Gem and jewellery exporters look for alternative payment methods to continue business with Russia

By

Isabelle Crossley

Published
Mar 10, 2022

Gem and jewellery businesses in India are exploring alternative payment mechanisms for exporters as the Russia-Ukraine conflict continues and international sanctions against Russia mount up.

​“India is closely monitoring its foreign trade situation in the wake of the Ukraine situation and may consider alternative payment mechanisms if the adverse situation continues for a long time and key trade sectors such as gems and jewellery face a problem in international cash transfer,” an anonymous government source told The Hindu. 
 
Diamonds make up around 50% of India’s total gem and jewellery exports thus any disruption to the diamond market will have significant consequences for the entire industry. Partially Russian state-owned diamond mining business Alrosa has assured businesses it will continue to supply rough diamonds but new issues with payments could disrupt the flow of diamonds to polishing hub Surat. 

In a move designed to isolate Russia from international trade, the G-7 (Group of Seven) has also decided to remove Russian banks from the SWIFT international banking system. This means that many Indian rough diamond importers working with Alrosa will have to find alternative methods of payment. 
 
To date, diamond businesses in Surat have reported business as usual and noted that a lot of business was conducted before February 24 when the war broke out. This suggests that, should the war conclude soon, the Indian diamond industry could emerge unscathed. The real issue for Indian industry is if the conflict and sanctions drag on. 
 
An alternative payment option posited by the Federation of Indian Export Organisations is setting up a rupee-rouble trade and using BRICS' bank to route the money.

“We have suggested this to the government,” said FIEO director-General Ajay Sahai, The Hindu reported. “Decisions will have to be taken by our central bank. The challenge in this would be fixing exchange rates for the currencies. But, our banks have experience for doing payments in local currencies because we have done that with Iran.”