Editor’s Note
This article discusses Alrosa’s strategic move to establish its first overseas diamond polishing facility in India, a significant development following recent high-level diplomatic engagements.
The Russian state-backed diamond producer Alrosa is taking a significant step into the Indian market, planning to establish its first overseas diamond polishing facility in Surat or Jaipur. The company is considering setting up this world-class plant in Surat or Jaipur, which are two of India’s major diamond processing hubs.
This strategic expansion in India follows Russian President Vladimir Putin’s recent visit to New Delhi. Alrosa, which supplies about one-third of the world’s mined diamonds, views India as a crucial partner, given its dominance in cutting and polishing.
Pavel Maryinchev, Alrosa’s CEO-Chairman, revealed that the company intends to initially invest $50 million from Russia’s trade surplus to build this state-of-the-art facility. This investment underscores Alrosa’s commitment to enhancing India’s position as a global manufacturing hub for diamonds.
Alrosa’s entry strategy is multi-faceted. In addition to the manufacturing plant, the company plans to launch co-branded luxury jewelry lines in collaboration with Indian jewelry houses. They also intend to develop traceable bridal and high-jewelry retail formats in major cities like Delhi and Mumbai.
To ensure transparency and efficiency, Alrosa will implement a blockchain-based supply chain platform for Indian business-to-business (B2B) diamond cutters. This technological integration aims to provide a clear and traceable journey for diamonds from mine to retail.
Maryinchev highlighted India’s strong economic performance as a key factor for this collaboration. He noted that India cuts and polishes nearly nine out of every ten diamonds globally. Furthermore, India is rapidly climbing in diamond jewelry consumption, currently ranking second after the United States, with a 15% growth recorded last year.
While optimistic about Southeast Asian markets, Alrosa acknowledges current market dynamics. Maryinchev declined to comment directly on the impact of US tariffs on Alrosa’s sales. The US has imposed significant tariffs, including a 50% tariff on Indian diamonds, making them more expensive for American retailers and consumers.
Maryinchev expressed confidence that businesses would adapt. He observed fluctuations in diamond purchases by Indian cutting and polishing firms, with an increase in August-September and a decline in October. He believes the high import duties will not have a lasting effect, and the industry will find ways to mitigate the impact.
The CEO also addressed the growing market for lab-grown diamonds (LGDs), noting their increasing price divergence compared to natural diamonds. However, he emphasized separate markets for natural and synthetic diamonds, suggesting that regulatory separation is crucial to encourage demand for natural stones.
Alrosa’s move could significantly boost India’s diamond processing capabilities and exports, potentially creating jobs and enhancing the value chain. It will also bring global luxury retail standards and advanced supply chain technology to the Indian market. The company’s investment is expected to further solidify India’s position as a leading global diamond hub. The competitive landscape for Indian jewelry retailers and manufacturers could intensify, while consumers may benefit from new luxury offerings and improved transparency. An inflow of foreign direct investment into a major manufacturing sector is generally positive for the economy.