On a recent episode of the Rapaport Diamond Podcast, a prominent executive in the Indian manufacturing sector gave a revealing report of his company’s current operations.
“Since October, we are back at the normal production levels,” Shreyans Dholakia, brand custodian at Shree Ramkrishna Exports (SRK), told this reporter on April 1. This, he said, was an opportunity to gain market share as others reduced their output because of the market uncertainty. “It’s not that we are polishing a lot of goods and will be flooding the market. There are many others who are not doing it.”
By the time the podcast with Dholakia was published later that month, the situation had changed dramatically, and statistics were already indicating that some of SRK’s assumptions might require scrutiny.
India was in fact shipping large quantities of rough into the country and accelerating its polished production, leading to concerns that an oversupply would ensue given the uncertain demand levels. The US’s tariffs announcement in early April sent the industry into shock and created an obstacle for selling Indian goods.
Sudden jump
The diamond industry sank into yet another crisis in the first half of 2024 as the weakness in Chinese demand persisted and US orders were mixed. Cutting firms in India, responsible for more than 90% of the world’s finished diamonds and around half of the US’s polished imports, slashed rough buying and polished production in the second half of 2024 in response (see Figure 1). Rough imports began to climb in December and in the first two months of 2025 as sentiment picked up due to a rebalancing of inventories. They were still low by historical standards, averaging $776 million for those three months.
However, India’s rough imports jumped from $756.9 million in February 2025 to $1.3 billion in March, according to data the country’s Gem & Jewellery Export Promotion Council (GJEPC) released in mid-April — an increase that took many manufacturers by surprise.
The sector’s apparent change of policy reflected an improved mood in the market as shortages of in-demand items started to appear. This positive sentiment was visible at the Hong Kong International Diamond, Gem & Pearl Show in the first week of March, where trading in loose stones exceeded expectations.
Many cutters that had shifted to lab-grown diamonds to keep workers busy returned to natural around the same time, seeing an opportunity for profit, several sources reported.
Larger goods — upward of 5 carats in the rough segment, 2 carats in polished — were especially strong because of low availability and solid consumer demand. Dealers that bought 5-carat and larger rough at De Beers’ sight in late March and early April received offers of 3% to 7% above the De Beers list price from other market participants.
Tariff trouble
This surge in rough supply put the industry in a difficult position when the US announced its tariff policy on April 2. President Donald Trump imposed 10% customs duties on almost all imported products, effective April 5, and 26% on Indian goods starting April 9. He then paused the higher rate for 90 days.
“The minute the tariffs came, everyone realized that this excess amount of rough that they bought was going to be a troublesome problem,” said Nilesh Chhabria, chief operating officer at Mumbai-based manufacturer Finestar Jewellery & Diamonds.
Manufacturers rushed to transfer polished to the US before the tariffs went into effect, fearing that inventory located outside of America would lose value.
The number of round, 1-carat diamonds on RapNet, Rapaport’s online trading platform, listed as being located in India plunged in early April, as explained in the April 2025 issue of the Rapaport Research Report. US-based inventory rose. Indian-based stockpiles in that category recovered over the two weeks that followed before fluctuating in late April and the first two weeks of May (see Figure 2).
“The winners were the people who sent a major portion of their inventory to the US, because those goods got sold to wholesalers and retailers,” according to Chhabria.
Manufacturers continued to import rough in April despite the situation, with shipments into India slipping only slightly to $1.2 billion for the month.
These were “pretty staggering numbers from my point of view, with the market we have,” said another senior figure in the Indian manufacturing sector, who wished to remain anonymous. Trump’s announcement was a “huge setback to sentiment, but people still went ahead and bought a lot of rough,” he added.
The figure likely also reflects stones that companies committed to buying before the tariffs were a consideration.
De Beers’ rumored “special deals” with sightholders appear to have boosted the March and April totals. It’s an open secret that De Beers has sold rough to selected customers at prices below its official list since early 2025, aiming to shift its large inventories without publicly cutting valuations. The company has declined to comment, and Rapaport was not able to corroborate the rumors.
Meanwhile, submissions to the Gemological Institute of America (GIA) in Mumbai for diamond grading have increased in the past six weeks, a spokesperson for the laboratory said on May 16. This is a soft indicator that polished production has climbed following the increase in rough imports.
