In late October and early November, economic activity in India slowed down significantly ahead of one of the main Hindu holidays, the Diwali festival of lights. However, this year, diamond manufacturers went on holidays early as the diamond industry significantly reduced production in response to the slowdown in demand.
The holiday pause may last for up to a month, depending on the market situation. Last year, Diwali coincided with a temporary moratorium on rough diamond imports from October 15 to December 15, 2023, and factories suspended operations for up to two months.
Meanwhile, according to Rapaport, trade statistics indicate that inventories are continuing to stabilize. While India’s gross polished exports fell 23% year-on-year to $1.29 billion in September, rough imports fell 25% to $779 million, according to data from the Gem & Jewellery Export Promotion Council (GJEPC). Net rough and polished imports after consignment returns were relatively low at $152 million for the month, up from $13 million in August.
With domestic demand in India at around $100-150 million, inventories fell slightly in August before leveling off or even rising slightly in September. Manufacturers are cautiously optimistic, noting shortages of a few sought-after items, such as higher-quality VS to SI clarity diamonds, could worsen during the festive season. Production will be suspended for a longer period than sales, while online transactions will continue.
At the same time, manufacturers speak about the "lopsided" inventory: there are categories for which demand is significantly lower than supply, and companies are trying to get rid of excess stocks. In January-February, they predict, some goods will be in short supply, while there will be no buyers for others. According to traders, the reason for moderate stabilization and the expected shortage after Diwali will be a decrease in production, not demand.
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
