Mumbai: With the threat of US economic sanctions on Russia hanging like a Damocles sword, India’s gem and jewellery industry is gearing to establish direct contacts with Russia, to source rough diamonds, reports Business Line.

Supply of roughs from Russia to Dubai and Belgium could be severely impacted if the US imposes economic sanctions on Russia, say exporters.

Currently, the industry buys roughs, produced mostly in Russia, from Dubai and Belgium. Last year, Alrosa produced 36.9 million carats of rough. India imported 163.11 million carats of roughs worth $16.34 billion, and exported 36.46 million carats of polished diamonds worth $20.23 billion in 2013.

However, direct imports of rough diamonds from Russia to India are modest at about $767 million. India’s exports of gems and jewellery during the calendar year 2013 stood at $36.04 billion.

Alrosa accounts for close to 25 per cent of the world rough diamond output. An estimated 14 out of 15 polished diamonds studded in jewellery globally, are cut and polished in India.

The gem and jewellery industry feels that direct supplies of rough diamonds could boost trade between both countries to $5 billion.

Vipul Shah, Chairman, Gem and Jewellery Export Promotion Council, said that apart from the fear of sanctions, it was in India’s interest to source diamonds directly from Russia.

In fact, he added, Russia is also exploring the possibility of selling roughs directly to China and Dubai, and has signed agreements to explore the possibility. Procedural matters are all that is standing between the two countries, which would sharply increase trade in polished diamonds between the two countries, he said. The gem and jewellery industry has urged the Government to set up notified zones to facilitate global miners such as De Beers, Rio Tinto, Alrosa and others to bring in roughs for auction in India.