On Thursday, the Indian National Congress (INC) in Gujarat publicly stated that the country's diamond industry is facing a major crisis, and the Indian government must take action to help hundreds of thousands of diamond workers out of their current difficulties.
Over the past year and a half, more than 100,000 workers have lost their jobs due to the industry’s decline, with over 100 taking their own lives due to financial hardship. Despite this, the Indian government has been described as "corrupt, inefficient, and incompetent," failing to take any action to assist these workers.
Although this public statement can largely be seen as a political struggle between the INC and the Bharatiya Janata Party (BJP), with industry issues being used as leverage, it nevertheless reflects serious problems that persist in the diamond industry both in India and globally.
In content disclosed by the Indian media, the INC blamed the plight of diamond workers in Gujarat on G7 sanctions against Russian diamonds and questioned whether the Indian government had raised concerns with the Ministry of External Affairs and the Ministry of Commerce and Industry about the adverse effects of these sanctions.
A Times of India report on October 3 discussed the details of the sanctions, stating that a large number of rough Russian diamonds still enter India, where they are cut and polished, then exported to Western markets via Hong Kong and the UAE (note: this information has not been verified). This creates a subtle opposition to the G7's strict embargo and, invisibly, intensifies political tensions between nations.
As mentioned in our previous articles, the political nature of the natural diamond industry is becoming increasingly apparent and undoubtedly affecting the direction of the industry. From a few years ago, when the narrative was "a diamond is a diamond regardless of origin," to today’s emphasis on traceability and strict scrutiny of origin, political power plays a significant role.
This is no longer an "invisible hand."
Addressing Industry Challenges
In today’s climate of severely declining market demand and continually falling prices, it seems India lacks a quick solution. However, this doesn’t mean efforts have ceased—on the contrary, we can see some avenues for breakthroughs in recent news:
- On September 30, GJEPC (Gem and Jewellery Export Promotion Council) held a seminar in conjunction with BDB (Bharat Diamond Bourse) and MDMA (Mumbai Diamond Merchants’ Association) to discuss the "key pricing challenges faced by the diamond industry." Participants pointed out that the existing diamond price index suffers from "a lack of transparency, monopolization, and incomplete industry feedback" and urged the creation of a more transparent alternative index.
If this topic gains support from midstream companies, it could mean that India will have more influence over natural diamond pricing—even if it will likely face resistance and pressure from various sources.
- Additionally, SDB (Surat Diamond Bourse), which was recently established but struggling, announced plans to connect with LGDA (Lab-Grown Diamond Association) and to attract more lab-grown diamond companies.
Despite the massive investment of ₹34 billion, and its claim of being "larger in scale than the Pentagon," SDB has only attracted 50-60 companies to move in. The poor condition of the bourse has led to it being dubbed a "ghost building" by the Indian media a few months ago. The lack of supporting infrastructure is part of the problem, but the broader decline in the diamond market has caused significant financial difficulties for companies.
According to The Blunt Times, SDB's engagement with LGDA seems to reflect a further willingness to welcome lab-grown diamond companies to Surat. However, based on our understanding of India, there is a significant possibility that this move could end up being a "smokescreen" since infrastructure issues cannot be solved just by holding a few meetings.
An Uncertain Future
In the face of today's market downturn, India’s diamond industry is indeed experiencing unprecedented difficulties. Amid these challenges, it is essential for India to balance the production of lab-grown and natural diamonds to ensure job security for hundreds of thousands of workers. The release of GJEPC's September import and export data in mid-October will clarify the situation in India, and we will provide a more detailed description of the international diamond industry for the first three quarters of this year.