Exporters said many dealers and jewellers in G7 nations have declined to purchase polished diamonds without origin confirmation despite the new ban on Russian goods applying only to 1 carat and larger stones.

“Even though the origin confirmation is required for 1 carat and above of cut and polished diamonds, dealers and jewellers are asking the same for smaller diamonds too. This is creating a lot of confusion in the market and impacting cut and polished diamond exports from India,” said Vipul Shah, chairman of Gem & Jewellery Export Promotion Council (GJEPC).

In addition, geopolitical tensions between Iran and Israel are expected to hit exports of cut and polished diamonds to the Middle East, Shah said. “The region accounts for 15% of our diamond exports,” he added.

Shah said the diamond industry has reached out to the government to resolve the impasse. “We have requested the commerce ministry to look into the matter with urgency. The government has taken up the matter at the diplomatic level. Exports in April will be impacted heavily due to this confusion and the rising geo-political tension,” he said.

As per the new rule effective March 1, US and European Union have banned entry of cut and polished diamonds of 1 carat that are cut and polished in third countries but originate from Russian mines. Ban on smaller diamonds (below 1 carat) will become effective from September 1.Incidentally, India cuts and polishes 9 out of 10 rough diamonds available worldwide. Such diamonds are imported from Russian and South African mines.The current quandary in the global diamond trade comes in the backdrop of a nearly 28% decline in exports of cut and polished diamonds to $14.8 billion during the April to February period of FY24 from $20.44 billion a year earlier. Imports of rough diamonds have also fallen by 18% to $15.71 billion in the same period.

“All these confusions are slowing down exports. Exporters are trying to deal with their overseas clients one-on-one to resolve the issue,” said Anoop Mehta, president of Mumbai-based Bharat Diamond Bourse.

A senior diamond exporter, who did not want to be named, said US banks are asking diamond buyers for more information, causing delays in payments to Indian exporters.