already been blocked from Russia as one of the sanctions provisions.
It was reported earlier in Jeweler that the Indian government has expressed its intention to circumvent international banking restrictions by reviving its foreign exchange agreement with Russia.
“However, for the diamonds going on sale in April, the trade would prefer a rupee-ruble mechanism. The relevant authorities are looking into the matter and something will be put in place,” Shah said.
Alrosa is the largest diamond mining company in the world. It represents about 95% of the diamonds produced in Russia and about 30% of the diamonds mined in the world. India has the largest diamond cutting and polishing industry in the world.
A disruption in the supply of rough diamonds would have a huge impact on the Indian diamond industry, as a number of large diamond companies, run by Gujarati diamond dealers, operate in Russia.
Conflict Diamonds Debate
While the jewelry industry‘s position in the ongoing Russia-Ukraine dispute remains murky and complex for most, some have taken a direct stance.
Cristina Villegas, director of the Mines to Markets program, said The Guardian that his organization regards Russian diamonds as conflict diamonds.
âThey are objectively conflict diamonds, they are funding an armed conflict against a peaceful neighbor, by a state actor,â Villegas said.
âThe situation with Russian diamonds is that they really became conflict diamonds overnight.
âThese things take time to settle on new definitions. But the silence is striking – and it’s hard not to assume it’s because much of the industry hopes it will go away or be forgotten.
For another industry insider, the larger question is the nature of economic sanctions imposed by the West and their effectiveness.
Under US customs regulations, a cut diamond from India that started out as rough from Russia has undergone enough physical transformation to be considered a new product. So it is eligible to be imported and strong for US consumers.
Martin Rapaport, the founder of RapNetan online diamond trading network, said The Guardian that the sanctions will have little impact on relations between India and Russia.
“The flow of diamonds from Russia to India to America will continue unabated,” Rapaport said.
âSanctions are essentially very ineffective. They do nothing. That’s not going to stop Russian diamonds.
India studies impact of sanctions on trade regulations
India’s finance ministry said it was assessing the impacts of Western-imposed sanctions as it devised alternative payment mechanisms in trade with Russia, mainly for rough diamonds, fertilizers and mineral oils.
“We will await the details of any unilateral sanctions. The exact details to examine their impact on our economic exchanges with Russia,” the finance ministry spokesman said. Arindam Bagchi said at a press conference.
To date, India has not imposed any sanctions against Russia.
Brittany is disappointed
The UK has openly declared its disappointment with India’s stance on invading Ukraine.
India on Saturday abstained from voting on a US-sponsored UN Security Council resolution that opposed Russia’s “aggression” against Ukraine, with Indian officials saying dialogue was the only answer to settling disputes.
Speaking to the press, Anne-Marie Trevelyan, UK Trade Secretary, said: “We are very disappointed, but we continue to work with Indian partners and hope their views will change.”
She added that the talks were continuing with the possibility of benefiting both parties. She also said there was still time for India to change its position and support calls for sanctions against Russia.
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