India’s diamond exports have encountered substantial obstacles recently, primarily due to weakened demand in key markets such as China, which has shown slow recovery post-Covid-19. Vipul Shah, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), noted that despite India’s dominant position in global diamond polishing — handling nine out of every ten polished diamonds worldwide — the industry has not been immune to these pressures.
Shah explained to Reuters that the current situation is marked by sluggish demand, exacerbated by China’s delayed economic recovery. China traditionally accounts for about a third of India’s exports of cut and polished diamonds, largely facilitated through Hong Kong. Factors like economic slowdown, changing consumer preferences favoring gold jewellery over diamonds, and reduced wedding activities have further dampened diamond demand in China.
The consequences are evident: India’s exports of cut and polished diamonds dropped by nearly 15% in the June quarter compared to the previous year, following a troubling 27.5% decline in the fiscal year 2023/24 ending March 31. Shah stressed the urgent need for government intervention to stabilize the industry amidst these challenging conditions.
Industry leaders recently urged the Indian government to include specific concessions in the upcoming budget to support the sector during its current turbulence. Shah highlighted requests from the GJEPC, including allowing the sale of rough diamonds in Special Notified Zones (SNZs) and granting operational licenses to globally renowned diamond trading firms like Bonas and I Hennig within SNZs. Unlike counterparts in Belgium and Dubai, Indian firms face tax barriers hindering them from procuring rough diamonds from SNZs.
Shah also pointed out that Indian diamond units have reduced imports of rough diamonds due to subdued demand for polished diamonds and shrinking profit margins amid declining polished diamond prices. India’s gems and jewellery industry, a significant employer with over 4.3 million jobs, contributes more than 10% to the country’s goods exports, underscoring its critical economic role.
As the industry tackles these challenges, Shah emphasized that concerted government support could play a crucial role in protecting its global leadership and sustaining its substantial contribution to India’s export economy.
