And you thought diamonds are forever!
India’s diamond industry is badly hit with the continuing slump in demand for cut and polished diamonds in the West and China, slowing down exports of the star precious stone for several months now.
The falling demand has led to massive job losses in diamond processing units, pushing out about 20,000 workers out of job in Surat – the nerve centre of the industry in Prime Minister Narendra Modi’s home state of Gujarat.
The UAE seems to be the only saving grace for India’s diamond exports, with demand continuing to be somewhat intact.
The UAE’s diamond trade was estimated at around $19.8 billion in the first half of 2022, a jump of 24.7 percent year-on-year.
Dubai’s diamond industry has been growing by leveraging its proximity to Africa and Russia, where many diamonds are mined, and India, where 90 percent of the world’s diamonds are polished.
As per ITC (international trade centre) trade figures, India contributes 19 percent of the total diamond exports in the world.
According to data from the Gems and Jewellery Export Promotion Council (GJEPC), overall gross exports of cut and polished diamonds in the April to November period of FY23 declined by 5.43 percent from the year-ago period.
Hit by the multi-year high inflation across key markets and slowing global economy, both exports and imports of gems and jewellery recorded double-digit decline in October.
Polished prices continued to decline in most categories, with the RapNet Diamond Index for 1-carat diamonds falling by 1.5 percent in November this year, and 10.7 percent for the full year.
Surat is home to 4,000-odd diamond cutting and polishing units, employing 800,000 workers.
But work has been drying up of late, according to industry experts.
“Recession fears force most of the units to work only at 60 to 70 percent of its capacity,” Ajay Kedia, managing director of Kedia Commtrade and Research, told Arabian Business.
“Slump in demand for cut and polished diamonds in the West and China is the major reason for the export decline,” Kedia said.
Industry officials said both countries are facing recession fears, adversely impacting demand, forcing many units in Surat to resort to firing of workers or even temporarily suspend operations.
Vipul Shah, chairman of GJEPC, said the slowdown in Europe, interest rate hike in the US and the zero Covid policy in China are challenges for the export sector.
The US is the biggest market for cut and polished diamonds, with China a close second.
US jewellery sales reportedly fell 5.4 percent year on year in November-December.
The UAE diamond market, on the other hand, has been seeing robust growth, with the polished diamond trade in the Gulf state posting a jump of 52.5 percent during January-June period of this year.
The UAE is also the largest export destination for Indian gold jewellery, accounting for over 75 percent of the South Asian country’s jewellery exports.
India’s overall exports of gems and jewellery in November were $2.43 billion, up 2.05 percent from the same year-ago period.
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