India's Natural Diamond Polishing Industry Faces Record Low Revenue

India's natural diamond polishing industry is expected to see a 25-27% revenue decline, reaching a decadal low of USD 12 billion this fiscal year. The drop is attributed to reduced demand in key markets like the US and China, as well as a shift toward lab-grown diamonds.

India's natural diamond polishing industry is poised to see a 25-27 per cent drop in revenue, hitting a ten-year low of USD 12 billion this fiscal, due to declining demand in crucial markets and a consumer shift to lab-grown diamonds, according to a report released on Wednesday.

The decline is attributed to muted demand in the US and China, a 10-15 per cent decrease in diamond prices due to oversupply, and a growing preference for lab-grown diamonds (LGDs), Crisil Ratings stated in its report. Revenues have now fallen for the third consecutive fiscal year, following a 29 per cent contraction in the previous year and a 9 per cent decline in FY23.

Tepid demand and decreasing prices have prompted diamond polishers to limit rough diamond purchases and reduce manufacturing. In response, miners have cut production, easing inventory pressures and helping stabilize prices. This is expected to stabilize operating margins at 4.5-4.7 per cent in FY25. Despite these challenges, lower working capital requirements will likely limit external debt reliance and support medium-term credit profiles.

(With inputs from agencies.)