Whalesbook
Geopolitical conflict in West Asia has severely impacted India's overall gem and jewellery exports, yet the sector shows a split performance with silver jewellery standing out and a strategic push towards becoming a rough diamond trading hub.
Conflict's Impact on Exports
India's gems and jewellery exports saw a significant 35.23% contraction in March. This decline was directly linked to escalating geopolitical tensions in West Asia. The conflict disrupted trade routes and increased insurance premiums, making shipments difficult. Exports of cut and polished diamonds (CPD) fell 27.48% in March alone. For the full fiscal year 2025-26, overall gems and jewellery exports dipped slightly by 3.32% to approximately $27.7 billion, down from $28.7 billion in the previous fiscal year. Major jewellery stocks, like Titan Company, showed minor fluctuations, reflecting investor caution.
Silver Shines Amidst Diamond Struggles
A clear divergence in performance is evident, with silver jewellery emerging as a strong performer. Silver jewellery exports surged by 52.21% over fiscal year 2025-26, reaching $1.47 billion. This robust growth contrasts with gold jewellery exports, which remained largely flat. Polished diamonds continued to face pressure, declining 8.52% for the fiscal year. This disparity may signal a shift in consumer demand towards more affordable or versatile options, especially given current economic uncertainties.
Push for a Rough Diamond Hub
Amid these challenges, the Gem and Jewellery Export Promotion Council (GJEPC) is pushing for India to become a rough diamond trading hub. Chairman Kirit Bhansali highlighted leveraging India's expertise in diamond cutting and polishing. Interest from companies in the UAE, a major rough diamond trading center, is noted. With government backing, India aims to capture more of the rough diamond trade, diversifying beyond polished goods.
Challenges to the Hub Ambition
Establishing India as a rough diamond trading hub faces significant hurdles. Ongoing volatility in West Asia poses risks to new trading operations. Transitioning requires more than polishing skills; robust financial infrastructure, efficient regulations, and strong ties with mining sources are crucial. Established centers like Dubai have advantages. The sector remains vulnerable to global economic slowdowns and geopolitical shocks. Reliance on policy without market demand could make the hub plan costly. Diamond demand also competes with other luxury items, sensitive to economic downturns.
Outlook for Recovery
GJEPC anticipates geopolitical tensions stabilizing within two to three months, expecting export recovery. The council is exploring new markets to reduce reliance on specific regions. Industry analysts see a positive long-term outlook for the sector, provided it adapts to global trade dynamics and pursues niche opportunities like rough diamond trading with supportive policies.