China has resumed purchasing cut and polished diamonds from India after nearly two years, providing a boost to the Indian diamond trade.
This renewed interest was evident at the Hong Kong International Jewellery Show (4-8 March), where Chinese buyers placed orders to replenish stock. The shift has contributed to an increase in rough diamond prices and renewed expectations for improved trade.
Implications for the Indian Diamond Industry
Surat, India’s main hub for diamond cutting and polishing, has been affected by lower demand from China in recent years. With China being India’s second-largest export market after the United States, the return of buyers is expected to support production and employment in the sector.
Vipul Shah, Managing Director of Asian Star, a diamond exporter, commented: “Buyers were cautious and mainly purchased small diamonds. We are happy that Chinese buyers have started showing interest. We can see green shoots of recovery. Hopefully, FY26 will be better for Indian diamond exports.”
Shifts in Chinese Consumer Preferences
In recent years, Chinese consumers have shown a stronger preference for gold over diamonds, viewing it as a more stable investment. This trend contributed to a decline in India’s diamond exports, with shipments to Hong Kong—through which most of India’s diamond trade with China is routed—falling by 28% in FY24 and dropping 60% in the current fiscal year up to February.
Traders noted that the mood among buyers at the recent Hong Kong jewellery show was better compared to the Jewellery & Gem World Hong Kong show in September 2024, indicating some improvement in sentiment. However, uncertainty remains over whether this trend will continue.
Market Adjustments and Price Movements
Following renewed interest from Chinese buyers, rough diamond prices have increased by 3-4%. However, traders caution that these price rises may not be sustainable if demand remains uncertain.
Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC), noted:
“We are cautiously optimistic about the recent uptick in diamond demand because we are not sure how long it will last. Diamond prices are being quoted 3-4% higher which we believe is a bit premature. Our members have observed at the recently concluded Hong Kong fair a lot of enquiries from buyers of mainland China.”
A GJEPC executive further commented: “As compared to the September 2024 fair, the recently concluded Hong Kong Jewellery show performed better, signalling a potential stabilisation in the market. However, the industry seems to be settling into a new normal, with the turnover of jewellery companies now approximately 30% to 40% lower than in previous years. This recalibration of the market size requires stakeholders to adjust expectations and strategies accordingly.”
Outlook for the Diamond Industry
While the renewed interest from China is a positive development, the long-term trajectory of demand remains uncertain. Indian diamond traders will need to monitor trends carefully and adapt to evolving market conditions.
