Surat Diamond Bourse Struggles Amid US Tariff Threats and Industry Downturn
India's diamond industry is experiencing severe challenges. Exports have hit a two-decade low due to weak Chinese demand. The US, a major market, plans to double tariffs on Indian diamond imports to 50% on August 27. This could lead to significant revenue losses and job cuts. The Surat Diamond Bourse, the world's largest office complex, stands largely empty with only 250 of 4,700 offices in use. Companies are reducing operations and seeking new markets to mitigate the impact. Without a favorable trade deal, up to 200,000 workers could lose their jobs.
*this image is generated using AI for illustrative purposes only.
The world's largest office complex, the Surat Diamond Bourse, stands as a stark symbol of the challenges facing India's diamond industry. Despite its impressive scale, with 4,700 offices sold, only 250 are currently in use, highlighting the severe headwinds buffeting the sector.
Export Slump and Tariff Troubles
India's diamond industry is grappling with a perfect storm of challenges. Exports have plummeted to a two-decade low, primarily due to weak demand from China, a key market. Adding to the industry's woes, the United States, which accounts for nearly a third of India's annual gem and jewelry shipments worth $28.50 billion, is poised to implement punitive tariffs.
The current US tariff of 25.00% on Indian diamond imports is set to double on August 27, potentially dealing a severe blow to the industry. This increase would put Indian diamantaires at a significant disadvantage compared to competitors from countries like Botswana, which face only a 15.00% tariff.
Impact on Businesses
The looming tariff hike has sent shockwaves through the industry. Dharmanandan Diamonds, a major player in the sector, anticipates a staggering 20-25% reduction in annual revenue due to the increased tariffs. The company is considering shifting more production to Botswana to mitigate the impact.
In Surat, the heart of India's diamond industry where over 80% of the world's rough diamonds are processed, the effects are already being felt. Diamond trader Shailesh Mangukiya reports a sharp decline in prices, with diamonds that previously sold for 25,000 rupees now fetching only 18,000 rupees. Mangukiya has been forced to halve his workforce to 125 employees in response to the downturn.
Industry-wide Repercussions
The ripple effects of the crisis are spreading throughout the industry:
- Job Losses: Industry experts warn that without a favorable trade deal, between 150,000 to 200,000 workers could lose their jobs.
- Operational Changes: Companies are implementing various measures to weather the storm, including:
- Reducing working hours
- Cutting inventory levels
- Offering significant discounts to maintain cash flow
Diversification Efforts
As the US market becomes increasingly challenging, Indian diamond companies are actively seeking to diversify their customer base. They are exploring opportunities in Asian, European, and Middle Eastern markets to offset the potential loss of US business.
Surat Diamond Bourse: A Dream Deferred
The Surat Diamond Bourse, once hailed as a symbol of the industry's strength and ambition, now stands largely empty. Many companies have put their relocation plans to the bourse on hold, reflecting the uncertainty pervading the sector.
As the August 27 deadline for the US tariff hike approaches, the Indian diamond industry finds itself at a crossroads. The coming months will be crucial in determining whether this storied industry can regain its luster or if it faces a prolonged period of diminished sparkle in the global market.
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