India's diamond industry is expected to witness 15-20 percent decline in revenue in this financial year due to falling demand and rising prices of rough gemstone globally, according to Crisil report.
Revenue of the Indian diamond industry is set to be cut 15-20 percent to USD 19-20 billion this fiscal, compared with a decadal high in the last financial year, following a double blow from falling demand and rising prices of roughs across the globe, Crisil Ratings said in a report.
"While volatility in rough diamond prices is typically passed on to the polished diamond prices -- although with a lag due to the long operating cycle in the trade, tepid demand has kept polished prices from fully catching up with rough prices this time around.
"This could squeeze the operating profitability of Indian diamond polishers by 75-100 basis points to 4- 4.25 percent this fiscal. Accordingly, interest coverage may weaken marginally," Crisil Ratings Chief Ratings Officer Subodh Rai said.
As per the report, a surge in Covid-19 cases has led to lockdowns in several regions in China, which is one of the largest consumers of Indian polished diamonds. Further, it mentioned that inflation and opening up of other avenues of discretionary spending such as travel and hospitality will dampen demand growth in the US and Europe in the near term.
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