India says slump in diamond exports is much worse than 2008

Diamond exports from India are set to tumble by as much as a quarter this year as the pandemic crushes demand and breaks supply chains.

Overseas sales of cut and polished diamonds may slump 20% to 25% in the year ending March from $18.66 billion last year, according to Colin Shah, chairman of the Gem & Jewellery Export Promotion Council. That will push exports to the lowest in data going back to the 2009 fiscal year on the association’s website.

“In 2008, things were bad for a quarter and business recovered after that. This is now two quarters gone,” Shah said in an interview. While festivals such as Diwali, Christmas, Valentine’s Day and the Lunar New Year will prop up demand in the next six months, it won’t be enough to lift full-year exports, he said.

India unleashed one of the world’s strictest lockdowns in March to contain the coronavirus outbreak. That brought business activity to a halt and put the economy on course for its first annual contraction in more than four decades. With more than 7 million reported infections, the country is now one of the world’s main virus hotspots.

The measures to control the spread of the pandemic meant that the production centers were mainly closed or operating at very low levels and rough diamond imports also fell in line with poor end-product demand. The country’s diamond exports fell 37% to $5.5 billion in the six months through September from the year-earlier period, according to data from the council.

Workers have now started returning to the diamond-polishing hubs of Surat, Mumbai and Kolkata, and factories are operating at 70% to 80% of capacity with social-distancing norms in place, Shah said. Still, it’s difficult to predict global supply chains as rules to control the virus change frequently, he said.