Diamond Exports
India’s exports of cut and polished diamonds have fallen to the lowest in two decades on sliding global demand and uncertainty caused by Donald Trump’s newly imposed tariffs.
What data is showing?
Gems and jewellery exports have been declining for three consecutive years in US dollar terms.
In FY25:
- Cut and polished diamonds exports fell by ~15% to ₹1.12 trillion – the lowest in nearly 20 years.
- Overall exports in this sector declined ~10% YoY.
- Imports of rough diamonds fell ~16% YoY.
- This shows a significant contraction in both demand and supply within the industry.
What’s Dampening the Trade?
- Pandemic Aftershocks: COVID-19 lockdowns disrupted production and supply chains.
- Geopolitical Factors: Sanctions on Russia, a key
rough diamond supplier, caused shortages and disrupted sourcing.
- US "Liberation Day" tariffs under President Trump increased trade tensions with India.
- Consumer Demand Dip: Decline in luxury spending in
US and China, the top global markets.
- Changing preferences and economic slowdowns in both countries have hurt demand.
- Rise of Lab-Grown Diamonds:
- Lab-made diamonds cost about 1/10th of natural diamonds, leading to a shift in consumer choices.
- Result: Falling demand and prices for natural diamonds.
- Factories in Surat have shut down; many skilled workers laid off.
Are There Any Bright Spots?
- Gold jewellery exports have shown some resilience, maintaining positive growth.
- Temporary pause on US reciprocal tariffs offers a slight breather.
- Exemptions in other US import tariffs (e.g., pharmaceuticals, smartphones) indicate possible scope for negotiation or relief in gems/jewellery.
Where Do Exports Go from Here?
- The industry faces short-term uncertainty due to:
- US trade policy unpredictability.
- Changing consumer behaviour.
- Competition from lab-grown diamonds.
- Long-term growth depends on global recovery, policy clarity, and consumer trends.
What Can Reverse the Industry's Fortunes?
Industry Demands from the Government:
- Promotion of Natural Diamonds: Public campaigns to differentiate them from lab-grown alternatives.
- Regulate Lab-Grown Diamond Sales: Ensure clarity in marketing and consumer awareness.
- Infrastructure & Credit Support:
- Government assistance in building a gems trading bourse.
- Subsidised loans to small-scale units.
- Extend cheap credit facilities and reduce capital gains tax.
- Tax and Duty Relief:
- Lower import duties on precious jewellery.
- Rationalize taxation to make Indian exports globally competitive.
