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India Fears Effects of Russia Sanctions on Supply

Feb 28, 2022 8:07 AM   By Joshua Freedman
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India’s diamond industry has raised concerns about further supply shortages after Western sanctions on Russia threatened manufacturers’ ability to pay Alrosa for goods.

Global powers including the US, the European Union and the UK have announced plans to exclude select Russian banks from Swift, a communication system enabling transactions between financial institutions in different countries. That follows Russia’s invasion of Ukraine on Thursday.

“Right now, the biggest problem that Indian diamond companies are facing is the issue of payments, as Russia has been banned from the Swift financial network,” a spokesperson for India’s Gem & Jewellery Export Promotion Council (GJEPC) said Monday in a statement to Rapaport News. “Delayed payments will impact rough supplies by two to three weeks, resulting in scarcity of rough from Russian allocations.”

Russia’s Alrosa is the world’s largest rough producer by volume, providing a large proportion of supply to the manufacturing sector in Surat, India. The geopolitical situation has added to existing worries about a lack of rough and polished availability amid drops in global mining production and strong consumer demand.

“GJEPC’s advice is to consult bankers and proceed cautiously with their approval only if the bankers are confident that the transfer to Alrosa will go through,” the spokesperson added. “The last thing one wants is for moneys to get frozen in limbo due to the sanctions.”

Relationships between Indian companies and Alrosa will not be affected as India has remained “neutral,” the council noted.

Last week, the US also imposed sanctions on a number of Russian entities, including Alrosa and its CEO, Sergey S. Ivanov. Those measures ban American companies from entering into debt transactions longer than 14 days with Alrosa but do not prevent them from doing business with the miner.

See Rapaport’s resource page for more information about the sanctions.

Image: Alrosa’s Jubilee mine in Yakutia, Russia. (Alrosa)
Tags: Alrosa, Banks, EU, European Union, Gem & Jewellery Export Promotion Council, GJEPC, India, Joshua Freedman, mining, payments, Rough Diamonds, rough market, rough supply, Russia, sanctions, Sergey Ivanov, Sergey S. Ivanov, Surat, SWIFT, UK, Ukraine, US
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