India Challenges Western Ban On Russian Diamonds

India is actively seeking to mitigate the impact of recent Western sanctions targeting Russian diamond exports, a move that has significant implications for its diamond industry.

Foreign Minister Subrahmanyam Jaishankar highlighted India's efforts to "delay, soften, and ideally prevent" the embargo implemented by the EU and G7 against Russian diamonds.

These sanctions, aimed directly at Russian exports and indirectly at imports via third states, represent a concerted effort to penalize Russia for its military actions in Ukraine.

The ban, which became effective in January with additional restrictions phased in from March, poses a critical challenge to India's diamond sector.

Surat, often referred to as 'Diamond City,' is a key global hub where approximately 90% of the world's rough diamonds are cut and polished before entering the international market.

Jaishankar's comments underscore the pivotal role of the diamond trade in India's economy and the potential repercussions of the ban on its local industries.

In addressing the sanctions, Jaishankar noted Prime Minister Narendra Modi's proactive engagements with world leaders, including Belgian Prime Minister Alexander De Croo. Belgium, a significant player in the global diamond trade, similarly faces challenges due to these restrictions.

These high-level discussions underscore the broader economic implications of the ban and India's concerted effort to navigate the complexities of international trade sanctions.

India's stance on the embargo has been clear, with efforts in December to persuade G7 countries to reconsider or delay the implementation.

The concerns raised by New Delhi revolve around the ambiguity of gem origin tracing rules and the proposed "traceability-based verification and certification" system. This system, which may necessitate data sharing about Indian businesses, has raised privacy and operational concerns.

As Western countries intensify their sanctions regime against Russia, Moscow has pivoted its diamond trade towards alternative markets. Countries such as China, India, the UAE, Armenia, and Belarus have seen a marked increase in imports of Russian rough and cut stones in 2023.

This shift indicates Russia's strategic realignment of its diamond trade in response to Western sanctions and highlights the evolving dynamics of global trade relations amid geopolitical tensions.

India's challenge to the Western ban on Russian diamonds reflects its strategic interest in maintaining a vibrant diamond industry, crucial for its economy.

As negotiations continue and India seeks to advocate for its position on the international stage, the outcome will have significant implications for the global diamond market and the broader geopolitical landscape.

By: Michael Figueroa