The Middle East conflict has caused widespread flight cancellations and airspace closures, disrupting India’s exports of gems and jewelry and imports of rough diamonds from the United Arab Emirates.
Dubai, a global hub for polished and rough diamonds and bullion, has grounded a number of cargo and passenger flights, impacting trade flows and shipments of both exports and essential raw materials, industry sources said.
“Imports and exports from the Middle East have stopped and there is no logistics to transport goods,” Vipul Shah, managing director of Asian Star, a major diamond exporter, told Reuters.
The Middle East accounts for nearly a quarter of India’s annual gem and jewelery exports of around $30 billion, and the United Arab Emirates accounts for more than two-thirds of the country’s rough diamond imports.
India is the world’s largest cutting and polishing center, processing 9 out of 10 diamonds processed worldwide.
Shonak Parikh, vice-chairman of the Gems and Jewelery Export Promotion Council, said the country’s gems and jewelery exports will decline in March as Dubai is not only a major market for gems and jewellery, but also an important intermediary between diamond producing countries and major consumer markets.
“If (the conflict) drags on, demand could suffer,” Parikh said.
India is dependent on demand from the Middle East after its biggest buyer, the United States, imposed heavy tariffs on Indian goods last year and cut purchases.
Colin Shah, managing director of Kama Jewelery, said international buyers are being cautious about placing orders amid fluctuations in the rupee-US dollar exchange rate and logistical constraints.
The Indian rupee fell to an all-time low of 92.3025 to the US dollar on Wednesday.
A Mumbai-based diamond exporter said both buyers and sellers have agreed to delay shipments because they know trade is disrupted by the war.
(Reporting by Rajendra Jadhav; Editing by Jane Merriman)
