Russia-Ukraine war spells doom for Surat’s diamond industry

Darshan DesaiUpdated: Thursday, February 24, 2022, 09:34 PM IST
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Russia-Ukraine war spells doom for Surat’s diamond industry | Pixabay

Surat: As Russia defies global outrage to launch an assault on Ukraine, the world’s largest diamond cutting and polishing hub, Surat, has almost suspended operations fearing supply disruptions and anticipating hikes in rough diamond prices.

Surat cuts and polishes 80% of diamonds produced and exported from India, while the world’s largest diamond mining firm, Alrosa, is in Russia. So the Russia-Ukraine war promises to disrupt supplies of rare gems to Surat as well as India.

Not only this, a dozen leading diamond firms controlled by Gujaratis are located in Russia. Industry captains say the crisis would adversely affect supplies from these companies across the world as well.

The diamond industry has already been facing a tough time for over a year. Right from June last year, the input costs have significantly increased as against the yield from the polished gems. While the rough diamond prices have been increasing by 55% to 60%, the corresponding rise in polished diamond prices have risen only between 15% and 30%.

A Surat-based diamantaire, requesting anonymity, expressed apprehensions that the interruption in the supplies may push the prices of gold and diamonds even further if the Russia-Ukraine conflict escalates. He didn’t wish to identify himself lest he sounded alarmist over gold prices.

However, Nilesh Bodki, who runs a diamond firm in Surat, said the war would have a huge impact if it continued for a longer time.

Manufacturing activity in the industry has already come to a halt over the last two days. Rising prices of rough diamonds has led to a fall in procurement costs, which in turn has resulted in a shortage of polished diamonds.”

So, while it has already turned into a veritable order-based industry because of high gold and rough diamond prices, the Russia-Ukraine war will further queer the pitch for the industry, say diamantaires.

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