-90% of the world’s rough diamonds are cut and polished in India
- Russia and Israel, both major sources for India’s diamond imports, have been embroiled in conflicts
NEW DELHI
For many months now, Hari, a diamond worker in Gujarat, has been struggling financially.
The 35-year-old is employed at a factory in Surat, a city regarded as India’s diamond manufacturing hub, where his working hours have dipped drastically over recent months.
“I used to earn 30,000 Indian rupees ($360) a month, but I’m down to around 15,000 Indian rupees ($180). Obviously, everything has been disrupted in my family life,” said Hari.
Thousands like Hari work in several factories in Surat, where 90% of the world’s rough diamonds are cut, polished and exported to countries around the globe.
But, today, burgeoning global economic crises and raging conflicts have taken the shine off the once-glittering industry.
“Initially, it was the Russia-Ukraine war. Then came the Israel-Palestine conflict,” Ramesh Jilariya, president of the Gujarat Diamond Workers Union, told Anadolu.
“That, along with the overall global economic condition, has left us in a place where there is not that much work even during festivals, which are normally a boom time for us.”
In 2022, Russia was the world’s largest producer of rough diamonds. That same year, though, the US sanctioned the import of Russian-origin diamonds.
India’s industry relies on imports of rough diamonds for polishing, besides already cut and polished diamonds from Israel for sorting and grading.
In financial year 2023, India imported rough diamonds worth $519 million from Israel, along with cut and polished diamonds valued at $220 million, according to Indian financial daily The Economic Times.
In April 2023, Indian exports of cut and polished diamonds were down by 38.86% compared to the same month of the previous year, marking a sharp decline that has impacted the entire industry.
All areas affected
According to India’s Gem and Jewelry Export Promotion Council, the country’s overall gross exports of cut and polished diamonds fell 9.78% in dollar terms during the April 2022 – March 2023 period, dipping from over $24 billion to around $22 billion.
Just last month, G-7 nations announced a direct ban on Russian diamonds starting Jan. 1, a move that sparked concerns in India.
“When it comes to the diamond industry, India is a big player and anything that happens in any part of the world has an impact on our industry. We do have concerns,” Randhir Jaiswal, a Foreign Ministry spokesperson, said at a briefing on Jan. 4.
The reduced numbers have dented the work hours of the industry’s employees and slashed their earnings by around 30-35%, said Jilariya.
“The price of polishing diamonds has decreased, while the cost of rough diamonds has surged,” he said.
Other areas of the gem industry have also been affected.
Vijay Mangukiya, managing director of Dhani Jewels, a Gujarat-based company focused on jewelry exports and diamond trading, said there has been a visible decline in demand from developed countries.
“That has led to a downturn in our work, with exports decreasing about 30-35% percent over the past seven months,” he said.
However, he added that the domestic Indian market is still “performing well,” pointing to significant recent deals and events such as the India International Jewelry Show 2024 held earlier this month.
For him, a primary factor in the decline remains the ongoing conflicts between major world players and the global economic slowdown.
“People are more inclined toward saving money and there’s a drift away from luxury items. But we’re still optimistic about a positive change in the coming months,” he said.
‘2023 was a challenging year’
Vipul Shah, chairman of the Gem and Jewelry Export Promotion Council, told Anadolu that 2023 was “a challenging year” for the Indian gem and jewelry industry.
However, the industry showed remarkable resilience and adaptability, and has managed to bounce back from the lows of the previous months, he said.
“The industry made a strong comeback in November 2023, with an impressive 11.44% growth in overall gem and jewelry exports,” he said.
Despite the November recovery, overall exports for April to November were 19% lower than the same period of 2022, he added.
“Other than the low demand in key markets, the factors that mainly affected exports include geopolitical concerns, shortage of raw materials and the fall in diamond prices,” said Shah.
“However, diamond prices have stabilized and, lately, we have also seen recovery in demand from key markets including the US, Middle East, and Hong Kong.”
This year, the council’s main aim is “to maintain the encouraging demand recovery trends that surfaced toward the end of 2023,” he said.
“The US and China continue to be pivotal markets for Indian gem and jewelry exports. The US has shown gradual recovery, while we are waiting for signs of improvement in China,” he said.
“However, these projections are subject to various factors, notably the evolution of geopolitical concerns in the near future. Despite this uncertainty, we hold optimism for positive developments … If geopolitical concerns ease and circumstances return to normalcy, we foresee the possibility of a notable increase in exports in the latter part of 2024.”
