Diamonds, which are long celebrated as symbols of splendour and timeless value, are now undergoing a significant decline in their market value. This shift is fueling concerns and people are raising questions about the future of these priceless gems.
Even India, which is rich in reserves of both natural and synthetic diamonds, is not immune to this shift. It is essential that we understand the factors contributing to the steep decline in diamond prices, and examine its wider consequences.
It’s been almost two years that the diamond industry has been scuffling with the slumping prices. According to a report by the Times of India, while the values of both natural and synthetic diamonds have dropped, natural diamonds are experiencing a more noticeable decline in their prices.
Ashok Gajera, the Managing Director and Chairman of Laxmi Diamonds has emphasized how critical the scenario is. He said, “It would be an understatement to say that business has been slow. Diamond rates have been falling for the past 22 months.” from major corporations to smaller enterprises, a wide range of businesses have been affected due to This downswing. Around 38,000 workers in Surat are encountering economic tension due to this downturn.
Natural Diamonds
Traders are selling these valuable gems at a loss as there has been an uninterrupted decline in diamond values. Gajera has highlighted that natural diamonds are facing intense competition from lab-grown diamonds. The value of these impeccable lab-grown diamonds has plummeted too, from $300 per carat in July 2022 to $78 per carat lately.
As reported by the Gem and Jewellery Export Promotion Council (GJEPC), this has impacted India’s gem and jewellery exports as well, where prices drooped by 13.44% year-on-year in June to Rs 15,939.77 crore ($1,909.57 million). Furthermore, over the same period, exports of cut and polished diamonds declined significantly by 25.17%.
As lab-grown diamonds (LGDs) have surfaced more, the condition of the market has significantly warped. Around 400,000 employees within the LGD sector are grappling with delayed salaries and possible job losses.
The delay in salaries can extend up to 20 days each month, as highlighted by the Diamond Workers Union of Gujarat. In the past few years, the value of lab-grown diamonds has plunged by 45%. Paul Zimnisky, an industry analyst, stated that the prices of these LGDs are now 90% less than their natural counterparts. This is in sharp contrast to 2015 when the price difference observed was only 10%.
Lab-Grown Diamonds
Experts have chalked the sharp decline in diamond prices up to a decrease in global demand. China, which once was a leading purchaser of mined and high-quality diamonds, have harshly cut short on its buying, accounting for only 10-15% of previous levels. According to Vipul Shah, the Chairman of the GJEPC, the fall in demand, that too from vital markets like China, is the primary factor contributing to the declining prices.
Governmental policies are further adding to the industry’s challenges. The diamond industry is more vulnerable to governmental policy chances because of its dependence on labour-intensive and large workforce, as pointed out by Sabyasachi Ray, Executive Director of the GJEPC. In an interview with the Times of India, Ray stated, “The gems and jewellery sector supports around 5 million workers, many from disadvantaged backgrounds. This industry relies heavily on skilled artisans and manual workers.”
The diamond sector has reached a very crucial stage, where it is wrestling with unique challenges presented by shifting market conditions and economic changes on a global scale. To navigate these rough waters, the diamond industry must revamp strategically and focus more on sustainability, amidst the rising decline in demand for these treasured gems. The future of these priceless stones now relies on the changing consumer attitude and developing market trends.
