New Delhi, Mar 6 (FN Bureau) The cut and polished diamond (CPD) exports from India may hit a five-year low in 2023-24 with a dip of around 25-30% to $15-16 billion, CareEdge Ratings said on Wednesday. The rating firm said that medium term CPD exports from India will be influenced by economic recovery in consumption markets, geopolitical landscape, and customer preference for diamond jewellery in the discretionary spending space. “Players operating in smaller carat diamonds (below 0.3 carats) to be better placed than entities dealing in certified diamonds, as smaller carat diamonds have witnessed lower price erosion and limited impact of LGD diamonds,” said Yogesh Shah, Senior Director at CareEdge Ratings.
He further said that the demand-supply imbalance has pressured the pricing of polished diamonds, leading to a price correction estimated at 5%-10% for diamonds below 0.3 carats, 20%-30% for 0.3-3 carat diamonds, and 10%-20% for diamonds above 3 carats in 2023. “This imbalance and price correction have adversely affected the export value,” Shah said. India is the world’s largest centre for cutting and polishing diamonds, accounting for over 90 to 95% of the total world’s polished diamond consumption. The US and China, the primary diamond-consuming markets, together account for approximately 65% of India’s diamond exports.
Following the pandemic, a surge in diamond jewellery demand, spurred by the US economic stimulus and limited opportunities for experiential spending, propelled CPD exports to record highs in FY22 ($24.43 billion) and FY23 ($22.04 billion). “However, economic conditions in the US and China, the rise of alternative discretionary spending options, the growing market for Lab-grown Diamonds (LGD), and geopolitical tensions have negatively affected India’s CPD exports which had resulted in a 28% year-on-year drop to $13.04 billion in 10MFY24, driven by decreases in volume and value,” CareEdge said.