India’s cut and polished diamond exports have been faltering due to weak demand from the key market, China.
A leading trade body in India has expressed concern over the situation and recommended that the government provide support to the industry to stabilize exports.
India is the world’s largest centre for cutting and polishing diamonds, accounting for nine out of 10 diamonds polished globally.
“We’re battling weak demand, particularly due to China’s slow recovery from COVID-19. As a result, demand continues to fall,” Vipul Shah, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), told Reuters.
The US and China, the primary diamond-consuming markets, together account for approximately 65 per cent of India’s diamond exports.
China accounts for around a third of India’s cut and polished diamond exports and primarily purchases through Hong Kong.
The economic slowdown, shifting consumer preferences and fewer weddings have been squeezing the demand for diamonds in China.
Shah said that India’s cut and polished diamond exports fell nearly 15% in the June quarter, compared with a year earlier, following a 27.5% decline in the 2023/24 marketing year that ended on March 31.
He said that the industry requested the government last month to provide a few concessions in this year’s budget to sail through rough weather.
The GJEPC has urged the government to permit the sale of rough diamonds in Special Notified Zones (SNZs) and allow globally recognised diamond trading houses like Bonas and I Hennig to operate from SNZs.
Unlike Belgium and Dubai, Indian bidders cannot purchase rough diamonds from SNZ due to the lack of a tax waiver.
Indian diamond units have curtailed rough diamond imports due to both weak demand for polished diamonds and pressure on their margins caused by softening polished diamond prices, he said.
India’s gems and jewellery industry – which employs over 4.3 million and accounts for more than 10% of India’s goods exports.