India's Diamond Industry on Brink of Collapse Due to US Tariffs

Strategic Insights -

The Indian diamond industry, a major contributor to the country's export earnings, is on the brink of collapse due to the escalating trade tensions between India and the US. The industry, which employs over 1 million workers, has seen exports of cut and polished diamonds fall by 17% in the year to March, to just over $13 billion. The industry's woes are compounded by the US President's executive order imposing a 10% tariff on Indian imports, which threatens to further depress demand and push more workers out of jobs.

Key Takeaways:

  • The Indian diamond industry, which is a major export sector, is facing a deep crisis due to the US tariffs.
  • Exports of cut and polished diamonds have fallen by 17% in the year to March, to just over $13 billion.
  • The industry employs over 1 million workers, with many having lost their jobs in the past 12 months.
  • More than 60 workers have died by suicide due to the economic stress caused by the industry's downturn.
  • The industry is struggling to move through its large built-up inventories, with many processors and intermediaries reporting no stability in the past year.
  • Indian exporters are shifting their focus to other markets, including Europe, the Middle East, and within India itself, in response to the US tariffs.

Statistics:

  • 17%: the decline in exports of cut and polished diamonds in the year to March.
  • $13 billion: the value of exports of cut and polished diamonds in the year to March.
  • 1 million: the number of workers employed in the Indian diamond industry.
  • 50,000: the estimated number of artisans who have lost their jobs in the past 12 months.
  • 60: the number of workers who have died by suicide due to the economic stress caused by the industry's downturn.
  • 10%: the tariff imposed on Indian imports by the US President.
  • 90%: the proportion of the world's diamonds that are processed in India.

Sources:

  • "Surat's diamond industry struggles with new US tariff" - The Financial Times (May 2023)
  • Indian government-backed Gems and Jewellery Export Promotion Council (GJEPC)
  • Diamond Worker Union Gujarat
  • CareEdge, an Indian ratings and analytics group
  • The Financial Times (caption: Karen Dias/FT)