India’s cut and polished diamond exports are expected to shrink to a five-year low of about $15-16 billion in 2023-24, and the outlook for the coming year is bleak as well, with demand from the world’s two largest markets, the U.S. and China, expected to be subdued, CareEdge Ratings said on Wednesday.
India is the world’s largest centre for cutting and polishing diamonds, accounting for the supply of more than 90-95% of polished diamonds to meet global consumption demand. The sector is also a large job creator.
The U.S. and China together account for approximately 65% of India’s diamond exports, which are down 28% in the first 10 months of 2023-24 to a tad over $13 billion (with both value and volumes declining). This is far lower than the peak of $24.4 billion attained in 2021-22.
Apart from the two major markets’ challenges, the rating firm attributed the slowdown in exports to the rise of alternative discretionary spending options, the growing market for lab-grown diamonds and geopolitical tensions. Moreover, the impending impact of G7 nations’ sanctions on Russian-origin diamonds and the resultant logistic and operational challenges for Indian CPD (cut and polished diamonds) players would remain a key monitorable, it said.
“Taking cognisance of recent developments and revision in the sector outlook to negative, CareEdge Ratings has undertaken the review of 29 investment grade cut and polished diamond segment entities which account for about 35% of the Indian industry (based on exports of ₹1,77,000 crore during 2022-23),” the firm said, adding that the outlook for most of the entities was revised to ‘negative’ with rating downgrades effected for some.
Published - March 06, 2024 08:15 pm IST
