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Informist, Wednesday, Apr. 30, 2025

MUMBAI – The export revenue of Indian diamantaires is expected to fall 8-10% in 2025-26 (Apr-Mar), CRISIL Ratings Ltd. said in a release. The 10% additional tariff levied by the US will exacerbate the impact of already-subdued demand and intensifying competition from lab-grown diamonds on Indian diamantaires, it said.

The US accounts for nearly a third of Indian natural diamond exports. "...calibrated inventory management across the value chain will support realisations, thus helping reduce the decline in export revenues, and limit the erosion of operating margins, helping contain the players' financial leverage and credit metrics," the report said.

The rating agency analysed 43 such diamantaires, accounting for nearly a fourth of the industry's revenue. In FY25, export volumes of natural diamonds were constrained by lower demand from China and competition from lab-grown diamonds in the US. Polishers pushed sales in the fourth quarter to avoid tariffs, but revenue from natural diamond exports fell 17% to around $13.3 billion.

"This fiscal, realisations on natural diamonds are poised to rebound 3-4% amid limited inventory across the value chain as diamantaires are aligning their rough purchases with visibility in sales of polished diamonds," said Rahul Guha, senior director at CRISIL Ratings. "Additionally, production cuts by miners will curtail price erosion. This contrasts with LGD (lab-grown diamonds), whose prices may reduce from a tenth of the price of natural diamonds last fiscal to a twelfth in the current fiscal, resulting in a wider price gap between natural diamonds and LGD," Guha added.

The rising price gap could lower natural diamond export volumes further by 12-14%, marking a third consecutive year of weak demand. Bacause of this, natural diamond polishers will face difficulties to pass on any tariff-led price hikes to customers, the report said.

"Natural diamond polishers, traditionally operating at thin margins of 4-5%, will have limited ability to absorb the tariff-induced price rise. As a result, miners and retailers may need to step in to absorb some of the price shocks. Consequently, we believe the operating margins of polishers may dip 20-30 basis points to 4.3-4.5% this fiscal," said Himank Sharma, director at CRISIL Ratings.  End

Reported by Ashutosh Pati

Edited by Avishek Dutta

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