After nearly two years of inactivity, China has resumed purchasing diamonds cut and polished in India, rekindling hope for Indian diamond traders and positively influencing rough diamond prices. This resurgence in demand, marked by Chinese buyers replenishing stocks at the Hong Kong International Jewellery Show (March 4-8), is expected to rejuvenate diamond production in Surat, India’s diamond cutting and polishing hub, and provide a much-needed boost to the country’s diamond exports.

China, which had primarily focused on buying gold during the past two years, is India’s second-largest diamond export market after the United States. This renewed interest is particularly significant for Surat, where diamond production had stagnated without Chinese orders. India currently handles the cutting and polishing of nine out of ten diamonds sold worldwide.

The mood at the recent Hong Kong Jewellery Show was notably more optimistic than the last event in September, with Chinese buyers showing more interest after a period of reduced spending on diamonds, driven by the belief that gold holds more value. Despite this cautious optimism, diamond exports to Hong Kong, the primary route for Indian exports to China, have dropped significantly—down 28% in FY24 and a further 60% through February of this fiscal year.

With Chinese demand starting to pick up, rough diamond prices have surged by 3-4%. “While we remain cautiously optimistic, we are unsure how long this recovery will last,” said Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council. “The market dynamics are shifting, and we are adjusting our expectations accordingly.”

Although the Hong Kong show showed signs of recovery compared to the September 2024 event, industry leaders acknowledge that the diamond market has recalibrated. Turnovers for jewellery companies are now about 30% to 40% lower than previous years, suggesting that stakeholders must adapt their strategies to the new normal.