India’s diamond polishing industry is set to face one of its steepest declines in nearly two decades, according to a report by CRISIL Ratings. The imposition of 50% tariffs by the United States on gem and jewellery exports is expected to slash revenues by 28-30% to around $12.5 billion in the current fiscal year, down from $16 billion last year. This would mark the industry’s lowest revenue since 2007.
The downturn comes after three years of declining sales, with revenues already shrinking by 40% due to weaker demand in the US and China, falling natural diamond prices, and growing competition from lab-grown alternatives. The US alone accounts for 35% of India’s polished diamond exports, making it a critical market.
Impact of Higher Tariffs
CRISIL noted that India polishes nearly 95% of the world’s diamonds, but the latest tariff hike makes exports difficult. With already thin profit margins, companies cannot absorb the extra cost, and passing it on to consumers is unlikely given the soft demand. This will further reduce operating margins, which are expected to fall to 3.5–4.0% this year, down from a peak of 5.5% in fiscal 2023.
Analysis of 43 major diamond polishers, representing about a quarter of industry revenue, showed similar risks. Credit profiles could weaken due to reduced operating leverage and lower profitability.
Market Shifts and Global Competition
While the UAE has emerged as an alternative hub for exports—its share doubling to nearly 20%—lab-grown diamonds now hold about 60% of the US market by volume, posing additional challenges. Chinese demand has also remained subdued.
CRISIL suggested that Indian polishers focus on three strategies: boosting domestic sales, diversifying to other export markets, and setting up facilities in major trading hubs. However, rerouting through low-tariff nations like Belgium or the UAE may not solve the problem, as most diamonds are still polished in India and subject to higher tariffs.
Financial Outlook
Despite limited reliance on external debt, companies may see pressure on profitability and credit metrics. Interest coverage is projected to fall to about 2 times, compared to 2.3–2.5 times last year. Leaner inventories, timely customer payments, and production cuts by miners will be critical in navigating the slowdown.
CRISIL cautioned that the industry’s revenues and global position will depend heavily on how demand for natural diamonds evolves in key markets amid tariffs and geopolitical uncertainties.
Nithin Rosh 
Leslie Rajan