Weak Chinese demand dents India’s diamond exports, industry seeks support

India’s cut and polished diamond exports have been faltering due to weak demand from the key market, China, and they are unlikely to stabilize unless the government provides support to the industry, the head of a leading trade body said on Thursday.

India is the world’s largest centre for cutting and polishing diamonds, accounting for nine out of 10 diamonds polished globally.

“We’re battling weak demand, particularly due to China’s slow recovery from COVID-19. As a result, demand continues to fall,” Vipul Shah, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), told Reuters.

China accounts for around a third of India’s cut and polished diamond exports and primarily buys through Hong Kong.

The economic slowdown, shifting consumer preferences from diamonds to gold jewellery and fewer weddings have been squeezing the demand for diamonds in China.

India’s cut and polished diamond exports fell nearly 15% in the June quarter, compared with a year earlier, following a 27.5% decline in the 2023/24 marketing year that ended on March 31, Shah said.

The industry is in trouble, and last month it requested the government to provide a few concessions in this year’s budget so it can sail through the ongoing rough weather, he said.

The GJEPC has urged the government to allow the sale of rough diamonds in Special Notified Zones (SNZs) and give permission to globally recognised diamond trading houses like Bonas and I Hennig to operate from SNZs, Shah said.

Unlike Belgium and Dubai, Indian bidders cannot purchase rough diamonds from SNZ due to the lack of a tax waiver.

Indian diamond units have curtailed rough diamond imports due to both weak demand for polished diamonds and pressure on their margins caused by softening polished diamond prices, he said.

India’s gems and jewellery industry – which employs over 4.3 million and accounts for more than 10% of India’s goods exports.