NEW DELHI: India’s diamond sector, a cornerstone of the country’s gem and jewelry industry, has been facing significant challenges over the past three years. Reduced demand in major markets and supply chain disruptions caused by G7 sanctions on Russian diamonds have exacerbated the downturn. Commerce and Industry Minister Piyush Goyal, addressing the Rajya Sabha, highlighted the alarming decline in diamond exports from $25.48 billion in FY 2021-22 to $18.37 billion in FY 2023-24. Imports also fell sharply from $28.86 billion to $23 billion during this period.
Shift to Lab-Grown Diamonds and Internal Issues
Global trends indicate a consumer shift toward lab-grown diamonds, considered more affordable and sustainable, adding to the reduced demand for natural diamonds. India’s polishing units are further strained by mounting operational costs and high inventories of unsold diamonds. The reliance on Dubai as a trading hub due to India’s high corporate taxes has also rendered the country’s Special Notified Zones (SNZs) ineffective.
Human and Structural Impact
The industry, employing over 1.3 million workers, has seen widespread factory closures and layoffs, particularly in Gujarat. The stress on workers has led to tragic consequences, including over 60 suicides.
Policy Recommendations
To address the crisis, Goyal suggested measures such as reviewing tax policies, regulating lab-grown diamond trade, and extending export credit periods. Experts echo these suggestions, emphasizing the need for immediate structural reforms to revitalize the sector.
Source: Web Team, C6N
