A 24.5% drop in rough diamond imports to $14 billion in FY24 from $18.5 billion in FY22
shows weaker global markets and fewer processing orders while a 25.3% decline in
net imports indicating reduced demand for processing in India.
“Additionally, the share of unsold diamonds returned to India increased to 45.6% from 35% during this period,” it said adding the net exports of cut and polished diamonds dropped by 45.3% reflecting a weak market and rising unsold inventory.
“This has triggered defaults, factory closures, and widespread job losses. Tragically, more than 60 people in Gujarat’s diamond sector have committed suicide, reflecting the severe financial and emotional strain India’s diamond sector is facing,” GTRI founder Ajay Srivastava said
As per the report, the gap between net rough diamond imports and net cut and polished diamond exports widened significantly signalling a large inventory buildup and a lack of sufficient export orders.Moreover, the demand for polished diamonds has dropped sharply in key markets like the US, China, and Europe due to economic uncertainty, inflation, and geopolitical tensions, leading to reduced consumer spending on luxury goods, including diamonds.Srivastava added that the Russia-Ukraine conflict has also disrupted the global diamond supply chain, with sanctions on Russia, a major rough diamond producer, further complicating trade and slowing down the global diamond trade.
Shifting consumer preferences toward lab-grown diamonds, which are more affordable, ethical, and sustainable, are also impacting the demand for natural diamonds.
On internal factors, the think tank said that many polishing units have large unsold inventories of polished diamonds, which discourages them from importing fresh rough diamonds as they cannot afford to take on more stock without selling their existing inventory.