Sparkling Resilience: The Ever-Evolving Diamond Industry

The diamond industry faces pricing shifts, with lab-grown diamonds experiencing a sharper decline than natural ones. Diamantaires endure tough times due to falling prices, exacerbated by factors like gold price hikes and changing consumer habits. Despite challenges, hope arises for lab-grown diamonds' revival. Industry stalwarts express concerns about oversupply and market dynamics. Despite hurdles, the sector remains resilient, adapting to market changes and contributing significantly to employment, especially for marginalized communities. Craftsmanship, innovation, and economic empowerment define the industry's enduring spirit.

In a recent turn of events, both lab-grown and natural diamonds have witnessed a shift in prices, with lab-grown diamonds experiencing a more pronounced decline compared to their natural counterparts. The prices of lab-grown diamonds have plummeted from a peak of $300 per carat in July 2022 to a recent low of $78 per carat, prompting speculation about the enduring allure of these dazzling gems. Concurrently, natural diamonds have also seen a moderate correction in prices, ranging from 10-15%.

Diamantaires, the connoisseurs of diamonds, reflect on the past two years as the most challenging period they have faced. The relentless decrease in prices coupled with the devaluation of their stocks has posed significant hurdles. External factors such as the surge in gold prices, economic downturns in the US and the Western world, and shifting consumer patterns in China have further compounded the industry's woes.

Despite a glimmer of hope earlier this year sparked by an increase in rough diamond imports from India, the industry's optimism was short-lived. Industry experts now point to an oversupply of diamonds in India as a contributing factor to the current market dynamics.

Ashok Gajera, CMD of Laxmi Diamonds, voiced the prevailing sentiment within the industry, stating, "Business slowdown is an understatement. Diamond prices have been on a downward spiral for the past 22 months." He highlighted the widespread impact on the industry, from the 38,000 workers in Surat to businesses of all sizes, emphasizing the daily devaluation of diamond stocks that has compelled many to fulfill orders at a loss.

Gajera noted a shift in consumer preferences, with smaller, lower-quality natural diamonds facing stiff competition from flawless lab-grown alternatives. The high-end market has also experienced a sluggish demand globally, with China, once a significant buyer of top-tier mined stones, scaling back its purchases significantly.

Looking ahead, CareEdge Analytics and Advisory foresee a potential revival in demand for lab-grown diamonds in the upcoming fiscal year, citing factors such as price competitiveness, environmental sustainability, and heightened competition from India in the lab-grown diamond sector.

Despite the challenges faced by the industry, the gems and jewellery sector's performance data for this year reveals a 5.9% decrease in gross exports compared to the previous year. Cut and polished diamonds, as well as polished lab-grown diamonds, have both experienced a decline in exports, underscoring the ongoing market shifts.

While the gems and jewellery sector appreciates the recent reduction in import duties by the government, Kanaya Kakad from the India Bullion and Jewellery Association warns of short-term losses for traders holding gold stocks purchased at higher rates.

Sabyasachi Ray, Executive Director of the Gems and Jewellery Export Promotion Council (GJEPC), shed light on the industry's diverse workforce, emphasizing the millions of artisans and blue-collar workers integral to its operations. He highlighted the sector's significant contribution to employment, particularly for individuals from marginalized communities across various regions of India.

As the diamond industry navigates these turbulent waters, resilience and adaptability emerge as key virtues that will shape its future trajectory. Despite the challenges, the industry remains a beacon of craftsmanship, innovation, and economic empowerment for millions across the nation.