There has been a steady increase in diamond exports and they are expected to go beyond $20 billion revenue mark this fiscal (2021-22). Interestingly exports have witnessed a growth of 20 per cent when compared to the last fiscal (2020-21). The major demand for diamonds was seen after the first wave of the COVID-19 pandemic. As per a recent report by CRISIL, revenues from diamond exports reached $ 16.4 billion last fiscal (2020-21), marking a decline of 12 per cent due to unprecedented lockdowns across the globe. Towards the second half of the last fiscal, pent-up demand and stimuli had buoyed consumption of diamonds and jewellery in the US and China, which account for around 75 per cent of India’s polished diamond exports.
As per a report by the Gem Jewellery Export Promotion Council of India, the exports of diamonds are showing a positive momentum as the overall gross export of cut and polished diamonds was at $2250.45 million (Rs. 16538.84 crores) during April 2021 when compared to $34.5 million (Rs.261.19 crores) for the same period of the previous year. Besides the cut and polished diamonds, the demand for lab-grown diamonds has also increased overseas. The report further says that provisional gross export of polished lab-grown diamonds during April 2021 also increased and stood at $90.35 million (Rs 669.08 crores) over the comparative figure of $0.02 million (Rs. 0.13 crores) for the same period (April 2020) last year.
The CRISIL report points out that as the pandemic is said to be contained in China, and the US inoculating almost 40 per cent of its population, consumer confidence has improved in both countries. It is expected that demand will improve with economic growth and declining unemployment. Additionally, restrictions on overseas travel and lower spending on hospitality mean celebrations are largely restricted to spending on gifting, including diamond jewellery. It augurs well for India’s diamond exports.
“Diamond exports have been rising and averaging $2 billion per month since October 2020. There will be some moderation in the second quarter of this fiscal, which is a lean period typically. But the festival season that begins in the export destinations from the third quarter of this fiscal year will boost revenue to pre-pandemic levels. That will tantamount to a 20 per cent growth in diamond exports by revenue this fiscal.” said Rahul Guha, Director, CRISIL Ratings Ltd.
As per CRISIL, the onset of the second wave of the pandemic saw smaller, labour intensive polishing units facing 20-30 per cent labour migration. The larger units restricted this movement to around 10 per cent by following physical distancing norms and providing safe transport to their staff. The diamond industry’s current operating rate is over 80 per cent, with sufficient inventory to tide over any production loss in the first quarter of this fiscal. The report states that the pandemic has also improved the management of rough diamond inventory. Earlier, prices of roughs moved sharply versus polished diamonds, leading to the stocking up of the former. The pandemic then led to a correction in the inventory of rough diamonds last fiscal, and this trend continues. It is also expected that the prices of both rough and polished diamonds are expected to be firm and move in tandem this current fiscal.