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With lackluster demand from the US, EU and China, rating agency Crisil has said that India's diamond polishing industry will see its revenue drop by 30-35 per cent to $14-15 billion in current fiscal. It highlighted that these three geographies account for 75 per cent of India's polished diamond exports. Rahul Guha, Director, Crisil Ratings said ‘Israel imports $1.25 billion worth of polished diamonds annually from India. With the country now declaring a war on the Palestinian militant group Hamas, this number could be at risk’.

He said there is some increase in demand in the second half of every fiscal from festivities such as Thanksgiving, Christmas and the Chinese New Year, but this is unlikely to provide a significant offset this time. He noted ‘Consequently, we see the Indian diamond industry shrinking by over a third on an annualised basis this fiscal’. According to Crisil, with the inventory of higher-cost polished diamonds piling up to over four months of sales, profitability of polishers will be chiselled 50-100 basis points amid lower retail prices. The silver lining is that a shrinking business translates to reduced debt, which will offset the pressure on credit risk profiles of diamond polishers. This was indicated in a study of 46 diamond companies rated by Crisil that account for over a fifth of the Rs 180,000 crore industry by revenues as of last fiscal year.

Crisil further said demand for polished diamonds started weakening since last fiscal amid slowing economic activity leading to a volumetric drop of 25 per cent. But worries about supply of rough diamonds following western sanctions on Russian mining major Alrosa supported prices. Polished diamond price on an average was up nearly 10 per cent last fiscal on-year. This helped arrest the decline in India's polished diamonds exports to $22 billion last fiscal from $24.2 billion in fiscal 2022.  In 2023-24, Crisil said ‘not only has demand fallen further in major markets, but also there has been no disruption in the supply of roughs’. Consequently, prices of roughs have corrected, leading to polished diamonds getting cheaper by 10-15 per cent.