Slump in India’s diamond exports this year worse than 2008 crisis, says Bloomberg

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India’s diamond exports, which polishes about 90 per cent of the world’s rough diamonds, is likely to collapse by as much as a quarter this year as the pandemic has crushed demand and broken supply chains all across the world, says a Bloomberg report.

Quoting Colin Shah, chairman of the Gem & Jewellery Export Promotion Council, the Bloomberg report claims that overseas sales of cut and polished diamonds may slump by 20 per cent to 25 per cent in the year ending March 2021 from $18.66 billion last year. Since 2009 this will be the lowest exports of polished diamonds from India. 

“In 2008, things were bad for a quarter and business recovered after that,” Shah said in an interview. “This is now two quarters gone.” While festivals such as Diwali, Christmas and Valentine’s Day will prop up demand in the next six months, that won’t be enough to lift full-year exports, he said.

India imposed one of the world’s strictest lockdowns in March to contain the coronavirus outbreak. That brought activity to a halt and put the economy on course for its first annual contraction in more than four decades. With more than 7 million infections, the country is one of the world’s virus hot spots.

The measures to control the pandemic meant production centers were closed or operating at very low levels, and rough-diamond imports fell in line with poor end-product demand. The country’s diamond exports sank 37 per cent to $5.5 billion in the six months through September from the year-earlier period.

Workers have now started returning to the diamond-polishing hubs of Surat, Mumbai and Kolkata, and factories are operating at 70 per cent to 80 per cent of capacity with social-distancing norms in place, Shah said. Still, it’s difficult to predict global supply chains as rules to control the virus change frequently, he said.

De Beers sold about $467 million of rough diamonds in its eighth sales cycle of 2020, Anglo American Plc said. Sales improved compared with $334 million in the previous cycle, and $297 million during the same cycle in 2019.

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