Editor’s Note
India’s diamond industry, the world’s largest cutting and polishing hub, is confronting a severe downturn. Plummeting demand from China has pushed exports to a two-decade low, while imminent U.S. tariffs threaten to divert crucial American buyers to competitors. This dual crisis is forcing drastic measures across the sector, with many smaller firms now struggling to survive.
India is the world’s largest diamond cutting and polishing center. However, India’s diamond industry exports have fallen to a 20-year low due to weak demand from China. Compounding this, the 50% high tariffs imposed by U.S. President Trump on India are set to take effect on the 27th, potentially causing American buyers to shift their purchases to countries like Israel and Belgium. Consequently, many small and medium-sized enterprises in India have no choice but to offer steep discounts or even lay off workers, while larger companies are considering relocating operations to countries with lower tariffs to salvage lost orders.
Reuters reported on the 26th that the Surat Diamond Bourse in Surat, located north of Mumbai, covers an area of 6.7 million square feet. When Indian Prime Minister Narendra Modi inaugurated the exchange in December 2023, he praised this complex, larger than the Pentagon’s 6.5 million square feet, as a symbol of “new India’s strength and new resolve.”
This massive exchange consists of nine interconnected 15-story buildings with gleaming glass facades, housing banks, customs offices, secure vaults, and a jewelry mall, designed to be a one-stop business center for the global diamond industry. Surat is India’s “diamond capital,” where over 80% of the world’s rough diamonds are cut and polished. Typically around August, workers in Surat ramp up production to meet the surge in U.S. orders for Christmas and New Year.
However, this year is different. The Surat Diamond Bourse is now unusually quiet, with only a few traders at work. Due to weak demand from China, India’s diamond industry exports have hit a 20-year low. The U.S. market accounts for nearly one-third of India’s annual $28.5 billion jewelry and diamond exports. With the impending high U.S. tariffs shaking buyer confidence, India risks losing its largest market. Industry insiders say American buyers are likely to turn to countries like Israel, Belgium, and Botswana for diamonds.
For smaller exporters, there are few options to mitigate the impact other than offering significant discounts to barely stay afloat. Shailesh Mangukiya, who runs a cutting and polishing workshop in Surat, said:
He said he has already halved his workforce to 125 employees.
Shaunak Parikh, Vice Chairman of the Gem & Jewellery Export Promotion Council (GJEPC), stated that the industry is also reducing workdays and hours due to the demand slowdown. He warned that if India and the U.S. cannot reach a trade agreement to lower tariffs, 150,000 to 200,000 workers could lose their jobs.
Industry insiders point out that many businesses are currently reducing purchases of rough diamonds and operating with minimal inventory to maintain cash flow. Larger players also plan to shift some operations to countries like Botswana in Africa, where the U.S. tariff is only 15%. Hitesh Patel, Managing Director of Dharmanandan Diamonds, expects the U.S. tariffs to reduce the company’s annual revenue by 20% to 25%.
Indian diamond exporters are also striving to expand into Asian, European, and Middle Eastern markets to compensate for losses in the U.S., but exporters admit finding new buyers is not easy. The only glimmer of hope comes from India’s domestic market. Hitesh Shah, a partner at Venus Jewel, a major diamond processor supplying global luxury brands like Tiffany & Co. and Harry Winston, said demand for diamonds in India is still growing. The country has recently surpassed China to become the world’s second-largest market.