By Shivangi Acharya
NEW DELHI (Reuters) – India expects little disruption to its diamond industry from an incoming ban by G7 countries on Russian gems, a trade ministry official said on Friday, because the country mostly processes smaller Russian diamonds which will be less affected by the new restrictions.
India is home to 90% of the world’s diamond cutting and polishing industry, including for some Russian diamonds.
Last week, G7 nations announced a direct ban on Russian diamonds starting Jan. 1 followed by phased-in restrictions on indirect imports of Russian gems from around March 1.
Starting March 1, Russian diamonds sized a carat or above will face restrictions in G7 countries, while diamonds sized half a carat or more will be banned in September 2024, and a new system to trace origin will be introduced, Vipul Bansal, an official at India’s federal trade ministry, told reporters.
“The key point here is that most of the Russian diamonds we cut and polish essentially are less than 0.5 carats,” Bansal said, adding the impact of the ban will be “lesser than anticipated.”
Bansal said this rule of carat size will only apply to polished diamonds, and the size for rough diamonds under the new regulations could be larger.
Russia is the world’s biggest producer of rough diamonds by volume with a 30% share of the market. The G7 is introducing new trade restrictions to limit Moscow’s revenues that help fund its invasion of Ukraine.
Implementing a ban on Russian diamonds, however, depends heavily on India, which wants to minimise potential disruptions for small diamond firms employing millions of people.
(Reporting by Shivangi Acharya; Editing by Angus MacSwan and Susan Fenton)