India’s diamond polishing revenues are projected to reach their lowest point in ten years, according to a recent warning from Crisil Ratings, a credit agency based in India. The drop in revenues is attributed to falling prices and rising inventory levels.
Crisil estimates that diamond sales will decline by as much as 27%, totaling approximately $12 billion for the fiscal year ending March 31, 2025. This marks the third consecutive year of contraction in the manufacturing sector, following a 29% decline last year and a 9% decrease in 2023.
The primary reasons for this downturn include:
Weak demand in major export markets such as the United States and China.
A 10% to 15% decrease in diamond prices due to oversupply.
A shift in consumer preference toward lab-grown diamonds.
Crisil highlights that Indian diamond exports to the U.S. have plummeted by 43% in value over the past two years, driven by sluggish demand. In China, which accounts for 28% of India’s diamond exports, consumers are increasingly favoring gold jewelry, viewing it as a safer investment. Additionally, younger consumers in both markets are showing a preference for synthetic diamonds over natural ones.
“Lab-grown diamonds, which closely resemble natural diamonds, are 90% cheaper,” stated Rahul Guha, director at Crisil. “Their market share in the U.S. has grown from 8% to about 25% by value in just two years. This share could be even higher if it weren’t for the significant drop in lab-grown diamond prices due to oversupply. Consequently, natural diamond exporters are likely to continue facing serious challenges.”
In response to reduced demand, polishers have limited their purchases of rough diamonds and scaled back manufacturing. Miners have also reduced production, which has helped slow the decline in prices. Crisil believes these measures will assist in stabilizing profit margins for fiscal 2025.
“Persistent price drops have led polishers to reduce purchases, while miners are implementing production cuts and offering flexible procurement terms to ease working capital pressures,” explained Rushabh Borkar, associate director at Crisil. “As a result, inventory levels throughout the value chain are expected to decline, which will mitigate pricing risks and lessen reliance on external borrowing in the medium term.”
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