India’s diamond industry, once a booming sector, is now in a deep crisis marked by declining exports, falling prices, and widespread job losses. This downturn has left many families in distress, particularly in Surat, Gujarat, which is the heart of the diamond polishing industry.
The situation is dire. Exports of cut and polished diamonds plummeted from $23 billion in 2022 to $16 billion in 2023, with projections suggesting a further decline to $12 billion in 2024. Prices for polished diamonds have also dropped significantly, ranging from 5% to 27% this year due to low global demand and an oversaturated market.
The human cost of this crisis is heartbreaking. Nikunj Tank, a diamond polisher who supported his family, lost his job when his polishing unit shut down. Unable to find new work, he tragically took his own life in August, highlighting the severe emotional toll on workers[1]. Reports indicate that over 30,000 workers have lost their jobs in just six months, with more than 65 suicides linked to the industry’s struggles.
Several factors have contributed to the industry’s decline:
- Global Conflicts: The ongoing Russia-Ukraine war and tensions in the Middle East have disrupted international markets.
- Sanctions on Russian Diamonds: India imports about 30% of its rough diamonds from Russia, and sanctions have severely impacted this supply chain.
- Economic Slowdown: A global economic downturn has reduced consumer spending on luxury items like diamonds, particularly in key markets such as the US and China.
The Rise of Lab-Grown Diamonds
Adding to the industry’s woes is the increasing popularity of lab-grown diamonds, which are significantly cheaper than natural diamonds. This shift has led to a decline in sales for natural diamonds and further strained businesses in Surat. While lab-grown diamonds also face challenges with oversupply driving prices down from $300 to $78 per carat, their market share continues to grow.
Impact on Workers and Families
The fallout from this crisis is not limited to factory closures and layoffs; it extends to families struggling to make ends meet. Many small units have been forced to shut down entirely. A helpline launched by the Diamond Workers Union received over 1,600 distress calls from workers seeking financial assistance or job opportunities.
Brokers and traders are feeling the pinch as well. Dilip Sojitra, a diamond broker from Surat, described a market that has come to a standstill with minimal buying or selling activity.
Hope for Recovery?
Despite these challenges, some industry insiders remain hopeful for a recovery. Nandlal Nakrani, president of the Surat Diamond Brokers Association, believes that if rough diamond prices decrease and polished diamond prices rise, there could be a turnaround. The upcoming festive season may also provide a much-needed boost to sales.
As Sojitra optimistically stated, “This too shall pass,” but the path ahead remains uncertain for thousands affected by this recession. The need for immediate intervention and support for workers is critical as India navigates this challenging landscape in its diamond industry.