How the Iran war has plunged India’s diamond industry even deeper into crisis

The narrow lanes of Varaccha in Surat are crammed with buildings that are connected to each other. Most of these have several small rooms in which workers sit at tables.

Tubelights attached to the tables rise above the workers’ heads. At the centre of each table is a round disc, usually made of metal, which hums softly as it spins. Workers hold metallic devices that look like thick pens. At the tip of each device is a tiny diamond, which a worker gently strikes against the disc to shape and polish it.

One of these rooms is rented by Harish Patel, who for three decades polished diamonds as an employee with a unit, before deciding to start his own unit in October 2025. He bought five such tables with discs, and hired 30 workers. “I had thought I would be able to earn at least Rs 10,000 to Rs 15,000 more every month,” Patel said, sitting at a table at the end of the room. As he spoke, he handed out to his employees diamonds they had to work on, after noting in a register the number of diamonds he was giving each.

But in late February, when the West Asia conflict began, the diamond industry was hit with a massive slowdown – soon, Patel could hardly get hold of any rough diamonds in the market to polish.

The diamond polishing industry in Surat employs between an estimated 8 and 10 lakh workers. It relies on the import of rough diamonds from countries like the United Arab Emirates, Belgium and Russia. The industry also imports rough diamonds from African countries like Angola and Botswana. After polishing, diamonds are exported to major markets in countries like Switzerland, the United Arab Emirates, and the United States.

But trade disruptions since the outbreak of the war have led to a sharp drop in the import of rough diamonds into the country. While India imported 134 lakh carats of rough diamonds in March 2025, this March, it imported just 95 lakh carats. At the same time, exports of polished diamonds fell in the same period by 27%, including to the United Arab Emirates, which was the top buyer of India’s polished diamonds in 2025-’26.

The slowdown presents an existential threat to the diamond polishing sector, particularly to relatively new entrants like Patel. “In the last two months, many diamond workers have left for their villages,” Patel said. His employee Deepali briefly looked up from her work and added, “Many workers were also asked to leave because there was no work.”

The current disruption has those in the polishing business particularly worried because the industry had already suffered other blows in recent years.

The first such blow was the broader economic slowdown brought on by the Covid-19 pandemic. This led to a decline in imports of rough diamonds, from quantities worth $19 billion in 2017-’18, to just around $11 billion in 2020-’21. By 2021, imports rose to levels that were seen before the pandemic.

But in 2022, imports fell once again, by 8%, data from the Gem and Jewellery Export Promotion Council shows. The council attributed this fall to “rising global inflation, diminished supply of rough diamonds, economic slowdown in key economies such as the USA, China, Europe and Hong Kong and persisting supply chain issues due to the geopolitical conflict in Ukraine”.

Some observers also linked the decline to sanctions that G7 countries imposed on Russian goods, including diamonds, to try and limit the country’s ability to fund the war in Ukraine. They noted that Russia earlier sent around 30% of its rough diamonds to India for polishing, but that India grew reluctant to continue buying these diamonds because European countries had ceased buying Russian-origin diamonds. Between 2022-’23 and 2023-’24, imports of Russian diamonds fell by around 4%, and diamond imports overall fell by 18%.

Since then, too, the imports of rough diamonds have fallen steadily, eventually dropping to quantities worth $10 billion in 2025-’26 year.

In all, data from the Gem and Jewellery Export Promotion Council shows, between 2022 and 2026, the import of rough diamonds into India fell by a massive 40%.

The industry was also hit by changes in the export market. In April 2025, the United States slapped tariffs on Indian diamonds sold to the United States. These tariffs fluctuated between 26% and 50%, and presented a massive hurdle for India to make sales to one of its largest diamond markets. Though the tariffs were lifted in February this year, until then, manufacturers were hesitant to buy as much rough diamond as they did earlier.

The impact of these tariffs was evident in export figures: while 40% of all exports of polished diamonds from India were sent to the United States in 2024-’25, this dropped to just 15% in 2025-’26.

In fact, through these years, the United Arab Emirates gained dominance as a source of rough diamond imports for India, and as an export market for polished diamonds. In 2025-’26, India imported 68% of its rough diamonds from the country, up from 48% in 2021-’22. Exports to the United Arab Emirates also increased – India exported 21% of its polished diamonds to the country in 2025-’26, up from 8% in 2021-22. (A recent investigation showed that diamonds coming from the UAE likely originated from Russia.)

