Sanctions imposed by the United States and European nations on Russia in the wake of its aggression on Ukraine is likely to have a direct impact on the Indian diamond industry at a time when it is on the recovery mode after the pandemic and is aiming at $24 billion revenue in FY'22.

Russia's biggest diamond miner Alrosa supplies about 30 per cent of the rough diamonds globally and is a critical source for India.

India imports, cuts and polishes 80-90 per cent of the world's rough diamonds.

“There is no major impact as of now though there are problems in fund transfer with some banks. We are keeping our fingers crossed and monitoring the situation as Alrosa is a critical source,” Gems and Jewellery Export Promotion Council (GJEPC) ED Sabyasachi Roy told PTI.

He said orders for the next two months were placed before the war broke out and sanctions were imposed. "As of now we know Alrosa as a company is not under sanction".

Rating agency Crisil in a note said sanctions will have a bearing on growth of the diamond industry.

“The sanctions have severed Russia's central bank and two major banks from the SWIFT system. While they do not prohibit business with Alrosa, trade settlement has become difficult, which could lead to supply disruptions,” Crisil said.

The Indian diamond industry, which is almost entirely export-oriented, is likely to clock revenues of USD 24 billion this fiscal, bouncing back to pre-pandemic levels.

It was expected to log a compound annual growth rate of 5-7 per cent over the medium term on the back of steady demand and hardening prices before the Russia-Ukraine war began, the note added.

“If the trade disruption is protracted, next quarter's sales will be down by 25-30 per cent shaving off about USD 2-2.5 billion,” Crisil Ratings director Rahul Guha said.