Exports of cut and polished diamonds to decline by 7-10% in FY26: Icra

"This is largely attributable to pressure on demand in US, exacerbated by uncertainties surrounding imposition of US tariffs. Icra has thus, maintained its sector outlook at negative," report said

After witnessing a 20-year low in FY25, the exports of Indian cut and polished diamonds (CPD) are expected to further decline by 7-10 per cent year-on-year (Y-o-Y) to about $12 billion during the current financial year, Icra said in a report on Thursday.

 

“This is largely attributable to pressure on demand in the US, exacerbated by uncertainties surrounding imposition of US tariffs. Icra has thus, maintained its sector outlook at negative,” the report said.

 

During the previous financial year, CPD exports from India contracted 17 per cent to $13 billion due to worsened global macroeconomic conditions and increasing competition from lab-grown diamonds (LGD) and fancy-coloured diamonds (FCD).

 

 

There was a slowdown in demand in the US and China – two key consuming markets.

 

Driven by shift in consumer preferences for comparatively inexpensive diamonds and their perception of LGD’s ethical sourcing, these diamonds have gained momentum with their market share increasing to 8 per cent of polished diamond exports in FY5, as compared to 1 per cent in FY19, the report said.

 

“The volumes are expected to witness further sequential decline in H1 FY26 (April-September), led by additional demand pressures emanating from uncertainties around US tariff imposition and continued subdued offtake from China, adding that with high inflation having reduced discretionary spending globally, the Indian CPD industry is staring at another demand downturn due to imposition of tariffs by the US,” it said.

 

The report further said that rough diamond imports into India are a leading indicator of the global demand of CPDs. During FY25, while the volumes declined by around 16 per cent Y-o-Y, overall imports in value terms dropped sharply by 26 per cent Y-o-Y due to an 11 per cent moderation in average rough prices.

 

“While anticipating a slowdown in demand, CPD players managed the inventory levels in FY25 by reducing rough procurement and cutting back on production, followed by extended seasonal holidays in Q3FY25. Moreover, to save the additional cost led by US tariffs, most Indian CPD exporters increased the shipments to the US in March 2025, thus leading to controlled inventory levels at the year-end,” it said, suggesting that the CPD players remain reluctant to buy roughs amid sluggish overseas demand as well as the evolving tariff situation.