G7 sets conditions for India over Russian diamonds

The G7 has restricted Russian diamonds of one carat and above processed by Indian cutters from entering its market, according to media reports.

The high-level G7 delegation that visited India on September 27-29 has reportedly informed the industry about the decision. It also made it clear that it had no objections to traders buying rough diamonds from Russia, polishing them, and selling them to any other market.

Anoop Mehta, the president of Bharat Diamond Bourse (BDB), said that Indian traders of Russian diamonds would now have to adhere to a system of warranties to ensure traceability. “For this, a number of protocols laid out by different countries and agencies are being looked into,” he told the Economic Times. “There is the Belgian protocol, the Indian protocol, and the World Diamond Council protocol. G7 will have to identify the right protocol for the traceability of diamonds. There will be another two rounds of talks with G7 before it is finalized.”

The G7 countries – which consist of Canada, France, Germany, Japan, Italy, the United Kingdom, and the United States – have been debating sanctions on Russian diamonds for more than a year. The group accounts for 70% of the global consumer market, but it has been pushing to stop Russian diamonds from entering its market in order to tighten the squeeze on Moscow’s revenues. The G7 has recently announced its intention to place an embargo on direct and indirect imports of Russian diamonds, which reportedly сould include an introduction of a diamond tracking system similar to SWIFT.

Experts, however, say the implementation of those plans will depend heavily on top diamond trading hub India. The country is the world’s largest processor of rough diamonds, responsible for cutting and polishing over 90% of the world’s gems. According to experts, most diamonds are initially exported as rough gems and tracking their origins could be a very difficult task, taking into account the fact that they can change hands 20 to 30 times before reaching the market.

Traders told the Economic Times that a stone from Russia traded in Belgium would find its way to India’s Surat – a major hub for diamond cutting and polishing – and then likely wind up in the US before landing in China.