Slowdown in the US economy has sent shivers down the spine of not only financial markets across the globe but also taken the sheen off India’s sparkling diamond industry.

The recent US turmoil has robbed the Surat diamond industry off its glitter. Diamantaires in the diamond city estimate that the US meltdown has resulted in a 15% to 20% fall in diamond demand.

Apart from this, diamonds cut and polished in Surat are routed to the US through various other parts of the world, such as Dubai, Hong Kong, Thailand and Israel. These countries purchase polished and cut diamonds from Surat to manufacture diamond jewellery and sell their finished products in the US.

“The US slowdown has already taken its toll on the Rs 60,000 crore diamond industry in Surat. The demand for diamonds has declined by around 15 to 20 per cent after the crisis in the US markets,” said Chandrakant Sanghvi Chandrakant Sanghvi, Regional Convener for Gujarat, Gems and Jewellery Export Promotion Council (GJEPC).

Though it would be difficult to quantify fall in the demand at this point of time but the bulk buyers in the US are treading cautious with their purchases. “They have either stopped purchases or scaled down offtake from India as they are jittery about sales of finished products in the American markets,” said Sevant Shah, owner of Surat-based Venus Jewels.

“Three years back, US markets constituted 60 per cent of the total diamond exports from India, which has halved to 30 per cent now. It is further expected to decline in the wake of financial crisis in the US,” said former president of the Surat Diamond Association.

Slump in demand of diamond has also taken its toll on the prices of cut and polished diamonds. “The prices have recently plummeted by 3 to 5 per cent,” said Chandrakant Sanghvi. This has added to the woes of diamond-cutting and polishing units as the prices of rough diamonds have gone up in recent times. However, a higher dollar against rupee has provided some cushion to the diamantaires.

Considering the bearish sentiment in the market, diamond units are likely to extend the Diwali vacation. This year, the vacation is expected to be of 45 days and it will start earlier. “Some units have already closed for the vacation,” said Pravin Nanavati.

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