The first half of 2024 has seen a notable rise in Russian rough diamond exports to India, despite global market challenges and ongoing sanctions.
According to data from the Indian Ministry of Commerce and Industry, Russian diamond exports to India increased by over 22%, reaching 4.1 million carats during the period. However, the rise in volume has been accompanied by a significant decline in value, reflecting the continued drop in diamond prices.
Impact of Sanctions on Russian Diamond Exports
The sharp increase in exports comes after the imposition of strict sanctions by the G7 and EU nations. Since January 2024, these sanctions have targeted Russian diamonds of 1.0 carat and above, regardless of where they are cut and polished. In September, this threshold was further reduced to diamonds of 0.50 carats and above. Consequently, Russian diamonds entering India can only be sold to non-G7 and non-EU markets, limiting the potential pool of buyers.
India continues to be a key player in the diamond industry, handling around 90% of global diamond cutting and polishing. This position helps Indian firms maintain trade with Russia, though sanctions have made transactions more complex.
Price Decline Undermines Revenue Growth
While the volume of Russian diamonds imported into India has increased, revenues have fallen significantly. In the first six months of 2024, revenue from these imports dropped by 15.22%, from $614 million to $520 million. This suggests a sharp decline in the average price per carat, driven by global oversupply and weak demand.
This trend is consistent with broader industry conditions, where diamond prices—both rough and polished—have been falling. Worldwide diamond production declined by about 8% in 2023, putting downward pressure on prices. The result is that while Indian companies are importing more diamonds from Russia, they are doing so at a much lower price per carat than in previous years.
Strategic Importance of the Indian Market
India’s diamond industry, due to its scale, remains an important outlet for Russian diamond exports despite Western sanctions. However, the path forward for Indian and Russian diamond trade remains uncertain. Future trends will depend on the global demand for diamonds, especially from key markets like the US and Europe.
Industry experts caution that the increase in Russian exports to India should not be seen as a sign of market recovery. The global diamond market remains in a period of stagnation, and any potential recovery will depend on an improvement in demand for diamond jewellery, particularly in key luxury markets.