Estimated return dates for the Indian city’s lab — the amount of time the GIA tells customers it will probably take between submission and the stone being ready for return — were at seven days until early April and have grown to 15 days as demand for services increased, the spokesperson added.
This is still lower than during the busy market of 2021, when return times fluctuated between 15 days and 30 days.
Manufacturers that spoke to Rapaport were split about whether the sharp intake of rough was a bad move in hindsight. Now they have the merchandise, processing it into polished makes more sense than keeping it in a safe and enables sellable inventories once Americans run out of goods, market participants argued.
But US demand for overseas diamonds has been mixed, given the costs involved.
“The people who [bought too much] in the month of March and April are dreading to put that on the wheel,” said another anonymous manufacturer. “They know they don’t have the sales.”
Imports vs. exports
What do the numbers say about India’s condition?
March and April 2025 were noteworthy for the large margin by which India’s rough imports exceeded its gross polished exports. Polished exports in dollars should normally be significantly higher than rough imports, given that polishing adds value to the goods. (Some 65% of the rough carat weight is lost in the manufacturing process, but it is self-evident that the resultant polished outcome should still be more valuable than the raw material if the exercise is to be profit-making.)
In March, rough imports were 13% greater in value than gross polished exports, before returns. In April, the gap narrowed to 8%.
There are complexities that mean these numbers do not necessarily indicate India bought too much rough in these months. It takes between six and eight weeks from committing to buying the rough to having the polished available to sell. The goods Indians bought in March only hit the market as polished in May. The statistics also ignore India’s domestic diamond sales, which have become increasingly important as China continues to struggle, as well as the loose stones destined for jewelry factories within the country’s borders.
The first problem can be solved, albeit partly and unsatisfyingly, by viewing the data on a quarterly basis. This smooths out some of those time lags, though it makes it harder to spot trends as they happened.
We have attempted to address the second problem in two ways. One is by estimating Indian demand as equivalent to 20% of polished exports, which works out at around 17% of the country’s total polished sales. We also added the 50% of India’s studded gold jewelry exports that can assumed to be diamond content, accounting for the trade’s sales to jewelry factories. We subtracted the GJEPC’s figures for polished imports (which are usually very low) and returns of consignment goods to give an estimate for the nation’s total polished demand.
The results of these loose estimates show a drop in rough imports relative to polished demand from the third quarter of 2024 onward (see Figure 3), implying that the Indian market was achieving a better balance between supply and demand. On a monthly basis, the relationship between rough imports and estimated polished demand appeared to improve strongly in August to October 2024 as buyers prepared for the US holiday season (see Figure 4). Both figures declined over the seasonally quiet Diwali period in November, with the trend improving again in January and February 2025 — hence the reports of shortages by early March as factories sold polished but did not replace the rough in the same quantities. March and April show a more mixed situation, partly for seasonal reasons and partly because of what appeared to be speculative rough buying.
What’s next?
The events leave the industry nervous about how things will look a month from now. While supply and demand are more in sync than they were in the first half of 2024, many manufacturers took a chance by taking on rough during a period of unprecedented uncertainty.
India’s rough imports will probably show a sharp drop for May as manufacturers wait to see the state of trading at the Las Vegas shows in early June as well as the impact of tariffs, said Vipul Shah, CEO of Mumbai-based diamond manufacturer Asian Star.
“May will be a game changer,” he predicted. “Imports have taken place in a huge volume, and that will have an added pressure. We don’t see that kind of demand.”
But there are also reasons for cautious optimism. Manufacturers have learned to self-regulate their production and buying: They solved the 2024 oversupply crisis by spontaneously reducing purchases, unlike in 2008, 2020 and 2023, when there were top-down instructions to pause rough imports. And American clients will eventually need new merchandise, even if this means paying tariffs.
US buyers “are realizing that if a jeweler needs to run his jewelry store, they need to buy diamonds,” said Devansh Shah, a partner at Indian polished manufacturer Venus Jewel. “Maybe in the short run there is certain supply available in the US which may suffice for temporary demand, but in the long run, they have to get used to restocking from India. There is no other option.”
This article was first published in the May 2025 edition of the Rapaport Research Report.
Main image: David Polak/Shutterstock
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