Mumbai – Indian diamantaires find themselves contending with a trio of challenges encapsulated by three Cs: compliance, caution, and concern. Over the past two months, these factors have dominated discussions and strategic planning within the Indian diamond industry.
At the forefront is the imperative of compliance with recent stringent regulations governing the export of Russian diamonds weighing 1 carat and above to G7 countries, effective since March 1. While the impact varies across companies, adherence to these regulations represents a significant operational focus.
Simultaneously, a climate of caution prevails as industry stakeholders navigate the unpredictable global market. Of equal concern is the proposed implementation of the “one import node” mechanism, colloquially termed the “rough node,” which mandates certification for all non-Russian diamonds, slated for later this year by G7 nations.
While larger diamonds subject to the recent regulations constitute only a fraction of India’s diamond production, estimated at about 10%, this figure is anticipated to double when the threshold reduces to half a carat. Notably, the majority of Russian goods processed in India are of smaller sizes, below 0.50 carats.
Vipul Shah, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), emphasized the industry’s preparedness for the new regulations. The GJEPC has issued advisories to its members, facilitating compliance through coordination with buyers and the provision of official self-declarations tailored to specific import requirements.
Leading exporters affirm their commitment to compliance, with companies like Jewelex India and Asian Star emphasizing transparency and adherence to legal frameworks. Nilesh Kothari of Jewelex India highlighted their proactive stance in issuing self-declarations since 2022, supported by meticulous documentation.
Rahil Shah of Asian Star echoed this sentiment, underlining the company’s dedication to ensuring confidence among buyers through transparent practices and comprehensive documentation trails.
Devansh Shah of Venus Jewel underscored the importance of transparency in navigating heightened restrictions, emphasizing clear visibility across the supply chain. However, he noted challenges stemming from a lack of clarity in regulatory communication, resulting in confusion within the trade community.
Concerns extend beyond compliance to the feasibility and implications of proposed mechanisms for tracking the origin of rough diamonds. Industry bodies like the GJEPC have voiced reservations, warning of potential harm to non-Russian stakeholders and urging reconsideration by G7 officials.
Despite uncertainties, a consensus emerges among Indian diamantaires regarding the practicality of tracking smaller diamonds. Manish Jiwani, representing MSME interests within the GJEPC, cautioned against the feasibility and cost implications of extending sanctions to diamonds below 0.50 carats.
As the industry navigates these challenges, uncertainties loom over future market dynamics, particularly concerning U.S. demand. With import-export requirements clouded by regulatory ambiguity post-September 1, stakeholders anticipate a cautious approach among U.S. retailers, impacting restocking patterns and market dynamics.
Amidst these challenges, the industry remains hopeful for a pragmatic and equitable resolution, emphasizing the importance of dialogue and collaboration in shaping future regulatory frameworks.
