Exporters of gems and jewelery have been assured of support from Russia’s Alrosa, which accounts for about 30% of the global diamond production.
Exporters of gems and jewelery have been assured of support from Russia’s Alrosa, which accounts for about 30% of the global diamond production.
India may consider alternative payment mechanisms for exporters if the Russia-Ukraine conflict continues for a prolonged period and major trade sectors such as gems and jewellery, face problems in international cash transfers, government sources said on Tuesday.
The idea came against the backdrop of the Russo-Ukraine War and sanctions being imposed by Western countries, including the Group of Seven (G-7) economies, that have imposed punitive sanctions against the Russian central bank.
The G-7 also decided to remove Russian banks from the SWIFT international banking system – aimed at isolating Russia from global trade.
“India is closely monitoring its foreign trade position in view of the situation in Ukraine and may consider alternative payment mechanisms if the adverse situation persists for a long period of time and in international cash transfers to key business sectors such as gems and jewellery. The problem has to be faced,” said a source.
Exporters of gems and jewelery have received assurances of support from Russia’s Alrosa, which accounts for about 30% of global diamond production, and sells around 10% of its rough-diamond production to India.
Diamonds account for about 50% of India’s gems and jewelery exports.
So far, the supply of rough diamonds from Russia has not been disrupted, but the industry is concerned about US sanctions on Russia and the country being banned from the SWIFT financial network, sources said, adding that massive payments were made And that the gems and jewelery business is doing ‘well’ in centers like Surat.
He said that a lot of business was contracted by the Indian industry before February 24 and as a result, payment related issues have not come to the fore, though banks are cautious.
Many manufacturers pay in Euros.
He said that though the trade continues without any major impact, the government is in constant touch with the importers and exporters and is ready to consider their concerns about the adverse consequences if it develops into a long-term crisis for international trade. Is.
Russia’s Alrosa on February 28 sent a letter to the GJEPC (Gems and Jewelery Export Promotion Council) stating that Alrosa is ready to address concerns related to day-to-day operations in the wake of US sanctions imposed on Alrosa.
The Russian company has told the Indian industry that it is able to operate normally without any delay due to its diversified banking partners and that its agreements with foreign partners are continuing as normal.
It is anticipated that there will be no short term impact on the Indian diamond industry. However, a long-term crisis could potentially have an impact as the industry depends on imports.
Alrosa sells 68% of its rough diamonds through trading centers (Belgium 40%, UAE 22% and Israel 6%), 77% through long-term contracts, 12% by tenders and 11% through the spot market. In.
According to Federation of Indian Export Organizations (FIEO), Rupee-Ruble trade is one of the alternative modes of payment between India and Russia.
FIEO Director General Ajay Sahai said, “We have suggested this to the government. “The decisions will have to be taken by our central bank. The challenge in this would be to fix the exchange rate for the currencies. But, our banks have experience in paying in local currencies as we have done with Iran.”
Sharad Kumar Saraf, Mumbai-based leading exporter and founder chairman of Technocraft Industries India, said India can explore the possibility of using BRICS bank for bilateral trade.
“We can have a public sector bank as a nodal bank which will monitor debit and credit,” Mr. Saraf said.