The Squeeze on Natural Diamonds

Imagine an established industry facing pressure from two entirely separate directions simultaneously, a cheaper, rapidly scaling substitute product eating into demand from one side, while sanctions disrupt its actual raw material supply chain from the other, at the exact same time. That's genuinely the position India's natural diamond trade sits in right now, squeezed by the lab-grown diamond rise covered elsewhere on this site and by geopolitical sanctions on Russian rough diamond supply simultaneously.

Russia has historically been one of the world's largest rough diamond producers, and sanctions imposed following the Russia-Ukraine war disrupted the flow of Russian rough stones into global, and specifically Indian, cutting and polishing supply chains, adding a genuine raw material sourcing challenge on top of the demand-side pressure lab-grown diamonds were already applying.

The US tariff crisis covered elsewhere on this site compounds this further, since natural diamonds bore the brunt of those tariffs specifically, meaning the natural diamond side of India's trade has faced supply disruption, demand erosion from lab-grown substitution, and a severe tariff shock, three distinct headwinds, all landing within roughly the same two-year window.

Watching how India's natural diamond exports perform from here, whether the roughly 16 million carat FY2025-26 figure stabilises, continues declining, or eventually recovers, is a genuinely useful indicator of whether natural diamonds settle into a smaller, more premium-positioned niche alongside a dominant lab-grown market, or whether the current pressure represents a more existential, longer-term threat to natural diamond trade at India's historical scale.