The diamond industry is implementing a temporary shutdown to manage excess inventory as it contends with reduced demand from major markets such as China and the United States.
Challenges in Key Markets
The diamond market is struggling due to shifts in consumer behavior in China and the US, which are two of the industry’s largest markets. Since the COVID-19 pandemic, Chinese consumers have increasingly preferred gold over diamonds, leading to a significant drop in diamond sales. Meanwhile, the US market has seen a decline in demand for natural diamonds, worsening the industry’s difficulties.
Impact on the Industry
The halt in operations in Surat is part of a larger strategy to control inventory and stabilize the market. However, the situation is particularly severe for smaller cutting and polishing units in Gujarat. About 500 of these smaller units have already closed, resulting in the loss of 70,000 to 75,000 jobs, according to labor union sources. These units mainly supplied products to larger exporters in Surat and Mumbai, who then shipped them to global markets.
The temporary closure of Surat’s factories highlights the ongoing struggles of the Indian diamond industry. As global demand remains uncertain, the industry faces the challenge of balancing inventory management with the need to sustain employment and support thousands of workers.
Looking Ahead
The 10-day shutdown in Surat aims to better align supply with current market demand. However, it also emphasizes the need for the industry to adapt to evolving consumer preferences and global economic conditions. With key markets like China and the US showing no immediate signs of recovery, the Indian diamond industry may continue to face challenges. Moving forward, the industry may need to explore new markets and diversify its product offerings to mitigate these disruptions.
The resilience and adaptability of India’s diamond sector will be crucial in shaping its future.
