Diamond Buyers Asking for Too Much Origin Info, Indians Say
April 4, 2024 | Joshua Freedman
"Clients in the US and Europe are demanding source declarations for diamonds that are currently exempt from sanctions, causing chaos in the Indian trade, industry officials told Rapaport News.
Many dealers and jewelers in Group of Seven (G7) nations are refusing to buy any polished diamonds without origin confirmation, despite the new ban on Russian goods applying only to 1-carat and larger stones, the officials said.
The new rules, which went into effect on March 1, extended the US and European Union bans to polished diamonds manufactured in third countries from Russian-mined rough.
The confusion stems from the lack of an explicit statement excluding diamonds under 1 carat from these import bans, said senior figures at India’s Gem & Jewellery Export Promotion Council (GJEPC) and at the Bharat Diamond Bourse (BDB) in Mumbai. The US and the EU plan to expand the embargo to 0.50 carats from September 1.
The attitude likely also reflects expectations that the sanctions will expand to smaller sizes over time, a senior source in the US market said.
“Everybody’s asking for everything to be certified, and not only 1 carat and above, which is ridiculous,” BDB president Anoop Mehta said Monday. “I see that there will be an issue going forward. The G7 has to come up with a [clarification] that goods below 1 carat do not require any certification, at least till September.”
The process is not especially expensive or time-consuming, as most customers are only requiring a self-declaration and not documented proof, Mehta said. However, it is exacerbating confusion around the sanctions and prompting Indian exporters to ask their own suppliers for the same information, he added.
“[They say, ‘If the] client wants it, we need to certify it,’ so he in turn asks for it,” Mehta continued. “So, the whole industry is all up in a mess.”
Furthermore, European customers are generally unwilling to accept statements of non-Russian mixed origin, requiring confirmation of single origin, Mehta added.
There are also concerns that the origin claims lack proof and will come under scrutiny in the future, said Sabyasachi Ray, executive director of the GJEPC.
The Jewelers Vigilance Committee (JVC), which provides guidance to the US trade on legal matters, is working on a “written restatement of the actual parameters [and] requirements” for manufacturers to send to retailers, said JVC CEO and general counsel Tiffany Stevens.
The purpose of this would be to “reassure retailers and keep them from overreaching on asks,” Stevens added, noting that this was still in development.
The GJEPC has also tried to explain the requirements to the industry, but companies are doing what their clients ask of them, Ray noted.
“What I understand from our exporters [is that] most of the customers in the US and Europe are calling for this,” even in melee sizes, Ray added.
US sanctions currently entail self-certification of diamonds imports’ non-Russian status.
Until August 31, the EU is requiring importers into the bloc either to provide documentary evidence of origin or to send goods to Antwerp’s Diamond Office for issuance of a “G7 certificate.”
Both the US and the EU have a 1-carat threshold for rough and polished during that period. From September 1, as well as lowering the minimum size to 0.50 carats, the EU will mandate use of the G7 certification scheme.
The G7 sanctions have already disrupted India’s trade indirectly because of customs delays in Antwerp, which had eased by the end of March. Shipments were getting stuck for more than a week, with officials blocking goods clearly not covered by the sanctions, such as De Beers rough boxes and stones under 0.50 carats, a trader in the Belgian city told Rapaport News.
The GJEPC was one of several trade bodies that signed a letter in February cautioning against requiring anyone who wishes to sell polished diamonds in the G7 to send their rough to Antwerp first for inspection.
Further confusion has arisen from the existence of different rules in different jurisdictions as well as from uncertainty around “grandfathered” goods present in the US before March 1, Ray explained.
In addition, US banks are asking diamond buyers for more information than before March 1, creating delays in payments to Indian exporters, a Mumbai-based dealer said on condition of anonymity.
The GJEPC will hold a meeting of trade members in the first half of this month to hear feedback on the situation.
However, a major impact on trade flows is unlikely given the diamond market’s general weakness, said the BDB’s Mehta.
“The demand itself is slow,” Mehta said. “I would be surprised if in a couple of months there will be a supply-chain issue.”
Clarification, April 7, 2024: The article has been updated to clarify that the sanctions in question are on polished diamonds manufactured in a ... "
https://rapaport.com/news/diamond-buyer ... dians-say/
