An estimated 250,000 members of India’s diamond cutting and polishing industry have been placed on unpaid leave for two weeks.
The work moratorium was the result of a major supply disruption in Surat, the Indian centre of the diamond trade.
The ongoing economic sanctions against Russian mining company Alrosa, installed by the US, EU and UK, has led to a significant shortage of rough diamond product in India.
The massive reduction in workload impacted more than one million people who work in India’s diamond processing industry.
According to the Gem & Jewellery Export Promotion Council (GJEPC), India’s rough diamond imports decreased by 23 per cent in April compared to figures from the previous year. Sanctions imposed on Alrosa are believed to have cut around 30 per cent of the global supply of diamonds.
Diamond Workers Union president Ramesh Zilariya, told Economic Times, “The units have been reducing working hours, from twelve to eight, and had given two days off to workers every week”, noting the furlough started on 16 May.
“During this period, the workers will not get any wages. We fear that subsequently this will result in job losses,” he said, pointing out that diamond processing companies are struggling with cash flow due to the shortage of diamonds for processing and export.
Vipul Shah, vice chairman of GJEPC, said “India’s diamond industry is 100 per cent 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.”
The processing industry in Surat is responsible for more than 90 per cent of the global supply of cut and polished diamonds.
Alrosa is responsible for approximately 40 per cent of the rough product which is processed in Surat. Alrosa is the world’s largest diamond mining company, and accounts for around 30 per cent of diamonds extracted worldwide each year.
The economic sanctions placed on Alrosa by the European and US powers are a punitive response to Russia’s invasion of Ukraine in late February.