Surat: Russia’s plan to build a diamond-cutting cluster and promote local manufacturing is unlikely to threaten Surat’s diamond industry, according to manufacturers and traders, who cite weak market conditions, high costs and India’s established processing ecosystem.Industry players said Russia has tried to develop local diamond manufacturing in the past, with limited success. They believe current market conditions, marked by shrinking margins and subdued demand, make large-scale investment in new cutting and polishing centres difficult. Surat’s diamond industry employs around eight lakh workers and remains the world’s largest hub for processing rough diamonds.President Vladimir Putin signed an executive order on Aug 6 directing the establishment of a diamond-cutting cluster spanning the Republic of Sakha (Yakutia), Russia’s main diamond-producing region and the Smolensk Region, home to Alrosa’s Kristall cutting plant. Russia is also preparing to introduce an 8% export duty and give preference to local manufacturers.The measures come as Russia seeks to revive its diamond trade after sanctions disrupted a sector that once supplied about 30% of the world’s rough diamonds.US and G7 sanctions on Russian diamonds have affected the trade since Russia’s war with Ukraine began. The US imposed sanctions on Russian diamonds in 2022. The development raised concerns for India because Surat polishes nine of every 10 rough diamonds globally and a substantial share of roughs traditionally came from Russia. The US accounts for 30% of India’s gem and jewellery exports.Since the sanctions were imposed, rough diamond imports from Russia to India have fallen sharply, dropping from $1,195 million in 2022-23 to $307 million in 2025-26.“In the past, diamond mining countries have tried manufacturing, like Botswana. Even Russia tried this but was not successful given the size of India’s manufacturing capacity. Now in current market conditions when margins have dropped, it is difficult to develop a cutting polishing centre anywhere in the world,” said a leading diamond manufacturer from the city, who is among the largest importers of Russian roughs.“Setting up cutting units and training people or shifting workers from India involves huge cost and no manufacturer will take that risk in the current time,” he added.The executive order also directs that, after meeting requirements under federal laws governing precious metals and stones, mining companies must first offer rough and partially polished natural diamonds to participants in the cluster before those stones enter the wider market.Diamond traders dealing in Russian rough had similar views.“The market is already slow and no one can afford investing in manufacturing or shifting manpower to Russia. India’s economical manufacturing polishing capacity makes it difficult for any country to match it,” said Bharat Narola, a Dubai-based rough trader.“Russia’s aim of setting up a cutting and polishing cluster will not emerge as a challenge. For cutting and polishing, leading Indian companies will not go there as there are global sanctions and there are cost factors when the market is slow,” said Dinesh Navadiya, chairperson of the Indian Diamond Institute.
