India Calls for 2-Month Moratorium on Rough Diamond Imports

The plea comes against a backdrop of declining demand and falling prices.

Michelle Graff michelle.graff@nationaljeweler.com

Stock image of rough diamonds from De Beers

Five diamond industry leaders in India have signed onto a letter calling for a two-month halt on rough diamond imports amid flagging demand for diamond jewelry and falling polished natural diamond prices. (Stock image ©De Beers Group/Photo credit: Ben Perry @ Armoury Films)

Mumbai, India—Diamond industry leaders in India are appealing to mining companies and the country’s manufacturers to stop importing rough diamonds for at least two months.

In the letter, they “suggested” manufacturers halt the import of rough diamonds from Oct. 15-Dec. 15 in response to the decline in diamond jewelry demand in the world’s two largest markets, the United States and China.

The letter also notes that Indian diamond leaders already have reached out to all the major diamond mining companies and asked them to support the industry with a “prudent and responsible approach in their offerings to their respective customer base.”

It states: “We have witnessed that mining companies are regularly selling the rough diamonds that are being mined, irrespective of the state of demand in the midstream. They believe that the midstream is a mature segment of the pipeline and will only purchase rough diamonds if there is real demand.

“In other words, they rely on the midstream to gauge the demand for rough diamonds and are happy to respond with corresponding levels of supply. This puts the onus on the midstream to transmit real levels of demand by translating our need for supply of rough diamonds to all mining companies.”

Alrosa, which remains under sanction in the U.S., agreed last week to cancel its September and October sales in response to a request from India’s Gem & Jewellery Export Promotion Council (GJEPC).

De Beers said it will continue to hold sights, focusing on “additional supply flexibility” for sightholders when needed.

The company said it will “take a responsible approach to rough diamond sales, supplying to demand and supporting both the short-term and long-term health of the industry, just as we have previously when faced with challenging industry conditions.”

Together, Alrosa and De Beers account for approximately 53 percent of the world’s production by volume and 59 percent by value.

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The call to temporarily halt rough diamond imports comes as the decline in demand for diamond jewelry has left Indian companies with more polished natural diamonds in a market where prices are falling.

It is the third time industry leaders in India have made such a plea. The first was in 2008 during the global financial crisis, and the second came in 2020 during the COVID-19 pandemic.

As Stephen Rego reported for National Jeweler’s September 2023 India Diamond Report, the country’s polished diamond production is well below the levels recorded last year, signaling an end to the halcyon days the industry witnessed in the immediate wake of COVID.

According to figures released by the GJEPC, in the first five months of the Indian fiscal year (April to August 2023), exports of polished diamonds have fallen 30 percent year-over-year in value terms and are down 28 percent in volume terms.

Ajesh Mehta of D. Navinchandra Exports, who is also head of GJEPC’s Diamond Panel Committee, told Rego that while manufacturers expected a drop-off in U.S. demand, the global slowdown has been deeper and wider than anticipated due in large part to stagnant demand in China.

In the letter, the industry leaders provided examples of the various initiatives under way to help stimulate natural diamond demand, including the GJEPC’s gala at the recent Hong Kong show, the new dedicated diamond section at the India International Jewellery Show, and the efforts of the Natural Diamond Council, which just unveiled its latest campaign.

De Beers also is looking to generate demand for natural diamonds this holiday season by reviving and refreshing its “Seize the Day” campaign from the 1990s.

“We have no doubt and remain confident that we will address and improve long-term demand in this precious and rare natural resource, but at the same time, we must navigate the short term carefully,” the letter states.

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The leaders of five key Indian diamond industry organizations signed the letter: GJEPC Chairman Vipul Shah, Bharat Diamond Bourse President Anoop Mehta, Mumbai Diamond Merchants Association President Bharat Shah, Surat Diamond Bourse Chairman Vallabhbhai Patel, and Surat Diamond Association President Jagdish Khunt.

The letter calls for revisiting the proposed ban on rough imports on Dec. 1 to gauge if the supply/demand situation has improved.

It also noted that Indian diamond manufacturers should continue their operations without interruption despite the ban on rough imports, and that measures should be taken to ensure the moratorium doesn’t impact the livelihoods of the country’s many diamond factory workers.

“Having taken these steps, we have no doubt that we will come through these challenging times stronger than ever, as we all believe in the longer term consumer demand and value of this finite natural gift of love—diamonds.

“Let us act together in the collective interest of the Indian diamond industry so that we can confidently walk towards a better season ahead,” the letter concludes.