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    Ukraine impact: About 250,000 workers in Surat's diamond units sent on leave, job losses loom

    Synopsis

    The US Treasury had slapped sanctions on Alrosa on April 8, potentially cutting off about 30% of the world's supply of rough diamonds.

    GJEPC proposes park for lab-grown diamonds
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    About 250,000 workers employed at Surat's diamond polishing and cutting units have been asked to go on leave for 15 days from May 16, as the supplies of rough stones from the biggest diamond miner, Alrosa, which is partially owned by the Russian government have been frozen amid the Russia-Ukraine conflict.

    The US Treasury had slapped sanctions on Alrosa on April 8, potentially cutting off about 30% of the world's supply of rough diamonds. The sanctions barred India's diamond exporters from importing rough diamonds from Alrosa. Exporters cannot take any risk as the US is the major buyer of Indian cut and polished diamonds.

    "The units have been reducing working hours from 12 to eight and had given two days off to workers every week. They thought that the supply side will improve if the government intervenes. But with the US expanding sanctions, they have now asked the workers to go on leave for 15 days, beginning May 16," Ramesh Zilariya, president, Diamond Workers Union, Gujarat, told ET. "During this period, the workers will not get any wages. We fear that subsequently this will result in job losses."

    The diamond units in Surat employ around a million people.

    Vipul Shah, vice-chairman, Gem and Jewellery Export Promotion Council (GJEPC), said: "India's diamond industry is 100% import-dependent and any shortage of roughs has a severe impact on manufacturing activity and employment in the sector. This will also have a huge impact on total gem and jewellery exports."

    Gujarat Govt Help Sought
    More than 30% of rough diamonds imported from Alrosa directly come to Surat for cutting and polishing. Besides, Alrosa exports rough diamonds to other countries worldwide which finally come to Surat for polishing through different routes.

    Diamond Trading Corporation at Antwerp also procures diamonds from mines worldwide and sells rough diamonds to their Indian sight holders. "Due to supply constraint many factory owners have reduced their production," said Dinesh Navadiya, region chairman, GJEPC, Gujarat.

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    The fresh crisis comes after the industry recovered from the Covid-19 pandemic-induced slowdown and gems and jewellery exports rebounded in 2021-22 to touch $39.15 billion, up nearly 55% year-on-year.

    The Diamond Workers Union Gujarat's Surat unit had on May 4 sent a memorandum to Gujarat chief minister Bhupendra Patel seeking financial aid for the diamond workers. The memorandum said there were more than two million workers employed in the diamond factories in Surat, Navsari, Ahmedabad, Bhavnagar, Botad and Bhavnagar.



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