Indian diamond exporters are facing mounting pressure as global demand for natural diamonds weakens, hit by economic headwinds and the rapid rise of lab-grown alternatives.

In major markets such as the US and China, natural diamond sales have dropped significantly over the past two years, squeezing margins for India's large cutting and polishing industry that relies heavily on exports.

Diamond exports from India slumped 22 percent in April-June 2025 to $2,837.3 million, according to data from Gem & Jewellery Export Promotion Council (GJEPC).

Exports to the US, a key market, declined 30 percent in 2024 amid factors including supply chain disruptions, economic uncertainties, a shift in interest towards affordable jewellery, and increased competition from lab-grown diamonds (LGDs).

However, rising demand at home .is providing a much-needed buffer, as domestic natural diamond jewellery sales grew 12 percent to $9.3 billion in 2024.

Industry executives say the domestic market's growing appetite, especially among first-time buyers, could help partially offset the international slump.

"India has overtaken China to become the world's second-largest diamond jewellery market," said Amit Pratihari, managing director at De Beers India. "There's a significant opportunity as only 10 percent of Indian women in the potential market currently own natural diamond jewellery."

Lab-grown diamonds accelerate disruption in export markets

One of the key reasons for the slowdown in India’s diamond export growth is the rapid rise of LGDs, particularly in the US market. Over the past few years, synthetics have grabbed a major share of solitaire jewellery sales by offering significant price advantages.

"The US retail market pushed LGDs heavily for the last three to four years as a fast-moving, affordable category. Today, they make up about 50 percent of solitaire diamond jewellery sales," said Ramit Kapur, managing director at Gemological Science International (GSI). "But LGDs are losing value every quarter, and retailers are beginning to rethink their positioning."

The pricing pressure has led to steep corrections — natural solitaire prices have fallen between 30 and 35 percent — forcing Indian manufacturers to scale back production and rethink inventory. Smaller stones like melee, which have seen relatively stable pricing, are gaining favour. "Retailers are not overstocking and are shifting to lightweight jewellery formats," Kapur added.

Meanwhile, to protect the long-term value of naturally mined diamonds, industry body GJEPC is proposing amendments to the Consumer Protection Act, said Kirit Bhansali, Chairman, GJEPC.

"There is a lot of misinformation about LGDs, their value, and their attributes, so we have a sharp focus on making sure people can access accurate information," Bhansali said.

"Natural diamonds are rare, billions of years old, and carry emotional and symbolic meaning. Lab-grown stones, created in weeks, cannot replicate that," said Pratihari.

Courtesy: Money Control