Compliance, Caution, and Concern: The Current Outlook of Indian Diamantaires

There is a willingness to comply with new government-mandated regulations, with an insistence that they should be practical and realistic.

Stephen Rego regostephen@gmail.com

Asian Star’s diamond manufacturing facility in India

The inside of Asian Star’s facility in India. Like other large Indian diamond manufacturers, Asian Star said it is prepared to comply with the G7’s ban on Russian diamonds but noted the tighter regulations could burden smaller players.

Mumbai—There are three new Cs that have been foremost in the minds of most Indian diamantaires over the past two months: compliance, caution, and concern.

While the importance of each “C” varies from company to company, together they reflect the three critical issues directly impacting the Indian diamond industry.

Currently, compliance with the new, more stringent rules governing exports of Russian diamonds of 1 carat and above to G7 countries that kicked in March 1 takes center stage.

But caution in navigating the unpredictable global market and concern over the “one import node” mechanism, also known as the “rough node,” for certification of all non-Russian diamonds proposed to be implemented by G7 countries later in the year are also widespread.

The industry is not taking the sanctions lightly, though goods in the 1-carat-plus sizes are estimated to account for only about 10 percent of the total volume manufactured in India, a figure that may rise to about 20 percent when the cutoff is reduced to half a carat later this year.

Most Russian goods manufactured in India are in smaller sizes (below 0.50 carats).

“We have been gearing up for these new rules,” Vipul Shah, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), said recently.

GJEPC Executive Director Sabyasachi Ray explained that the council has issued an advisory to its members stating that from March 1, they should coordinate closely with buyers to ensure that all export parcels for goods of over 1 carat are accompanied by an official self-declaration as per “each country/ importer/buyer’s requirement.”

He said the GJEPC has shared proposed formats for these declarations and set up a help desk should any member require assistance in handling compliance issues.

Leading companies across the spectrum confirm they are adhering strictly to the new rules.

Nilesh Kothari of Jewelex India, a top exporter, said though the major part of their business is in smaller diamonds, the company has been issuing self-declarations where applicable since 2022, backed by appropriate paper trails.

“We will continue to do so as long as these are required,” he said.

Rahil Shah of Asian Star, another large exporter, emphasized that the company also has always been transparent and compliant with legal requirements in buyer countries.

Asian Star does not export significant quantities of large diamonds, he also noted.

“Our aim is to add a layer of confidence to the purchaser,” he explained, by using self-declarations for individual stones, or in some cases “a parcel-to-parcel mechanism,” always supported by “a definite invoice trail from the point of purchase of rough.”

Devansh Shah, a partner at Venus Jewel, noted that the company already had implemented a transparent process.

“Through our online portal, buyers have access to detailed information regarding the selection of goods, particularly emphasizing G7 shipping eligibility. This transparency empowers buyers. Additionally, upon request, we provide necessary declarations, ensuring compliance with G7 standards where applicable.”

He added, “To navigate the heightened restrictions effectively, we have prioritized maintaining clear visibility across our supply chain.”

However, he also points out that the in the run-up to the March 1 changes, “the lack of clarity on various crucial details from G7 and U.S. authorities led to confusion in the trade community.”

Many diamantaires have said that they were notified of the rules very late and there is still no clear indication how they are going to be implemented in practice.