But now, the escalation of the West Asia conflict has threatened this import and export trade. “On one hand, there were no raw diamonds in the market to polish, and on the other, what we were making was not getting sold,” said Dipak Ghetiya, a former diamond worker.

These years of slowdown left diamond workers in Surat facing serious job crunches, particularly since they earn a commission on each diamond they polish.

Ghetiya noted that in 2023, “I used to reach my unit at about 9 am, and some days, till 5 pm I would be sitting with no diamonds to work on.” He added, “I worked for around two months like this.”

While earlier, he would earn at least Rs 30,000 a month, this dipped to “only about Rs 15,000 a month”, he added.

The instability in the diamond business since 2023 has pushed some diamond workers to tragic ends. Twenty-two-year-old Keval Makwane joined a small diamond-polishing unit in Surat in 2017 – his family needed the income because his father had to quit the same work after a road accident.

In 2024, Makwane lost his job. For six months, he tried working at different polishing units, and took up other work, but none of the jobs lasted. On a late afternoon in April 2025, when his family was not home, Makwane overdosed on medicines. Upon returning home, his mother found him unconscious and rushed him to the hospital. He died two days later.

“He never spoke to me about his stress,” said Divya, Makwane’s mother, her eyes welling up. “I had thought I would speak to him about it after he returned from the hospital, but he never did.”

Makwane’s is not the only such story. Since January 2024, more than 80 diamond workers have died by suicide in Surat, according to the Surat Diamond Workers Union. “Since the slowdown in the business, many workers had borrowed loans to make ends meet or start other businesses, but were not able to pay them back,” said Bhavesh Tank, the union’s vice-president. “Unfortunately, that led them to take this extreme step.”

The union has been demanding that the Gujarat government establish a welfare board for workers and provide financial support to the families of the those who died by suicide.

In response to the decline in the industry, small diamond manufacturing units in Surat began to adopt alternative ways to stay afloat. Many began polishing lab-grown diamonds. These are diamonds that are chemically created under high heat to be identical to a natural or mined diamond. While they are cheaper than natural diamonds, they too require polishing.

Gem and Jewellery Export Promotion Council data shows that exports of polished and unpolished lab-grown diamonds from India have boomed in recent years – rising almost tenfold, from exports worth $130 million in 2018-’19, to exports worth $1.13 billion in 2025-’26.

But workers soon realised that lab-grown diamonds took more time to polish. “Its a difference of the hardness,” said Ghetiya. He explained that natural diamonds are less hard to work on, and that a small one can usually be polished in between five and ten minutes. In contrast, a lab-grown diamond of the same size can take around 30 minutes to polish.

Moreover, because lab grown diamonds are cheaper, workers are also paid less for polishing them. Depending on the size, a worker can earn between Rs 15 and Rs 60 for polishing a natural diamond, whereas they only earn around Rs 12 for polishing a lab grown one. Thus, “we are earning less for the same number of hours and same work”, said Deepali as she closely inspected the diamond she was polishing. Specifically, she noted, workers’ earnings had dropped from between Rs 20,000 and Rs 25,000 a month to around Rs 15,000.

The challenges led some workers, like Ghetiya, to leave the diamond business entirely. For more than a year now, he has been starting his day at a rented shop, where his mother, wife, and he roll out dough into small, flat rounds. They then fill them with boiled potatoes, fold them in half and fry them till they are golden brown to make a popular street snack known as ghughra.

He then packs them up in an iron trunk attached to his motorcycle and drives 7 km away to a textile hub, where customers soon crowd him. The shop and the iron box display the name of the small business venture in Gujarati script – “Ratnakalakar ghughra and nasta house”. Ratnakalakar is a term used to describe the diamond workers.

“People often put MBBS or engineer in front of their name,” Ghetiya said while preparing the snack and topping it with onions and chutneys for a young customer. “I worked as one for 22 years, and being a ratnakalakar is a part of my identity. I decided to name the shop this even though I left the industry.”

But the war in West Asia has hit even this business, just as it was finding its feet. The massive crunch in the supply of liquid petroleum gas after the closure of the Strait of Hormuz for over a month left Ghetiya with no fuel for his cooking. He invested in an electric stove that cost Rs 20,000, but soon found that it was only able to support much smaller vessels than his gas stove. “Now if the war continues for longer, I will have to rethink this business too,” said Ghetiya.

Source: Scroll
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