New Delhi has told Washington that it would be forced to take retaliatory measures against American imports if the Biden administration forced Indian manufacturers to route the diamonds through Antwerp in order to comply with the G7 sanctions.
“I told the Deputy Secretary of State (Richard Verma) and the US Ambassador (Eric Garcetti) that sending our diamonds to Antwerp would drive up costs for our manufacturers. They would also get to know our trade secrets,” Commerce Minister Piyush Goyal told the Dahisar Diamond Industry on Thursday.
Goyal was recounting a conversation he had with the American diplomats this week.
He emphasised that it was due to years of hard work that the Indian diamond industry had been able to outcopmete Antwerp. The minister noted that around 90-95% of the world's rough diamonds are polished in the Indian cities of Mumbai, Surat, Kolkata or in Tamil Nadu.
“If you force us, we will have to take retaliatory steps. For instance, we may have to ask you to route your imports to Jammu and Kashmir for testing, so that they end up becoming so expensive that they won't be able to compete in the market,” Goyal told the US diplomats.
Furthermore, the Indian minister told the US delegates that India wasn't a "weak country" anymore.
"This is Modi’s India. We will hurt your business interests if our interests are hurt,” Goyal stated.
The Indian minister further revealed that New Delhi was open to get its diamonds (weighing over 0.5 carat) tested, stressing that the compliance procedure should be conducted at centres in India rather than in European Union (EU).
"Our fight is still on and we hope we will be successful," the commerce minister stated.
Goyal highlighted that India's stance on the issue of G7 Russian Diamond ban had been consistent right from the start, adding that he had conveyed New Delhi's sensitivities on the matter to the European Union (EU) counterparts as well.
"I told the same thing to the European Union, following which they decided to give a six-month extension," he said.
Significantly, Indian industry has said that the G7 sanctions against Russian diamonds polished in third countries, which kicked in March this year, haven't had any noticeable impact Russia-India diamond trade till date.
During his interaction with the Dahisar industry, Goyal also expressed concern over the declining Indian polished diamond exports in recent weeks.
He noted that weekly exports in the third week of August had reduced by nearly $417 million.
"The two conflicts (Ukraine and Gaza) and the recession in developed countries are the main factors. The EU and the US are buying less. The developed countries are facing economic stress. The discretionary spending in these countries have taken a hit," Goyal explained.
He called upon the Indian industry to focus on exporting more "intricately-designed" gems and jewellery in order to "recapture" the market share.