Impact of the Iran Conflict on India’s Diamond Industry: A Deepening Crisis

The narrow alleys of Varaccha in Surat, a bustling hub of India’s diamond industry, are lined with interconnected buildings, many of which house small workshops filled with workers. Within these rooms, artisans are engaged in the delicate process of diamond polishing, using metallic tools resembling thick pens to carefully shape and finish each stone. At the center of their tables, round discs made of metal hum gently as they rotate, facilitating the intricate art of diamond craftsmanship.

Among the small business owners in Varaccha is Harish Patel, who transitioned from being an employee in a diamond polishing unit to starting his own venture in October 2022. He invested in five diamond polishing tables and employed thirty skilled workers, envisioning an increase in his monthly earnings by Rs 10,000 to Rs 15,000. However, his aspirations are now overshadowed by the escalating conflict in West Asia, which has severely impacted the supply chain and market for diamonds.

The crisis began to intensify in late February, coinciding with the outbreak of hostilities in Iran, leading to a downturn in the diamond market that has reverberated across India. The conflict has disrupted the flow of rough diamonds from global markets, causing prices to soar and availability to dwindle. As a result, small business owners like Patel are grappling with an uncertain future, struggling to maintain operations amid increasing costs and dwindling sales.

Observers note that the impact of geopolitical tensions on the diamond industry is profound. The Indian diamond sector relies heavily on imports of rough stones, primarily from regions affected by ongoing conflicts. As a consequence, many polishers are facing difficulties in sourcing the materials they need, leading to delays and a potential decrease in the quality of finished products. Market analysts fear that if the situation persists, it could lead to widespread layoffs and even the closure of small enterprises.

Furthermore, with the global economy still recovering from the pandemic, the combination of rising diamond prices and the uncertainty surrounding international relations has left many in the industry concerned. Local traders are now calling for government intervention to stabilize the market and ensure that the diamond polishing sectors can weather this storm. For many, the future remains uncertain as they navigate these challenging times, hoping for a resolution that will restore stability to their livelihoods.

Source: scroll.in