India may consider alternative pay system for exporters if Russia-Ukraine war continues for long

Exporters of gem and jewellery have received assurances of support from Russia's Alrosa, which accounts for about 30% of global diamond output

India may consider alternative payment mechanisms for exporters if the Russia-Ukraine conflict continues for a long time and key trade sectors such as gems and jewellery face a problem in international cash transfer, government sources said on Tuesday.

This consideration came against the backdrop of the Russia-Ukraine war and sanctions being imposed by western countries, including the Group of Seven (G-7) economies, which have imposed punitive sanctions against the Russian central bank.

The G-7 has also decided to remove Russian banks from the SWIFT international banking system — which is intended to isolate Russia from global trade.

"India is closely monitoring its foreign trade situation in the wake of the Ukraine situation and may consider alternative payment mechanisms if the adverse situation continues for a long time and key trade sectors such as gems and jewellery face a problem in international cash transfer," one of the sources said.

Exporters of gems and jewellery have received assurances of support from Russia's Alrosa, which accounts for about 30% of global diamond output, and sells about 10% of its rough-diamond output to India.

Diamonds account for about 50% of India's gems and jewellery exports.

So far, the supply of rough diamonds from Russia has not been interrupted but the industry is concerned about U.S. sanctions on Russia and the country being banned from the SWIFT financial network, sources said, adding that bulk of the payments had been done and that the gem and jewellery trade in hubs such as Surat is ‘doing well’.