Diamonds might sparkle, but they're losing their luster as an investment. "Prices have fallen to their lowest level this century!" per Bank of America's "Diamond Price Index," which highlights a dramatic decline of over 35-40% since 2022.
Surat: Ground Zero of the Diamond Crisis
The diamond industry in Surat, India—renowned as the world’s largest hub for polished diamond manufacturing—has been devastated by a prolonged recession over the past two years. Declining demand in major markets like the United States and China, the latter being the top buyer of flawless diamonds, has severely impacted Surat's economy. Adding to the turmoil are geopolitical tensions, including the Russia-Ukraine war and the Israel-Hamas conflict, which have disrupted supply chains and consumer confidence.
Over 30% of small diamond cutting and polishing units in Surat have remained closed since the Diwali vacation, while larger units have scaled back operations due to unsold stock and waning demand.
Concerns from Industry Leaders
Bhavesh Tank, Vice-President of the Diamond Workers' Union Gujarat (DWUG), warned of the crisis’s human toll, stating, “The demand for diamonds is at an all-time low, leaving small units with unsold inventory. Many artisans are under immense financial stress, with tragic cases of suicides reported.”
Efforts to Address the Crisis
To tackle these challenges, the Gem & Jewellery Export Promotion Council (GJEPC) joined forces with the Bharat Diamond Bourse (BDB) and Mumbai Diamond Merchants' Association (MDMA) to host a seminar on September 30, 2024. The event, led by DiaSense Diamond Pricing Index founder and CEO Pratik Shah, centered on "Key Pricing Challenges Facing the Diamond Industry."
Industry leaders, including Anoop Mehta (President, BDB) and Prakash Sanghavi (President, MDMA), highlighted the flaws in current diamond price indices, such as a lack of transparency and monopolistic practices. Experts called for collaborative efforts to create a more accurate and representative pricing model.
Trade Statistics: A Bleak Outlook
India’s exports of cut and polished diamonds from April to November 2024 fell by 18.88% year-on-year to $8.98 billion (₹75,183.34 crores). Imports of rough diamonds declined by 20.97% to $6.96 billion (₹58,223.36 crores), reflecting the broader downturn in the global diamond trade.
The Road Ahead
As the diamond industry grapples with these challenges, experts stress the need for innovation, transparency, and collaboration to stabilize and reinvigorate this once-thriving sector.
