India's diamond sector is experiencing a major downturn, marked by significant declines in imports and exports over the past three years, according to the Global Trade Research Initiative (GTRI). This crisis has led to defaults, factory closures, and considerable job losses, particularly affecting workers in Gujarat.
Export returns have increased, but the industry is struggling with a large inventory of unprocessed rough diamonds. This surplus is due to fewer orders and increased competition from lab-grown diamonds. Ajay Srivastava, the founder of GTRI, highlighted the severe impact on the sector: "This has triggered defaults, factory closures, and widespread job losses. Tragically, more than 60 people in Gujarat's diamond sector have committed suicide, reflecting the severe financial and emotional strain In ..
The think tank's data indicates a 24.5% drop in rough diamond imports, falling from USD 18.5 billion in 2021-22 to USD 14 billion in 2023-24. Net imports, after accounting for re-exported rough diamonds, declined by 25.3%, from USD 17.5 billion to USD 13.1 billion. Exports of cut and polished diamonds saw an even sharper decline of 34.6%, from USD 24.4 billion in FY 2022 to USD 13.1 billion in FY 2024.
GTRI reported that the share of unsold diamonds returned to India increased from 35% to 45.6% over this period, causing net exports of cut and polished diamonds to drop by 45.3%, from USD 15.9 billion to USD 8.7 billion. The difference between net rough diamond imports and net cut and polished diamond exports widened from USD 1.6 billion in FY 2022 to USD 4.4 billion in FY 2024, signaling a significant inventory buildup.
Several factors contribute to this crisis, including regulatory issues, internal inefficiencies, and weakening demand in key markets like the US, China, and Europe due to economic uncertainty, inflation, and geopolitical tensions. Srivastava noted, "Fluctuations in global diamond prices have caused uncertainty, with buyers hesitant to purchase rough diamonds in anticipation of further price drops."
Source Name : Economic Times