Why are Indian diamonds so cheap?
Diamonds that originate from India‘s manufacturing, trading, and exporting tend to be more affordable on average compared to prices in other major diamond centers globally. Several key factors within India‘s competitive industry enable this pricing advantage that can be 30-50% less than identical diamonds on the global market:
India‘s Dominant Position in Diamond Processing
As the world‘s largest cutting and polishing center, India plays a commanding role in the global diamond supply chain:
- Handles 92% of the world‘s polished diamonds, with the city of Surat dominating the industry
- Exports over US$23 billion in cut/polished diamonds annually as of 2022
- Imports ~US$19 billion in rough diamond imports to process in-country
- Has over 1 million skilled diamond cutters and polishers directly employed
This high volume of local processing and exporting of finished diamonds creates economies of scale and concentrated expertise that enables competitive pricing.
| Diamond Processing Stats | |
|---|---|
| Annual Rough Diamond Imports | US$ 19 billion |
| Annual Polished Diamond Exports | US$ 23 billion |
| Direct Jobs in Cutting/Polishing | 1 million+ |
Technology Adoption and Improving Efficiency
India‘s cutting and polishing industry has rapidly adopted advanced technologies and improved processing standards over the past decade:
- Laser cutting and computer planning optimize yields
- Automation is improving operational efficiency
- Quality assurance investments target higher global standards
As output quality and productivity rise while costs trend lower, India maintains competitive pricing thanks to these production improvements.
Government Support and Industry Investments
Recognizing the diamond industry‘s economic importance, India has provided targeted government support:
- Special economic zones with tax incentives
- Subsidies for production technology upgrades
- Improving training programs and education institutes
- Trade promotion programs and reduced export duties
With leading domestic companies like Essar, Shrenuj, Su-Raj, and Dharmanandan investing heavily and the Indian government prioritizing the industry‘s growth, efficiency and output continues expanding to feed global demand through competitive prices.
Fragmentation and Low Margins Across Supply Chains
India‘s diamond supply chain remains highly fragmented:
- Thousands of small manufacturers and family operations
- Layers of brokers, traders, and dealers
- Highly competitive domestic buying networks
With multiple middlemen and extreme competition, producers are squeezed across the supply chain. But this drives consolidation trends as only the most efficient players can survive on very low margins. The result is diamonds reaching exporters at extremely competitive prices compared to other trading centers.
Understanding Diamond Quality Realities
As the famous maxim goes: "You get what you pay for." This is true across global diamond markets – prices vary based on factors like cut, clarity, transparency and other quality considerations.
Lower average prices of Indian diamonds does allow more cost sensitive consumers access to the market. However, experts emphasize considering quality levels rather than assuming direct price-based equivalency across regions or suppliers. Not all diamonds are created equal, and value assessments must go deeper than country of origin.
Sourcing Trust and Credibility Matter More Than Ever
The combination of India‘s structural advantages and desire from some sellers to maximize profits creates need for careful due diligence from all consumers:
- Quality assurance and grading standards can vary
- Not all suppliers adhere to ethical and credibility best practices
- Fraud does exist, if rarely among certified exporters
Seeking GIA graded diamonds provides assurance around quality benchmarks. Partnering with reputable local jewelers can provide credibility and trust. Due to lower margins and high competition, proper sourcing diligence matters despite the price savings accessible in Indian markets.
In the end India will remain the global leader in affordable diamond production and exports thanks to the unique dynamics outlined above. But finding the right balance across price, ethics, and value requires an informed approach by diamond buyers in any market.
