“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,” said Icra’s vice president and sector head Sakshi Suneja in a statement, the Press Trust of India reported.
The trend for declining cut and polished diamond exports from India began in the first half of the 2023 financial year, ET Bureau reported. 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.
Although diamond demand from China has not fallen, it has also failed to increase in a meaningful manner, according to Icra. 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.