JB Insights

The diamond industry is at an inflection point

McKinsey & Co Diamond Industry Report

Published

1 year ago

January 3, 2025

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This report by McKinsey explores the challenges and opportunities facing the diamond industry in the wake of several significant shifts. Here’s a breakdown of the key points:

Market Downturn:

Diamond prices have plummeted after a surge during the pandemic.
This is due to a combination of factors, including:
- Increased supply chain normalcy.
- Reemergence of traditional engagement timelines.
- Rise of lab-grown diamonds (LGDs) as a more affordable alternative.
- Growing consumer demand for ethical and sustainable sourcing (ESG).
- Sanctions on Russia, a major diamond producer.

Shifting Consumer Preferences:

Younger generations (Gen Z) are driving changes in diamond buying habits:
- More frequent purchases for self-reward.
- Preference for ethical sourcing and sustainability.
- Increased online shopping for jewelry.
- Growing interest in LGDs and recycled diamonds.

The Rise of Lab-Grown Diamonds:

LGDs pose a major challenge to natural diamonds due to:
- Lower cost (up to 80% discount).
- Perceived ethical and environmental advantages.
- Increasing quality and size availability.

The Future of the Industry:

The industry needs to adapt to survive:
- Natural diamond producers can:
  - Invest in traceability and ESG practices.
  - Highlight the unique value proposition of natural diamonds (rarity).
  - Consider vertical integration to manage costs and ensure compliance.
- LGD producers can:
  - Focus on further price reduction and technological advancements.
  - Address potential environmental limitations of LGD production.
- All diamond players can:
  - Develop innovative marketing strategies.
  - Embrace digital technologies for transparency and efficiency.
  - Build stronger partnerships for financing and branding.

Uncertainties Remain:

The long-term impact of LGDs on the diamond market is unclear.
Questions remain about diamond price volatility and ownership of the value chain.

Conclusion:

The diamond industry is at a crossroads. Adapting to changing consumer preferences, embracing technology, and addressing ethical concerns will be crucial for companies to ensure stability and longevity in the years to come.

The Diamond Industry: Navigating a Market in Transition

Insights from Changing Consumer Behavior, Technological Advancements, and ESG Imperatives

The global diamond industry, long associated with timeless luxury and tradition, is undergoing a seismic transformation. Once characterized by stability and predictable growth patterns, it now faces significant disruptions fueled by shifting consumer behavior, technological advancements, and heightened environmental, social, and governance (ESG) expectations. This article examines these trends, highlighting how diamond producers—both natural and lab-grown—can position themselves for sustained relevance and profitability.

A Market Recalibrated Post-Pandemic

The diamond industry experienced an unprecedented surge in prices during the COVID-19 pandemic, driven by delayed engagements, disrupted supply chains, and an increase in discretionary spending on luxury goods. However, this trend has reversed sharply, with diamond prices now at multi-year lows.

Several factors have contributed to this decline:

Rise of Lab-Grown Diamonds (LGDs): Offering affordability and perceived ethical benefits, LGDs have captured a growing share of the market.
Return to Pre-Pandemic Norms: Engagement and marriage cycles have resumed their traditional rhythms, reducing the urgency of purchases.
Sanctions on Russian Diamonds: Restrictions on Russian producers, including Alrosa, have altered global supply dynamics.
Increased ESG Awareness: Consumers now demand greater transparency and sustainability in diamond sourcing, putting pressure on traditional producers to innovate.

Shifting Consumer Preferences: A Generational Shift

Consumer behavior, particularly among younger generations, is reshaping the diamond market. Key trends include:

Ethical Sourcing and Sustainability:
Generation Z and Millennials prioritize brands that align with their values. Ethical labor practices, sustainable sourcing, and carbon-neutral operations are non-negotiable for these consumers.
Increased E-Commerce Activity:
Online diamond purchases are growing, with projections suggesting that nearly 20% of fine jewelry sales will occur digitally by 2025. The convenience and transparency of online platforms are redefining how consumers engage with brands.
Lab-Grown Diamonds as an Alternative:
LGDs are no longer confined to industrial use. They now represent a viable, affordable, and ethical alternative for fine jewelry, particularly in Western markets.
Self-Purchasing Trends:
Younger consumers increasingly view diamond purchases as a form of self-reward rather than traditional markers of engagements or anniversaries.

Technological Disruptions: LGDs and Supply Chain Traceability

Lab-Grown Diamonds: A Rising Threat

The affordability, scalability, and ethical appeal of LGDs have positioned them as the most significant disruptor to the natural diamond market. LGD prices, currently at an 80% discount compared to natural diamonds, have accelerated adoption among value-conscious consumers. Technological advancements have enabled the production of larger, high-quality stones, further eroding the exclusivity of natural diamonds.

