Diamond demand from key international markets has declined due to the pressures of inflation on consumers according to the ratings agency ICRA. Therefore, exports of cut and polished diamonds from India are expected to drop by 22% to around $17 bn in the 2024 financial year.
The export contraction is primarily being driven by weak underlying demand conditions in key consuming nations like the US and Europe due to the inflationary pressures, leading to a shift in spending away from diamonds.
The trend for declining cut and polished diamond exports from India began in the first half of the 2023 financial year. The first five months of the current, 2024 financial year saw a steep export decline of 31% for the sector, as polished diamond prices rose but export volumes fell.
According to ICRA, though diamond demand from China has not fallen, it has also failed to increase in a meaningful manner. This, coupled with increasing competition from lab-grown diamonds, has made the decrease in exports even more pronounced. The prices of rough diamonds have remained high this fiscal, despite gradual softening in the most recent months.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
