Surat's diamond industry unaffected by Ukraine conflict but dependant on Alrosa

By

Isabelle Crossley

Published
Mar 3, 2022

Diamond polishers in Surat have managed to remain shielded from the financial effects of the conflict in Ukraine, but this buoyancy is tied to the fate of Russian mining company Alrosa, which is partially state run.  

Russian rough diamond mining company Alrosa is 33% owned by the Russian Federation, according to its website. To date, the business is still able to trade and has not faced any specific sanctions. This has enabled Surat’s diamond polishers, who work with high volumes of diamonds from the business, to carry on working as usual. However, if countries such as the U.S. turns its sanctions on Alrosa, Surat could face a shortage of diamonds, the Press Trust of India reported. 
 
“A few days before the war broke out, around 45 Indian buyers were in Russia for the purchase of rough diamonds,” said the Gem and Jewellery Export Promotion Council’s Gujarat chapter’s chairman Dinesh Navadiya, the Press Trust of India reported. “Russia's Alrosa wrote to the chairman of the Surat Diamond Bourse that so far none of the American or European banks has placed any ban on transactions with it. But, I believe that if there is a ban on Alrosa on the transactions, the Russian rough diamonds, which are majorly polished in units in Gujarat's Saurashtra, will be in short supply.”

Around 30% of diamonds imported into India come from Russia and Surat is where close to 90% of India’s diamond exports are sent from. If the supply from Russia via Alrosa is affected, India may look to Botswana, which has recently announced it will increase its rough diamond production. 
 
As well as securing the supply of rough diamonds into India, businesses are monitoring demand in international markets. If demand for diamonds goes down in markets such as the U.S. and UAE due to the conflict, Surat will face another host of issues.