Supply Chain Innovations

Traceability is becoming a central pillar for diamond producers. Blockchain technologies and other digital tools allow consumers to verify the origin, production methods, and journey of their stones. Beyond compliance, this transparency creates opportunities for storytelling, connecting consumers to the unique narratives behind their diamonds.

Strategic Imperatives for Industry Players

To navigate these challenges, stakeholders across the diamond value chain must adopt proactive strategies:

For Natural Diamond Producers

Invest in ESG Compliance: Ensure ethical mining practices, sustainable water use, and community engagement.
Promote Rarity: Highlight the uniqueness and natural origin of mined diamonds, leveraging these qualities as a counterpoint to LGDs.
Vertical Integration: Streamline operations to enhance efficiency and reduce costs while meeting ESG targets.

For LGD Producers

Focus on Innovation: Continue improving production methods to lower costs and increase scalability.
Address Environmental Concerns: While LGDs are marketed as sustainable, energy-intensive production processes must be optimized.

For Retailers and Midstream Players

Embrace Digital Transformation: Develop e-commerce platforms and invest in digital marketing to engage younger, tech-savvy consumers.
Offer Recycled and Vintage Options: Cater to the growing demand for sustainable and upcycled jewelry.

Looking Ahead: Uncertainties and Opportunities

The future of the diamond industry is far from settled. Several questions remain unanswered:

How will LGDs reshape market dynamics?
Can natural diamond producers justify their premium pricing amid rising LGD quality?
How will geopolitical tensions and regulatory shifts impact supply chains?

Despite these uncertainties, one fact is clear: adaptation is essential. Whether through technological investment, strategic partnerships, or redefining value propositions, diamond industry players must evolve to meet the demands of a changing market.

The industry is at a crossroads. Those willing to innovate, align with consumer values, and embrace technological advancements will not only survive but thrive in this new era.

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JB Insights

India Raises Gold, Silver Import Duty To 15% To Curb Soaring Precious Metal Import Bills and Conserve Forex

Higher Duties Could Increase Prices, Impact Exports, and Create Liquidity Pressure For MSME Manufacturers Due To Rising Working Capital Requirements

Published

3 days ago

May 13, 2026

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#JbExclusive

The Finance Ministry on Wednesday raised effective import duty on gold and silver from 6% to 15% — comprising 10% basic customs duty and 5% agriculture infrastructure and development cess (AIDC) — effective 13 May 2026. The move aims to curb soaring precious metal import bills and conserve foreign exchange reserves as the West Asia crisis intensifies pressure on India’s trade balance.

Markets reacted swiftly. Titan fell as much as 1.5% on the day, extending a prior two-session decline of over 10%, while Kalyan Jewellers dropped as much as 5.9%. Gold and silver ETFs rallied sharply on expectations of higher domestic bullion prices. WGC data implies the 9-percentage-point hike could suppress annual consumer demand by roughly 57 tonnes — based on an estimate of 6.4 tonnes of demand suppression per 1% duty rise.

● Industry Voices

“Higher duties could revive gold smuggling, which had eased substantially after the 2024 duty reduction. Every 1% rise in import duty reduces consumer demand by approximately 6.4 tonnes — implying the hike could suppress demand by ~57 tonnes annually.”

Prithviraj Kothari, MD, RiddiSiddhi Bullions | National President, IBJA Bullions | Chairman, JITO

“Higher duties could increase prices, impact exports, and create liquidity pressure for MSME manufacturers due to rising working capital requirements. We urge continued dialogue for balanced solutions that support both economic goals and export growth.”

Kirit Bhansali Chairman, GJEPC

“The increase in customs duty is a temporary and calibrated measure in the present economic scenario. The trade should remain calm and confident — India’s jewellery sector has always demonstrated resilience and adaptability during challenging times.”

Rajesh Rokde Chairman, GJC

“It is important for the trade fraternity to avoid panic and continue business with confidence and responsibility. GJC fully supports the nation’s larger economic priorities and remains committed to constructive engagement with policymakers.”

Avinash Gupta Vice Chairman, GJC

“Due to the simultaneous occurrence of two events—the sudden 9% hike in import duty and statements made by PM Modi—both the jewelry industry and customers find themselves in a state of confusion. This is significantly impacting jewellers, artisans, and large factories alike.

My suggestion to everyone is to remain patient and avoid panicking. Everyone should avoid protests, shop closures, or any form of aggression. Once the government’s complete process is revealed, we can then consider all options through dialogue and discussion.”

Anurag Rastogi, North India Head – IBJA

“Business is already at nearly 50% of normal levels, and the duty increase will reduce consumption volumes further. Promoting lower caratage jewellery — 9ct, 14ct, 18ct — could make products more affordable and reduce gold usage. As an industry, we must stand with the government during this period.”

