In India, the diamond industry, grounded by the war in Ukraine, seeks to adapt
Only bicycles and two-wheelers manage to navigate their way nimbly through the human anthill of Mahidharpura Road, the beating heart of the diamond trade in Surat (Gujarat), in western India. Every day, thousands of men in shirts flock to this artery to sell and buy precious stones. The crowd overflows into the adjacent streets.
The traders, installed barefoot on cushions along the sidewalk, examine, with the naked eye or with a magnifying glass, the rough diamonds and the finely cut jewels. In their trouser pocket, dozens of glittering gems are wrapped in simple sheets of paper. Some 90% of the world’s diamonds are cut in India, earning Surat the title of diamond capital.
Despite this apparent bubbling, the Indian industry is going through a difficult patch. Due to lack of activity, Mahidharpura Road, which was usually teeming with people until 9:30 p.m., now empties from 6:30 p.m. Tailors and traders are forced to return home earlier. “We are facing a shortage of rough stones on top of low demand”, summarizes Amar Singh Rathore, who negotiates the prices of gems along the sidewalk. At issue: the sanctions imposed by the United States and other Western countries against the largest diamond extractor in the world, the Russian state group Alrosa.
Drop in rough stone imports
New Delhi, historical ally of Russia and partner of the West, does not impose any sanctions on Moscow. But the suspension of Russian banks from the Swift interbank network complicates the purchase of stones. Before the war in Ukraine, an estimated 95% of Russian diamonds were polished in India. Now they are coming in drop by drop. “At the start of the war, some payments were still going through, but this is less and less the case”says Vipul Shah, the chairman of the Gem & Jewelery Export Promotion Council (GJEPC).
Merchant banks either cannot or are reluctant to finance Russian diamond payments, due to Western sanctions targeting Moscow. Rough stone imports thus fell by more than 7% between April 2022 and February 2023, in dollars. In volume (carats), they fell more than 21%. Indian diamond exports fell nearly 30%, in dollars, last January, compared to January 2022.
At least 15,000 stonemasons and stone polishers have already lost their jobs since February 2022 in Gujarat. In this state, the political stronghold of Indian Prime Minister Narendra Modi, and a hub for diamonds, this industry employs between 500,000 and 1 million people. Most of the dismissals are recorded by hand in notebooks stored in the office of Bhavesh Tank, vice-president of the diamond workers’ union in Gujarat.
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