Gujarat's Diamond Industry Faces Recession From US-Israel-Iran War Uncertainty

Junagadh: Gujarat's diamond industry is staring at fresh challenges due to the Israel-US war on Iran that is ongoing in West Asia. The diamond industry, which had experienced a slump before Diwali last year, was gradually regaining its shine since Diwali by slowly restarting operations.

Rough diamonds, mostly imported from Israel and Dubai, were arriving for polishing in Surat, Bhavnagar, Junagadh, Amreli, Botad, and other districts of Gujarat. But now, the war has cast a shadow on the Gujarat-based industry's lustre. Industrialists associated with the diamond industry have expressed concerns that if the war continues for a long time, it could face another recession.

Impact Of War On Gujarat's Diamond Industry

The diamond industry, which is Gujarat's largest employer and foreign exchange earner, was slowly getting back on track after Diwali. The diamond market was booming, and jewellers and foreign buyers were importing more rough diamonds for polishing.

The thriving diamond market in Junagadh's Ambawadi employs around 8,000 diamond workers year-round. After Diwali, rough diamond imports gradually increased, providing employment to small factories and these diamond workers.

But now, the diamond market has suddenly become vulnerable because of the war. If it continues, the import of rough diamonds will decrease or be adversely affected, which will directly impact Gujarat's diamond industry, say industry professionals.

Vijaybhai Seth, originally from Manavadar but currently living in Hong Kong, told ETV Bharat that the diamond market had experienced a slowdown before Diwali, but it was gradually recovering, before the war created a new crisis. If the war continues for a long time and intensified, it could prove fatal for the industry, he said.

"Countries like the US, Dubai, Israel, and Hong Kong have deep ties to the diamond industry, whereas India is only a polishing node. If diamond imports are halted, it will have a devastating impact on jewellers and factories," he also said.

Dinesh Navadia, leader of Gujarat Diamond Industries, told ETV Bharat that the ongoing war could also pose a crisis for the diamond industry. Currently, Dubai and Israel are sending rough diamonds to India for polishing, which has been contributing to Gujarat's diamond industry's slow but steady growth.

Gujarat receives approximately US$ 122 million in diamond trade from Dubai each year. Dubai and Israel also export rough diamonds. Diamonds polished in India are exported to other countries via Dubai. The United States is the largest diamond market. If the import of rough diamonds decreases or stops, it will have a negative impact. If the war continues for a long time, there could be significant losses in imports and exports, potentially costing Gujarat's diamond industry Rs 2,000-3,000 crore.