India’s diamond industry, which was expected to see a modest recovery next fiscal, may face fresh disruption as the ongoing West Asia conflict threatens key supply routes and trading hubs critical to the sector.
Indian diamond polishers “import 70% of roughs from the UAE and Israel and export 20% to them,” Rahul Guha, Senior Director, Crisil Ratings, said.
Any prolonged conflict could therefore disrupt shipments of rough stones and impact exports of polished diamonds, a report by Crisil Ratings showed.
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The risk emerges at a time when the sector was hoping for a modest recovery next fiscal after several challenging years.
Industry body Gem & Jewellery Export Promotion Council (GJEPC) warned that the region plays a critical role both as a trading hub and a sourcing centre for the Indian industry.
“The ongoing tensions in West Asia could have a significant impact on the gem and jewellery trade as the region — particularly the UAE and other GCC countries — plays a crucial role in India’s export ecosystem as well as in sourcing raw materials,” said Kirit Bhansali, Chairman of GJEPC.
Bhansali noted that India’s gem and jewellery exports to GCC countries have risen sharply from $5.4 billion in FY22 to about $8.3 billion in FY25, underscoring the region’s growing importance for the sector.
At the same time, the Gulf is also a major sourcing hub for the industry. Imports of raw materials and precious metals from the GCC have increased from around $16.2 billion in FY22 to about $28.1 billion in FY25, he said.
“If the conflict continues, it could lead to logistical challenges such as flight disruptions, rerouting of shipments and port delays, which may result in longer transit times,” Bhansali said.
“There could also be a rise in freight and insurance costs due to the heightened risk perception in the region.”
The UAE and other Gulf hubs also serve as key business centres for Indian diamantaires and jewellery exporters, hosting regional offices, retail operations and logistics networks for several Indian companies.
Logistics disruptions could affect Surat manufacturing
India plays a pivotal role in the global diamond value chain, cutting and polishing the majority of the world’s diamonds in manufacturing hubs such as Surat.
A prolonged disruption in the supply of rough diamonds from West Asia trading hubs could therefore affect the flow of raw materials to cutting and polishing units.
Bhansali said the industry is keeping an eye on the developments while working with logistics partners to minimise disruptions.
“The industry is closely monitoring the situation and working with logistics partners to minimise disruptions. We hope the situation stabilises soon so that trade flows can continue smoothly,” he said.
GJEPC said it remains in touch with both industry stakeholders and the government as the geopolitical situation evolves.
“Given these deep connections, any prolonged instability can have implications for business sentiment, movement of goods, imports of raw materials, exports of finished goods and overall market dynamics,” the council said in a statement.
Exports had slumped earlier, recovery expected ahead
The renewed geopolitical risk comes after a difficult period for India’s diamond sector, which has faced weak global demand, tariff uncertainties and growing competition from lab-grown diamonds.
Crisil estimates that the revenue of Indian diamond polishers is likely to decline 8–10% in FY26 to about $14–14.8 billion, marking the third consecutive year of contraction for the industry.
However, the ratings agency expects the sector to return to growth in FY27, owing to increased exports to the US following the interim trade deal that eliminated the 25% reciprocal tariff on Indian gems and diamonds, effectively bringing down the US tariff to zero.
Revenue is projected to rise 6–7% year-on-year in FY27 to around $15–15.5 billion, supported by improving export demand and trade normalisation.
Export volumes of polished diamonds are also expected to increase 4–6% next fiscal, although the outlook could be affected if geopolitical tensions persist in key trading regions.
West Asia remains a crucial corridor for both sourcing rough diamonds and shipping polished stones, meaning prolonged instability could delay the sector’s recovery.
