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The Indian diamond industry, long regarded as a global hub for diamond cutting and polishing, is facing an unprecedented crisis. With over a million people employed in this sector, the downturn is not only an economic setback but also a humanitarian challenge. Key data and trends from recent years highlight the depth of the issue and its implications.

Decline in Trade Volumes

One of the most glaring indicators of the crisis is the sharp decline in trade volumes. Between 2021 and 2024:

Rough diamond imports have dropped by 24.5%, from $18.5 billion to $14 billion.

Exports of cut and polished diamonds have decreased by a staggering 34.6%, plummeting from $24.4 billion to $13.1 billion.

This contraction has significantly affected the cash flow of diamond manufacturers, leading to a worrying increase in unsold inventories, which have risen from 35% to 45.6%.

Key Challenges

1. Declining Global Demand

Global demand for diamonds, particularly from the United States and China—India’s largest markets—has waned. Changing consumer preferences and economic uncertainties in these regions have led to reduced spending on luxury goods, including diamonds.

2. Competition from Lab-Grown Diamonds

The rise of lab-grown diamonds presents a new competitive threat. With a growing consumer preference for sustainable and affordable alternatives, traditional diamond sales are under pressure.

3. Financial and Operational Strains

Rising operational costs and shrinking profit margins have made survival difficult for many diamond-processing units, especially in cities like Surat, known as the diamond capital of India. This has led to widespread factory closures and job losses.

4. Social and Emotional Toll

The industry’s crisis is not just financial but also deeply human. Reports of over 60 suicides in Gujarat’s diamond sector underline the immense emotional and financial strain on workers and business owners. The impact on families and communities dependent on the diamond trade has been devastating.

A Sector at Breaking Point

The chair of the Indian Diamond Institute aptly described the situation as a “breaking point.” The ripple effects of reduced exports, unsold inventory, and job losses have created a perfect storm for the industry.

The sector’s fragility has also exposed its reliance on a limited number of markets, raising questions about its resilience to global economic shifts.

The Path to Revival

Despite the bleak scenario, steps are being taken to address the crisis:

1. Exploring New Markets: Industry stakeholders are actively seeking alternative markets to reduce dependence on the US and China. Diversifying export destinations is essential for long-term stability.


2. Promoting Lab-Grown Diamonds: Recognizing the potential of lab-grown diamonds, some manufacturers are pivoting toward this segment to cater to changing consumer preferences.


3. Government Intervention: Collaborative efforts between the government and industry bodies aim to provide financial support, encourage innovation, and explore policies to stabilize the sector.


4. Boosting Domestic Demand: Campaigns to stimulate domestic consumption of diamonds could help mitigate the decline in exports.

A Critical Juncture

India’s diamond industry stands at a critical juncture. Its survival depends on its ability to adapt to evolving global dynamics and consumer preferences. While the challenges are immense, the industry’s resilience and strategic interventions could pave the way for recovery.

The stakes are high, not just for the economy but also for the millions of livelihoods intertwined with this shimmering yet struggling sector. The time for action is now, to ensure that India’s legacy as a global diamond hub continues to shine.