CareEdge Ratings, an Indian rating and analytical agency, has published a new outlook of the country's diamond export business, stating that the sector may hit a five-year low in FY2024.
According to the agency, polished exports from India may dip 20% - 30% to $15 - $16 billion during 2024 financial year, while a recovery in the next fiscal will be limited.
Analysts at CareEdge say that there are a few major factors for such a bleak outlook. Among them are economic downturn in USA and China, the two main polished diamond consumer countries; growing acceptance of lab-grown diamonds (LGD); impact of G7 sanctions on Russian rough diamonds that may pose compliance and supply-side challenges for Indian manufacturers; and midstream inventory glut.
In the medium term, polished diamond exports from India will be influenced by economic recovery in consumption markets, geopolitical landscape, and customer preference for diamond jewellery in the discretionary spending space. The agency expects companies with small debt and good inventory management to survive tough times for the diamond industry.
“Players operating in smaller carat diamonds (below 0.3 carats) [are expected] to be better placed than entities dealing in certified diamonds, as smaller carat diamonds have witnessed lower price erosion and limited impact of LGD diamonds,” said Yogesh Shah, Senior Director at CareEdge Ratings.
Theodor Lisovoy, Editor in Chief of the European bureau, Rough&Polished
