Exports of cut and polished diamonds estimated to decline by 22% in FY2024: ICRA
ICRA expects India’s exports of cut and polished diamonds (CPDs) to fall by 22% to $17.2 billion in FY2024, amid weakened demand from the key consuming nations. According to ICRA’s recent note on the sector, CPD exports have been on a declining trend since H2 FY2023.
In 5 months of FY2024, CPD exports witnessed a sharp YoY decline of 31%, led by a decline in both export volumes and polished diamond prices.
While some sequential improvement in volumes is expected in the coming months, driven by the onset of the festive season, overall exports are still expected to contract by 10% YoY in the second half of the fiscal. The rating agency has revised the sector outlook to negative from stable.
Sakshi Suneja, Vice President & Sector Head, ICRA said in a statement: “The export contraction is primarily being driven by weak underlying demand conditions in key consuming nations like the US and Europe due to the inflationary pressures, leading to a shift in spending away from diamonds.
Demand from China, which accounts for 10-15% of the global demand, has also not picked up meaningfully so far. In addition, competition from lab-grown diamonds, which are priced at a significant discount to natural diamonds, also accentuated the dip in volumes, particularly for the large-sized diamonds in the range of one to three carats.
The share of lab-grown diamonds within India’s total CPD exports continues to rise.”
The prices of rough diamonds remain elevated in Year to Date FY2024, with current prices hovering around the 15-year median level, despite some softening seen in the recent months. These prices had soared in the last two years, following limited supply from mining companies and robust revival in demand, post the pandemic.