K. Srinivasan, CMD, Emerald Group

“An increase in import duty on gold typically has a direct impact on retail prices, influencing short-term consumer sentiment — especially for price-sensitive buyers. In the immediate phase, some customers may postpone discretionary purchases or wait for price stability. It can lead to a 10–15% volume decline to help control gold inflows into the country.

However, gold buying in India is deeply linked to weddings, festivals, and long-term wealth preservation, so demand is usually resilient over time.”

Suvankar Sen, MD & CEO, Senco Gold and Diamonds

“Changes in import duties on gold and silver are part of an evolving policy landscape, and the industry has consistently adapted with resilience and stability. We respect the government’s decision and recognize the broader economic considerations behind such measures.

Over the years, gold import duty has moved from 15% to 6% and now back to 15%. However, gold prices have never been driven by changes in duty alone. Global trends, rupee depreciation, and consumer demand remain key factors, while recent revisions reflect an already elevated domestic gold price environment.”

Chetan Thadeshwar, CMD – Shringar House Of Mangalsutra Ltd

“At SwarnShilp, we believe any duty increase is a reminder for the industry to become faster, more efficient, and more design-driven. Our focus remains on strong inventory planning, lightweight innovation, and timely delivery to support our customers despite market volatility.”

Surabi Karthik, President — South India Bullion Association, Secretary— Gold Bullion Association, Coimbatore

The customs duty on gold has gone up from 6% to 15%. This is not a punishment for our trade. Our Prime Minister is trying to protect India’s foreign exchange in a tough global situation — war tensions, Strait of Hormuz disruption, and rising import costs.

But we have a solution from within. India’s households hold 25,000 tonnes of gold sitting idle in lockers. Let us recycle this gold instead of importing more. Instead of borrowing working capital from foreign lenders, let us use India’s own gold through the Gold Monetization Scheme — and pay interest to our own people, not foreigners. This way, we can bring imports down from 700 tonnes to 500 tonnes — saving billions for our nation.

We are 2 crore people in this trade. We are not a burden — we are nation builders. Let us lead with pride and stand by our country in this hour. Together, we can solve this — the Indian way.

N Ananthapadmanabhan, MD, NAC Jewellers

The government’s decision to raise gold import duty from 6% to 15% is unfortunate, especially when closer to 30,000 tonnes of gold remain idle in Indian households. At GJC, we have long urged stronger implementation of the Gold Monetization Scheme by appointing jewellers as collection and mobilization agents, since they can connect with consumers more effectively than banks.

We have also proposed allowing every Indian woman to bring in up to 500 grams of gold without extensive KYC. These steps could unlock 2,000–3,000 tonnes, cut import dependence, and ease forex pressure.
The hike will impact sales in the short run, but in the long run, people have to buy for the weddings, so its impact will be minimal. This hike will encourage gold to come in unofficially to a great extent, which is detrimental, and will encourage hawala transactions to a great extent, contributing to a rise in tension in our country.

Shreyans Kothari, Gen. Secretary MWGJA

“While we support the government’s vision to strengthen the economy and manage imports, it is equally important to safeguard the interests of the jewellery industry, which supports millions of livelihoods across the country. A balanced and practical approach will help both the nation and the trade grow together.”

Khushboo Ranawat, Director – SwarnShilp Chains & Jewellers Pvt Ltd

● Industry Proposals

Lower caratage push
Promote 9K, 14K & 18K jewellery to cut gold consumption and keep prices within reach

Revamp GMS
Overhaul the Gold Monetization Scheme through jeweller networks to mobilize idle household gold

Old Gold Exchange
Scale consumer recycling programmes to reduce dependency on fresh bullion imports

● Risks to watch out for

● Dubai/CEPA arbitrage — GTRI warns that the India–UAE CEPA could make UAE-routed imports cheaper, partially neutralizing the duty’s intent

● Smuggling revival — duty spikes above 10% have historically correlated with the resurgence of grey-market gold flows into India

● Export competitiveness — higher landed costs raise working capital requirements for MSME exporters and could weigh on jewellery export volumes

– Raghav Dhir, Founder & MD, Dhirsons Jewellers, Dhiraj Dhir Group, Lajpat Nagar

“The revision in import duty is a significant policy shift, and while it will inevitably push up costs across the supply chain, it also presents a timely opportunity for consumers to rethink how they engage with gold. We strongly encourage our customers to bring in their old gold and exchange it for new jewellery.

This is one of the smartest ways to stay ahead of rising prices while refreshing your collection. At the same time, we believe this is the right moment for the industry and the government to come together and formalize a robust gold monetization scheme. India holds an estimated 25,000 tonnes of gold sitting idle in homes. Unlocking even a fraction of that through a credible, consumer-friendly programme would reduce our dependence on imports, ease forex pressure, and fuel domestic trade in a meaningful way. The policy intent is clear; what we need now is a structured mechanism that gives consumers the confidence to participate.”