The Indian Diamond Processing Industry Losing Its Luster?

Indian Diamond Processing
Indian Diamond Processing
Indian Diamond Processing Industry
Indian Diamond Processing Industry

Natural diamond is an allotrope of carbon that is formed under tremendous pressure and temperature deep in the bowels of the earth. Due to the unique lattice arrangement of the carbon atoms in the diamond molecule, the diamond has been attributed with physical properties like its extreme hardness and high thermal conductivity. Natural diamonds are usually transparent, rarely impure, and has high refractive index. Other than its ubiquitous use as jewellery, diamond is also an important component of industrial operations. The extreme hardness of the diamond is used in the industries to develop precision tools because diamond serves as an indispensable cutting and polishing agent for such purposes. Diamond is endowed with unparalleled durability and its optical and mechanical properties make it the most important and expensive allotrope of carbon that has been tagged with the much clichéd saying, ‘diamonds are forever’.


The most renowned institute in the field of diamonds is the Indian Diamond Institute (IDI), established in 1978. Not only diamonds, IDI is famous for other precious gemstones and also jewellery designing. The extremely high end infrastructure of this institute provides a comprehensive education in the field of gem stones especially diamonds which of course is the most valued and preferred gemstone in the whole world.


The diamond processing industry of our country is a flourishing industry, the export sector of which is one of the top foreign currency earners of our country. This industry is also an employment intensive sector currently employing six lakh people. However, the Indian diamond processing industry which once boasted the rare credit of cutting and polishing of eleven out of every thirteen globally mined diamond pieces is currently finding itself between a rock and a hard place. The major reason is of course the record slump of rupee against dollar in the international market. However, the fact that dollar is fetching more rupees in the international market has affected the industry in a varied way.


According to the latest data revealed by Gems and Jewelry Export Promotion Council (GJEPC), the polished diamond export showed a remarkable increase of 22% (US$ 1.478 billion), a net 7% increase amounting to 2.776 million carat by volume. This period recorded the Indian diamond industry processing almost 90% of the globally mined diamonds. In parallel, this period also witnessed the widening deficit of India’s net diamond account from US$ 146.82 million last year to the current US$ 477.91 million. As per the official report of GJEPC, India’s net import of rough diamonds from January 2013 to April 2013 was US$ 5.5 billion as compared to US$ 5 billion for the same period last year.


The Government of India introduced certain amendments to discourage import and increase export. As per a notification, Anup Pujari, the Director General of Foreign Trade, India, declared, “Cut and polished diamonds of 0.10 carat or above can be exported and thereafter re-imported duty free after certification by authorized laboratories”. Earlier, only diamonds of 0.25 carat or above could have availed this facility. The amendments introduced state that, “An exporter with annual export turnover of about US$ 831.289 (Rs 50 million) for each of the past three years may export cut and polished diamonds of 0.10 carat and larger to authorized laboratories with re-import facilities at zero duty within three months of the date of export”.

However such amendments don’t seem to be working for the small and medium scale diamond processing unit owners of Surat (one of the world’s biggest diamond cutting and polishing hubs) who seem to be hit worst by the falling value of rupee against dollar. The situation is so grave for them that they have ceased to accept rough diamond consignment deliveries from Antwerp, Dubai and African countries. Increase in the price of the rough diamonds by 15% to 17% combined with the falling value of rupee is preventing them from taking any kind of risks. Majority of the diamond merchants have stocked their diamond supplies overseas anticipating a further depreciation in the value of rupee. The increase in the rough diamond import is heavily affecting the diamond processing industry as a whole. While the rupee-dollar balance remains unfavorably skewed, a shadow of uncertainty looms over the entire diamond industry. Recently, the diamond industry has seen a considerable unemployment stemming from this uncertainty.

Another very important factor that is plaguing the Indian diamond processing industry is China’s new strategy of investing in African diamonds. As a part of China’s ‘Africa Invest Policy’, the China Development Bank (CDB) had promised an investment of up to US$ 10 billion in the Zimbabwean mining and agricultural sector. The repayment would be in the form of Zimbabwean diamonds. Besides most of the diamond mining African countries have adopted the beneficiation program under which they are setting up their own diamond processing units. As a result, outsourcing of rough African diamonds to India for cutting and polishing has stopped entirely, whereas India was a major center for such processing. In fact all attempts by Indian traders to secure a supply of rough diamonds from Zimbabwe have ended in a cul-de-sac.

One small ray of hope in this rough market is the brilliant breakthrough of the IIa Technologies, Singapore in creating artificial, rare and colorless Type IIa diamonds using the ‘micro-wave plasma chemical vapour deposition technology’. These lab synthesized IIa diamonds are free from any human abuse and other issues that might encompass mined diamonds. Type IIa diamonds are well accepted in the global market and can be a possible solution to the present creaky condition of the Indian diamond processing industry. These diamonds are comparable in every way with mined rough diamonds and what’s more, since these IIa diamonds are lab synthesized, a consistent supply is guaranteed.

The slump of the rupee against dollar, China’s new African strategy and general shortage of rough mined diamonds have left the Indian diamond processing industry standing at the crossroads with a bleak future. Other small factors are also there, like the general propensity amongst the consumers to buy electronic goods rather than jewellery. However, it is to be seen how fast the rupee can gain a respectable value in the international market. This alone will be enough to restore some of the lost luster of the Indian diamond processing industry.