Amidst a significant downturn in the diamond market and a landscape characterized by proud government endorsement of the local synthetic diamond industry, five prominent Indian trade organizations, namely GJEPC, the Bharat Diamond Bourse, the Mumbai Diamond Merchants Association, the Surat Diamond Bourse, and the Surat Diamond Association, have jointly recommended a two-month pause on rough diamond imports.
This decision, slated to run from October 15 to December 15, 2023, comes as a response to the sluggish trading of polished diamonds, attributed to weak US retail sales, increasing competition from lab-grown diamonds, and China’s economic slowdown.
«This was a unanimous decision from all the stakeholders in India», Vipul Shah, chairman of GJEPC said to JCK online. «We have to do what is right for the entire industry. We are seeing falling prices in both rough and polished. We feel if we collectively take action and stop prices from falling, that will boost confidence in the entire industry». Russia’s miner Alrosa, subject to embargo in USA and UE had already canceled sales for September and October, advising caution, and the recent Hong Kong fair witnessed minimal activity from Chinese buyers.
The associations collectively stated: «Mining companies are regularly selling the rough diamonds that are being mined — irrespective of the state of demand in the midstream».
It’s important to note that this voluntary ban does not represent a complete prohibition on imports; its aim is to address a 25% decline in exports from January to August, which has led to an accumulation of polished diamond inventories and falling prices.
This decision reflects similar actions taken by the industry in 2020 during the pandemic-related lockdowns. According to GJEPC data, in August, India’s rough diamond imports experienced a 3% year-on-year decline, reaching $1.32 billion, with volume down 14% to 12 million carats.
The timing of this freeze will coincide with the Diwali festival on November 12, which is traditionally when Surat’s diamond factories close for two to three weeks. However, this year’s shutdown is expected to be extended.
The self-proclaimed halt by the Indian diamond industry has not gone unnoticed, and on LinkedIn, some commentators emphasize that this move could have counterproductive consequences, such as an increase in lab-grown diamond transactions and the relocation of part of the production outside of India. It remains to be seen how this will affect the prices.
