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Expected decline in the diamond industry, impacting US tariffs and the LGD challenge
ICRA: According to the ICRA report, the Indian diamond industry is likely to decline in FY 2026. It will be under pressure due to weak global demand, increasing competition from lab-grown diamonds (LGD), and US tariffs. Cut and polished diamond (CPD) exports are expected to decline by 7 to 10%.
The Indian diamond trade can be squeezed twice because of diminishing demand worldwide, growing competition from lab-grown diamonds (LGDs), and US duties. This was given in a recent report prepared by credit ratings company ICRA. The report states that cut and polished diamond (CPD) exports will slow down between 7% and 10% in FY 2026. That decline was 17% in FY 2025. There has been no hope for this sector since then.
ICRA's report said CPD exports fell to a 20-year low of $13.3 billion in FY25, impacted by the global macroeconomic slowdown and growing consumer preference for cheaper LGDs. These now account for 8% of polished diamond exports, up from just 1% in FY19.
In addition, the recent imposition of a 27 per cent tariff by the US is likely to hurt India. The US is a major market, accounting for more than a third of India's CPD exports. Though this has currently been capped by a 10 per cent interim tariff, exporters are still concerned. Many Indian companies are now rerouting shipments through low-tariff hubs such as Dubai and Belgium to mitigate the impact.
