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Russia-Ukraine war takes the sheen off Gujarat’s diamond industry, Retail News, ET Retail

Russia-Ukraine war takes the sheen off Gujarat's diamond industryThe Russia-Ukraine war has had another fallout: India‘s diamond polishing hub in Surat, Gujarat has lost work. The ongoing conflict has impacted the supply of raw diamonds to Gujarat’s diamond polishing industry with some large entities curtailing work to just 3-4 days and smaller ones shutting shop.

Russian raw diamonds, usually small, make up 40% of diamond trade volume and about 30% in value, reported The Times of India. This forms part of the $18-billion diamond trade between India and Russia which now has taken a hit.

The roughs supplied before the US-sanctions were imposed are fast running out and the hurdles to set up an alternative to SWIFT payments has slowed down the supply. SWIFT is a payment system that enables banks worldwide to safely and instantly communicate about cross-border payments.

“Small and medium-sized stones worth close to $5 billion come from Russia. They are mostly used in wedding jewellery or assembled around a centerpiece or a solitaire. With the supply of raw materials affected deeply, most of the large factories in Surat have cut down on timings. Some are working for four days, some only three,” Ashok Gajera, managing director of Laxmi Diamonds, a significant polished diamond supplier to the United States and Europe, told The Times of India.

The shortage of raw diamonds comes at a time when the industry was geared for the Las Vegas diamond show. The wedding season in the United States is about to begin, and India accounts for nearly half of the polished diamonds used there.

“This is a difficult situation and factories have been forced to cut work hours. If it continues, they will be forced to lay people off. The government should intervene,” Vipul Shah, vice-chairman of India’s Gem and Jewelry Export Promotion Council, told TOI.

“Lunch breaks used to feel short as the bell would ring even as we were still washing our hands before returning to our work stations. Now, with the huge shortage in rough diamonds, days at work seem very long. There is nothing to do on certain days,” the report quoted Priyank Dave, a supervisor in a Surat diamond factory, as saying.

Diamond prices surged 18-20% when the war began, but they levelled in April. Prices have again started rising. If the shortage continues, both Gajera and Shah predict that prices will “skyrocket.”

(With inputs from Times of India)

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