India’s diamond industry is amid a severe crisis, marked by declining imports and exports, factory closures, and massive job losses. According to the Global Trade Research Initiative (GTRI), the sector’s downturn has worsened over the past three years due to global economic uncertainty, competition from lab-grown diamonds, and rising operational costs.
Ajay Srivastava, Founder of GTRI, highlighted the devastating impact on the industry, particularly in Gujarat, the heart of India’s diamond polishing sector. “Defaults, factory closures, and widespread job losses have taken a heavy toll on workers. Tragically, more than 60 people from Gujarat’s diamond sector have taken their lives due to the immense financial pressure,” he said. The situation calls for urgent intervention to prevent further damage.
Data from GTRI reveals a grim picture of India’s diamond trade. Imports of rough diamonds have plummeted by 24.5%, from $18.5 billion in 2021-22 to $14 billion in 2023-24, reflecting a sharp drop in global demand. After accounting for re-exported rough diamonds, net imports have seen an even steeper decline of 25.3%.
The situation is equally dire on the export front. Exports of cut and polished diamonds have fallen by 34.6%, from $24.4 billion in 2022 to $13.1 billion in 2024. Net exports dropped a staggering 45.3%, signalling a weak global market and a growing stockpile of unsold diamonds.
The rising inventory of unsold diamonds further compounds the industry’s woes. The percentage of unsold diamonds returned to India has surged from 35% to 45.6%. Additionally, the growing popularity of lab-grown diamonds, seen as more affordable and sustainable, poses a significant threat to the traditional diamond industry.
Global factors such as inflation, geopolitical tensions, and fluctuating diamond prices have also contributed to the decline in demand. The Russia-Ukraine conflict has disrupted the global diamond supply chain, with sanctions on Russia, a major diamond producer, creating further challenges for India’s diamond processing sector.
The diamond industry, which directly employs 1.3 million people, has seen widespread job losses, particularly in Surat, the world’s largest diamond polishing hub. Many polishing units have been forced to shut down, unable to cope with rising operational costs and the challenges of unsold inventories.
To revive the struggling sector, GTRI has proposed measures such as extending export credit terms, regulating lab-grown diamonds, and exempting foreign sellers from corporate taxes in India. Coordinated efforts are urgently needed to ensure the long-term viability of India’s diamond industry.
