India’s diamond cutting and polishing industry is facing significant headwinds due to slowing demand from its largest export market, China. Vipul Shah, the chairman of the Gem and Jewellery Export Promotion Council (GJEPC), stated that India’s cut and polished diamond exports fell nearly 15% in the June quarter compared to a year earlier, following a 27.5% decline in the previous fiscal year.
China accounts for around a third of India’s cut and polished diamond exports, primarily through purchases made in Hong Kong. However, the economic slowdown in China, shifting consumer preferences towards gold jewelry, and fewer weddings have been squeezing demand for diamonds in the country.
The Indian diamond industry, which accounts for nine out of ten diamonds polished globally, is now in trouble and has requested the government to provide some concessions in the upcoming budget to help it navigate the ongoing challenges.
Specifically, the GJEPC has urged the government to allow the sale of rough diamonds in Special Notified Zones (SNZs) and grant permission to globally recognized diamond trading houses like Bonas and I Hennig to operate from these SNZs. Currently, Indian bidders cannot purchase rough diamonds from SNZs due to the lack of a tax waiver, unlike in Belgium and Dubai.
The industry has also been forced to curtail rough diamond imports due to the weak demand for polished diamonds and pressure on profit margins caused by softening polished diamond prices.
The gems and jewellery industry in India employs over 4.3 million people and accounts for more than 10% of the country’s goods exports. The government’s response to the industry’s requests for support could play a crucial role in determining the sector’s ability to weather the current downturn and maintain its position as the world’s largest center for diamond cutting and polishing.