India’s Diamond Industry Hit by Geopolitical Turbulence

The Indian diamond industry, the world's leading exporter of polished stone, is grappling with the problem of growing inventories and reduced export orders due to lack of demand in major markets such as the US and China, diamond industry insiders have told Sputnik India.

"Around 95% of our polished exports go to US, China, Japan and European markets. However, the spillovers of Ukraine conflict and the Israel-Hamas war have affected Indian exports," Jagdishbhai Khunt, President of the Surat Diamond Association (SDA), told Sputnik India.

Khunt emphasised that any "major geopolitical event was bound to have an adverse bearing on polished diamond imports" from India.

The western city of Surat is believed to account for 80-90 percent of polished global diamond exports. Russian mining major Alrosa has been a major source of roughs for the Surat industry.

Further, Khunt said that the G7 sanctions against Russian rough diamonds polished in third countries, which kicked in March this year, haven't had any noticeable impact on import of Russian roughs into India.

"Most of the Russian roughs used in Surat weigh below 0.5 carat. There are no restrictions on them. As far as the import of Russian roughs weighing over 0.5 carat is concerned, we are yet to take a call on that matter," the diamond association president stated.

India as well as African Diamond Producers' Association (ADPA), which account for nearly 60 percent of the global diamond production, have opposed G7's plan to route diamonds weighing over 0.5 carat through Antwerp in order to certify that they didn't originate in Russia.

He further noted that so far, only Kiran Gems, had announced a vacation.

"As far as other diamond processing units are concerned, we aren't aware of any such plans. In general, most of our units go on a vacation for 4-5 days around Janmashtami every year," the Indian diamond association chief said.

Meanwhile, reduced export orders have also caused panic among millions of blue-collar workers engaged in the diamond polishing trade in India.

Around 750,000 workers in the Surat industry were already reeling under "recession-like conditions" for the past year, Bhaveshbhai Tank, the vice-president of Diamond Worker Union Gujarat (DWUG), told Sputnik India. Nearly 2.5 million of labor force is engaged in diamond manufacturing sector in the Gujarat state, making the sector a major source of livelihood, Tank underlined

Tank underlined that nearly 2.5 million workers were engaged in diamond manufacturing industry in the Gujarat state, making the sector a major source of livelihood.

"We are concerned about the effects of G7 sanctions on Russian diamonds. We have been seeking a relief package from the authorities to tide over this crisis," said Tank.

Lack of Demand in US and China

Meanwhile, diamond industry analyst Edahn Golan told Sputnik India that the ongoing downturn in the diamond sector wasn't just confined to India, as the diamond manufacturers around the world were being forced to scale down their operations.

"Diamond miners are also scaling back and halting rough diamond sales too," Golan stated.

He remarked that the economic downturn had "blindsided" the entire diamond sector.

"While there is a certain decline in consumer demand in the US, what's truly hitting the industry is the weakness of the Chinese economy. While all other major economies bounced back from COVID, China did not. This contrary to all expectations," explained Golan.

He added that the jewelry sector had not anticipated the situation and, as a result, increased activity post-COVID, only to find itself with very high inventories.

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