Are diamonds forever? Surat's sparkle wanes as war and tariffs cut deep
, known as the
diamond hub
of India, has been facing challenging times over the past few years. Problems stemming from the Russia-Ukraine war, the Israel-Palestine conflict, and Trump tariffs have adversely impacted the diamond trade, jeopardising the future of a city responsible for 90% of the world's diamond cutting and polishing.
The statistics further reveal the slump in trade. As per data from industry body Gem and Jewellery
Exports
Promotion Council (
GJEPC
), the overall gross exports of cut and polished diamonds during April-June 2025 amounted to $2837.29 million, reflecting a decline of 22.72% from $3,671.33 million for the same period in the previous year.
In fact, in April, India's exports of cut and polished diamonds plummeted to their lowest level in nearly two decades in FY 2024-25 due to sluggish demand from the United States and China, as per a Reuters report.
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Surat's significance as a diamond city is well known all over the world. The city is home to approximately 4,000 operational diamond factories, employing over a million people. Industry experts contend that the dismal situation has been further aggravated by US tariffs, leaving the industry uncertain about how things will unfold in the times ahead. Pintu Dholakia, CEO of Surat-based
Hari Krishna Exports
, says that the double-digit duty coming into the industry will further diminish the already low profit margins that are present. 'This has been the final blow leading to the downfall,' he states, ruefully.
Losing Lustre
Live Events
Jewellery manufacturers in the city do not see any significant improvement in the trade for the next couple of years. Some have also changed their strategy in response to the current situation by focusing on other geographies beyond the US, such as Europe and Asia. 'We want to reduce our dependence on the US market, as three months have already passed, and we don't know how Trump's strategy will pan out. Our other focus is India, where consumers are fond of branded jewellery, so that we can sell most of the products to Indian consumers as well,' Dholakia elucidates.
In addition to the tariffs, several other factors have played spoilsport over the years for the industry. Russia's invasion led the EU and G7 to ban imports of Russian diamonds from third countries, limiting access to raw material used by the diamond industry in India. The ban, which came into effect in March 2022, led to many job losses, salary cuts, and suicides resulting from financial distress.
This was followed by the Israel-Palestine conflict, which put immense pressure on India's diamond supply chains. Cut and polished diamonds, the highest exported commodity category to Israel, fell 11.24% year-on-year to $1.2 billion in FY23. In imports, rough diamonds, the highest exported commodity from Israel, fell nearly 53% to $519 million, according to industry data.
In fact, a Surat-based major diamond manufacturing firm,
Kiran Gems
, had even declared a 10-day 'vacation' for its 50,000 employees from August 17 to 27 last year, citing diminished demand for polished diamonds in international markets due to recession, a PTI report stated.
Moreover, the advent of lab-grown diamonds (LGDs) has also taken the sheen away from natural diamonds. However, there are both pros and cons to it, experts say. Jayanti N. Savaliya, Regional Chairman-Gujarat Region, GJEPC, states that though natural diamond trade has been impacted with LGDs making a foray, it has also helped in survival for the industry.
'LGDs came up as an alternative to those looking for work. So, there are advantages as well as disadvantages to it. There was stability in the Surat market, and workers did not go unemployed. So, though the industry was facing an impact due to low trade volumes, LGDs helped sustain some momentum,' he highlights.
Brand Surat
Going forward, Savaliya is of the view that Surat needs to up the ante on technology, branding, and quality to stay competitive. 'More focus should be on value-added jewellery, which can then be exported. Skill work development also needs to happen so that industry can understand more about LGDs, which are tech-based. Besides this, exporters need to be imparted with more awareness and tech education so that they can deliver products that are of international standards and quality,' he says.
Affirming his views, Vijay Mangukiya, Managing Director at Dhani Jewels, says that even though it is a challenging time right now, people have found a way to diversify and move ahead. He adds a caveat, though. 'They need to cater to the current global trends and what consumers want. This is what will translate to survival for them. Natural diamonds will have their own market, and so will lab-grown ones. As the jewellery industry survives on new categories, creation and innovation will take centre stage. Those who are not able to align with the shift will not survive in this industry,' Mangukiya states.
In this cut-throat industry characterised by profit margins, agility and the capacity to think quickly are essential for maintaining stability. Dholakia mentions that Surat is now slowly also elevating itself as a jewellery manufacturing hub. 'In the past couple of years, 200-500 units have sprung up in the city. Since money is not able to get capitalised in the natural diamond business, people are looking to diversify in jewellery manufacturing instead. Ultimately, everyone has the money; they just have to see where to utilise the capital to get lucrative returns,' he says.
Dholakia is hopeful that the gem and jewellery industry will be taken into account in the trade deal being negotiated between India and the US. 'We are employing more than 10 million people and are a significant contributor to the GDP. Hence, the industry should be factored in during the trade deal. We are one of the most beautifying industries, where jewellery is worn not just by people but also by Gods and Goddesses in temples. We see that our industry is forever, as diamonds are forever,' he emphasises categorically.
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