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After Russian oil, India raises sanctions over Russian diamonds with Europe

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Faced with mounting losses and consignment delays as a result of new European Union-G7 sanctions, Indian diamond exporters are calling for a separate screening course of to be arrange in India, in order that the newly mandated procedures for exports to Western nations could be processed easily.

The concern, which may show as protracted as discussions over sanctions on Russian oil have been, was raised with a delegation from Belgium, one of many most important sources of India’s diamond imports, throughout the go to of the Belgian Foreign Secretary, or President of the MFA Board, Theodora Gentzis (April 9-10), who met with External Affairs Minister S. Jaishankar on Tuesday, held talks on the Joint Economic Council with Commerce Secretary Sunil Barthwal, and held the second India-Belgian Foreign Office Consultations (FoC) co-chaired by the MEA Secretary (West) Pavan Kapoor in Delhi on Wednesday.  

“The G7 diamond file was discussed with our Indian interlocutors. Our cooperation around diamonds is an important theme in our economic relations, about which we continue to discuss regularly,” the Belgium Ministry of Foreign Affairs spokesperson stated in response to queries from The Hindu.

While the official readout of the assembly launched by the MEA on Wednesday didn’t particularly point out the issues being confronted over diamond processing, the place India holds 95% of the market, sources instructed The Hindu “Indian exporters’ concerns were raised during the visit”.

“The discussions encompassed key areas of bilateral cooperation including trade and economic cooperation, semiconductors, cyber and digital, Science and Tech, UNSC reforms and multilateral cooperation and institutional dialogue mechanisms,” the MEA stated, including that the dialogue had “extended to global and regional affairs” together with an change on “key global challenges”.

Chief amongst these issues are the procedures put into place by EU-G7 of their twelfth spherical of sanctions towards Russia for the struggle in Ukraine, that went into impact starting December 2023, with a four-phase plan. While the primary was a ban on importing Russian diamonds into Europe and the U.S., and didn’t have an effect on India, the second section that went into impact in March 2024 has prolonged the ban to Russian diamonds which are polished in a 3rd nation as properly. 

“These proposed sanctions are part of an internationally coordinated G7 diamond ban, aiming to deprive Russia of this important revenue stream estimated at 4 billion Euros per year,” the notification of the twelfth spherical of sanctions launched in December 2023 had stated.

India’s official coverage is that it doesn’t recognise unilateral, non-United Nations sanctions. While Indian exporters are in a position to separate Russian and non-Russian diamonds for the 2 markets  (western and non-western), the western grouping’s choice that every one tough diamonds should be verified in Antwerp itself by a “rough node” established there’s slowing down the method by as a lot as three weeks, officers on the Gems and Jewellery Export Promotion Council stated.

“This is about the livelihood of one million Indians who are involved in the diamond polishing industry, many of whom are poor,” one official, who requested to not be named, defined. 

According to the officers, the EU-G7 sanctions don’t simply delay provides, they’ve raised the price of tough diamonds by chopping out Russian gems, at the same time as demand for the business has been lagging over the previous two years because of the international financial downturn. In addition, making the Antwerp “rough” node the one place for screening diamonds for “traceability” and “certification” signifies that Indian exporters are shedding privileged details about pricing, income and different facets of economic safety, they added.

According to the EU-G7 sanctions, as of September 1, 2024, the ban may even be expanded to incorporate lab-grown diamonds, jewelry, and watches containing diamonds, indicating smaller diamonds may even come underneath the purview of sanctions, additional constraining India’s choices. 

As a outcome, the GJEPC and different business our bodies have been discussing the potential for constructing a second “rough node” level in India, given its management of the processing and sharpening market. “Otherwise, the entire industry in India could face a collapse,” one of many council officers instructed The Hindu. India exports about 65% of the polished diamonds it processes to western nations, whereas the remaining is both offered internally, or goes to China, the Gulf and different locations. 

The downside of Indian diamond exporters has been taken up earlier than with little impact on the EU-G7 mix that features most European nations, Canada, Japan and the U.S. In 2023, a delegation of the EU and U.S. Treasury Department officers had even visited Mumbai and Surat to take inventory of the influence of the selections, and had been handed petitions from the diamond employees’ unions as properly. Neither the MEA nor the Belgian MFA responded to particular questions on whether or not a attainable resolution, together with that of the “rough node” location in India, was mentioned or thought-about favourably throughout the talks.

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