Demand Slump in the West: Indian Diamond Industry to Focus on Domestic and New Export Markets 2023

Demand Slump in the West: Indian Diamond Industry to Focus on Domestic and New Export Markets 2023

At the Mumbai show, 2,100 buyers from 69 nations and businesses and deals worth Rs 50,000 crore were made.

The Indian diamond industry is getting ready to shift its attention to local markets and new growing markets in ASEAN nations to tap into those markets’ unmet demand due to decreased demand from important markets like the US and the European Union.

The results of the continuing negotiations on the possibilities for the diamond sector in Russia have yet to be discovered, according to Vipul Shah, Chairman of the Gem and Jewellery Export Promotion Council, who was speaking to FE. The government and businesses are attempting to develop the specifics of an impenetrable system for determining the traceability of diamonds.

He continued the “encouraging response” from ASEAN nations to the recent international exposition hosted in Mumbai’s Goregaon neighbourhood, suggesting that these markets had a lot of promise. Potentially important markets are Vietnam and Cambodia.

At the Mumbai show, 2,100 buyers from 69 nations and businesses and deals worth Rs 50,000 crore were made.

According to reports, 142 million carats of diamonds were produced globally in 2019, totalling $13.9 billion, but the value after grading, cutting, and polishing was $29,7 billion. The current value of the world jewellery market is $79 billion.

One of the world’s top three largest diamond-producing firms, De Beers Forevermark’s Amit Pratihari, stated, “The inflationary trends and geo-political instabilities around the world are influencing the worldwide diamond market.

However, because the Indian market is our primary emphasis, we are not concerned about this. De Beers says the Indian diamond market is in a favourable situation. Since 2018, the De Beers Forevermark business has been expanding steadily, averaging 10% to 20% growth yearly.

He claimed that because of the numerous ways in which the Indian diamond industry is distinctive, there will be strong demand throughout the approaching festival season.

Pratihari stated, in response to the growing discussion around a diamond’s traceability, “Consumers are more sensitive to the origins of the items that they consume. Diamond is no different from that. De Beers has a scheme that makes sure the diamonds are sold with an origin certificate in light of this.

The top three diamond producers in the world are Rio Tinto (British-Australian), Alrosa (Russia), and De Beers (Luxembourg). More than 60% of the world’s diamonds are produced by these three. The largest diamond deposits are in Russia. Botswana and Canada came in second and third, with 24.5 million carats and 16.3 million carats, respectively, behind Russia, which produced 41.92 million carats of diamonds in 2022.

The market value for Russian diamond production in 2022 has been estimated at $ 3.55 billion, while the market value of Botswana’s output is $ 4.7 billion.

The Indian diamond industry, a significant player in the global diamond market, is experiencing a significant transformation. With a pronounced demand slump in Western markets, primarily in the United States and Europe, the industry is strategically repositioning itself to focus more on domestic and new export markets.

This article explores the causes of the demand slump in Western markets, the strategic response of the Indian diamond industry, and the promising avenues for growth that have emerged.

The Western economies, particularly the United States and Europe, have experienced periods of slow growth, which has impacted consumer spending, including on luxury items like diamonds.

Trade wars and increasing protectionism have also impacted the flow of diamonds between countries, affecting Indian exports. Millennials and Gen Z in Western countries increasingly prefer experiences over material possessions, including a declining interest in traditional diamond jewellery.

The growing market for lab-grown diamonds, often marketed as ethical and more affordable alternatives, is impacting the demand for natural diamonds.

Western consumers are becoming increasingly concerned about the ethical implications of their purchases, including potential ‘blood diamonds.’

There is a growing awareness and concern for the environmental impacts of diamond mining. India has a rapidly growing middle and upper class with increasing disposable incomes. The industry is focusing on marketing campaigns to promote diamonds as a symbol of status and love within the country.

Indian diamond companies are expanding their retail presence across the country, targeting both metro and tier 2 and 3 cities.

China, along with other Asian markets like Singapore and Hong Kong, represents a significant opportunity for the Indian diamond industry.

Indian companies are also exploring new opportunities in the Middle East and Africa, with a growing market for luxury goods, including diamonds. Indian firms are collaborating with local companies in these new markets to gain a foothold and better understand local consumer behaviour and preferences.

The government has introduced various incentives for diamond exporters to encourage them to explore new markets. Efforts are being made to streamline regulatory processes and improve the ease of business for diamond companies.

The government is also focusing on skill development within the industry to ensure that workers are trained to international standards.

As synthetic diamonds become more popular, the Indian diamond industry must find ways to compete effectively. Entering new markets means understanding and complying with new regulatory environments, which can be complex and costly.

Indian diamond firms must continue to innovate in quality and design to meet the diverse preferences of new consumer demographics.

The demand slump in the Western markets has presented a significant challenge for the Indian diamond industry. However, this challenge is also an opportunity for the industry to reevaluate, reinvent, and reposition itself domestically and internationally.

With a strategic focus, policy support, and a commitment to innovation and quality, the Indian diamond industry stands poised to transform this period of adversity into one of vibrant, sustainable growth.