Mumbai, July 5, 2024 — India’s cut and polished diamond exports are facing a significant downturn due to weak demand from China, a key market.
Trade Body Expresses Concern
A leading trade body in India has voiced its concern over the declining exports and has called on the government to provide support to stabilize the industry. India is the world’s largest center for cutting and polishing diamonds, responsible for polishing nine out of ten diamonds globally.
“We’re battling weak demand, particularly due to China’s slow recovery from COVID-19. As a result, demand continues to fall,” Vipul Shah, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), told Reuters.
Key Markets Impact
The US and China, the primary diamond-consuming markets, together account for approximately 65% of India’s diamond exports. China alone accounts for around a third of these exports, primarily through Hong Kong. However, the economic slowdown, changing consumer preferences, and fewer weddings have significantly squeezed diamond demand in China.
Export Decline
Shah reported that India’s cut and polished diamond exports fell nearly 15% in the June quarter compared to the previous year, following a 27.5% decline in the 2023/24 marketing year that ended on March 31.
Industry Appeals for Government Support
Last month, the industry requested the government to provide concessions in this year’s budget to help navigate the challenging market conditions. The GJEPC has urged the government to permit the sale of rough diamonds in Special Notified Zones (SNZs) and to allow globally recognized diamond trading houses like Bonas and I Hennig to operate from these zones. Unlike Belgium and Dubai, Indian bidders cannot purchase rough diamonds from SNZs due to the lack of a tax waiver.
Impact on Imports and Employment
Indian diamond units have curtailed rough diamond imports due to both weak demand for polished diamonds and pressure on margins caused by falling polished diamond prices. The gems and jewellery industry in India employs over 4.3 million people and accounts for more than 10% of the country’s goods exports.
As the industry faces continued challenges, the call for government support grows louder, aiming to sustain one of India’s most significant export sectors during these turbulent times.
