Economy
Mint Primer: Can Indian diamond exports sparkle again?
Summary
- India’s exports of cut and polished diamonds have fallen to the lowest in two decades on sliding global demand and uncertainty caused by Donald Trump’s newly imposed tariffs. What will FY26 look like for the industry, and what will it take to revive exports? Mint explains.
What does the data show?
Diamonds and jewellery exports have been struggling for years. Exports of nearly all categories of gems and jewellery declined in FY25. In particular, exports of cut and polished diamonds fell nearly 15% year-on-year to ₹1.12 trillion, a nearly 20-year low, according to Reuters. Meanwhile overall exports of gems and jewellery fell by almost 10% year-on-year. This is the third consecutive year that cut and polished diamond exports and overall jewellery exports are declining in US dollar value. Consequently, our imports of rough diamonds have also declined in FY25 by more than 16% on-year.
What is dampening the trade?
The industry was first affected in the pandemic years as lockdown restrictions affected production and trade. Then, just as post-pandemic “revenge shopping" demand from the US boosted trade, sanctions on Russia kicked in. Russian mines are a major source of rough diamonds. This year, declining consumer demand in the US and China—the world’s biggest luxury markets by value—is hurting exports. Now, the US’ “Liberation Day" trade tariffs have led to more global uncertainty after president Trump imposed steep reciprocal rates on Indian exports, then suspended them for 90 days.
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Is there a bright spot here to seize?
Perhaps. Growth in exports of gold jewellery has stayed above water, although it forms a relatively small part of total gems and jewellery exports. The industry also got a breather with the pause on reciprocal tariffs. Some are drawing hope from the exemptions that Trump is rolling out to other imports into the US, including pharmaceuticals and now, smartphones.
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Where do jewellery exports go from here?
Trump’s tariffs and the consumer demand slowdown in the US and China will be immediate concerns for the industry. The US jewellery market grew by 5% in 2024, beating expectations, but isn’t likely to keep growing as consumer spending habits change. Besides, lab-grown diamonds costing nearly a tenth of natural diamonds are hurting global demand for natural diamond jewellery and driving down prices. Last year, many factories in Surat shut down and skilled workers were laid off in large numbers.
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What can reverse the industry’s fortunes?
Industry bodies have been asking for protection and sops from the government, including promotion of natural diamonds and regulating sales and marketing of lab-grown diamonds. The Gem & Jewellery Export Promotion Council has also urged the government to contribute funds to the natural diamonds promotion campaign and help the industry set up a gems-trading bourse, extend cheap credit to small-scale units in trade centres and reduce capital gains tax and import duties on precious jewellery.
