Why Surat diamond industry is seeing little sparkle ahead of Diwali

Diwali, the festival that sees a boost in purchases of precious stones and jewellery, is almost here, but it seems the festival of light is unable to eradicate the darkness prevalent in Surat’s famous diamond industry.

The sector, which accounts for the cutting and polishing of the world’s 80 per cent rough diamond, has not witnessed any significant rise in sales ahead of one of India’s most prominent festivities this year.

With the international demand plummeting after the US imposed steep tariffs, the traders had pinned their hopes on the less expensive lab-grown diamond (LGD) and a surge in the domestic market ahead of the festive season. But even those possibilities have looked dim, leaving an already distressed diamond industry in the lurch.

Also read: Trump’s sudden tariff hike stuns Surat and Mumbai’s diamond, textile hubs

Diamond traders have received less than 50 per cent of the usual order of cut-and-polished diamonds from the US — the largest market for Surat diamonds — since the Donald Trump administration implemented the high tariff plan in August.

Exports fall by more than half

As per data released by Surat Diamond Association (SDA), while diamond (cut-and-polished) worth Rs 13.58 billion was exported between 2022-23, it plunged to Rs 4.9 billion in 2024-25.

The sector, which accounts for the cutting and polishing of the world’s 80 per cent rough diamond, has not witnessed any significant rise in sales ahead of one of India’s most prominent festivals this year.

“We had expected the exports of cut-and-polished natural diamonds to go down after the new tariff. Hence, a majority of traders had pinned their hopes on a surge in domestic demand and a surge in demand for LGD ahead of Diwali,” Dharmesh Kanani, a diamond trader from Surat, told The Federal.

“Since August this year, many traders have made a switch to LGD. Between August and September, small and medium traders bought rough LGD from larger companies that set up manufacturing units for LGD. But neither the domestic demand nor the demand for LGD has been enough so far to compensate for the cost of switching to a new setup. Unless the LGD sale boosts by the end of November, the traders are staring at another major loss,” he added.

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Cheaper options

Kanani further said that there are two processes to make synthetic diamonds — Chemical Vapor Deposition (CVD) and the High Pressure High Temperature (HPHT).

“The machine used in the HPHT method is cheaper than the machine used in the CVD method. The HPHT machines can cost between Rs 2.5 lakh and Rs 70 lakh, depending upon the quality of the diamonds a machine can produce. But, synthetic diamonds grown in HPHT machines are costlier than those made in CVD machines.

Since the imposition of tariffs by the US administration in August, more than one lakh jobs have already vanished in Surat’s diamond sector.

"The HPHT machines mimic the natural process of heat and pressure under which diamonds are formed on earth while the CVD machines produce diamonds by placing a diamond seed (a small slice or powder of natural or synthetic diamond) in a vacuum chamber filled with heated hydrogen and carbon-containing gases,” Kanani, who expanded into LGD manufacturing in late August, told the publication.

He said that since the HPHT set-up is cheaper, most of the medium traders decided to switch to it to produce LGD. However, it has not brought them any relief since the sale so far has not been enough to even compensate for the new setup and the cost of training up the workers, Kanani added.

Also read: India’s diamond industry in despair as exports hit two-decade low

Doom and gloom

Around this time of the year, workers of Surat’s diamond industry burn midnight oil to meet the high demand for their products. The time between Diwali and Christmas remains a happy one for them despite the extra work, since it brings them bonus pay and the managers expensive gifts, sometimes even a flat or a car.

This year, both the workers and managers can’t keep the dreadful thought at bay — whether they would even have the work.

Since the imposition of tariffs by the US administration in August, more than one lakh jobs have already vanished in Surat’s diamond sector.

Matter of survival

“My grandfather migrated from Bhavnagar to Surat as a diamond polisher and built a small polishing unit gradually with his savings. It began as a small unit of five workers, and by the time I took over the business in 1998, we had over 200 workers. There was a time when we used to produce gems meant to last for many generations. It was all about opulence and legacy. But for the past two years, it has been only about survival. Now we are left with around 100 workers and forced to produce LGD,” Jagdishbhai Kanani, who has been a diamond trader for more than two decades, told The Federal.

Also read: Surat diamond workers protest for pay hike and relief package

“When the China-made LGD began to gain popularity in the late 1980s, Surat’s natural diamond traders were sure that nothing would replace the natural diamonds. Even when some traders in Surat began to switch to LGD in the early 2000s, most of us wanted to keep the legacy of the hand-cut and polished natural diamonds alive,” he said.

“But the pandemic changed everything. Adding to that, our exports took a hit since the new tariff was imposed. Most traders hoped switching to cheaper LGD would help, especially ahead of festivities. But there hasn’t been much surge in demand of LGD either this year," he added.

Lab-grown diamonds

In September, Sonani Jewels, a 25-year-old diamond company in Surat, opened a massive 18,000-square-foot showroom to sell only LGD. The showroom was inaugurated by Union Minister C R Patil and the Speaker of the Gujarat Assembly, Shankar Chaudhary.

The move encouraged many small and medium diamond traders, and the Surat diamond sector saw a major push towards LGD. But the enthusiasm didn’t last long.

Also read: Watch | Why is Surat’s diamond bourse deserted?

Babubhai Vaghani, president of Gujarat Lab-Grown Diamond Association, told The Federal, “More than a thousand new traders registered with us in the last one month in Surat, hoping for a much-needed sale surge during festivals. However, we have so far witnessed fewer sales than we made during Diwali last year. Last year, we made a sale (including export) of Rs 11,611.25 crore. This year, so far, we have made a sale (including export) of Rs 6,414.23 crore. The exports were expected to be low owing to the new tariffs but domestic demand has not been up to our expectations either.”

“Unlike hand-cut-and-polished diamonds, each LGD is not unique. Synthetic diamonds manufactured in one batch are similar. But until five years ago, it was a new concept in Surat and our products, being cheap, would sell fast. But now even the LGD sector is saturated. In the last two years, more than 80 per cent of the diamond traders who were involved in natural diamonds either switched over to LGD or expanded their business to LGD, along with cutting naturally rough diamonds. With increased competition, sales have gone down,” he added.