India's natural diamond industry revenues are expected to remain flat in the current financial year at $14.8-15.2 billion, Crisil Ratings said in a report on Wednesday.

The revenues are projected to remain broadly flat year-on-year, reflecting an uneven recovery in global demand. Nevertheless, this marks a stabilisation in industry performance, following a three-year decline, the report said.

Crisil Ratings said resilient domestic demand is expected to cushion the weakness in exports, while lab-grown diamonds (LGDs) continue to reshape entry-level demand even as natural stones are expected to retain their premium appeal.

The domestic market, which accounted for less than 15 per cent of industry revenues in FY24, now contributes nearly a quarter of overall sales, reducing the industry's reliance on a handful of export markets.

Domestic revenues are projected to grow 12-15 per cent this fiscal, supported by organised retail expansion, rising consumer aspirations and premiumisation.

In contrast, exports are expected to decline 5-7 per cent to around $11.5 billion amid subdued jewellery demand in the key markets of the US and China.

According to the report, the export challenge is both structural and cyclical with LGDs establishing a strong foothold in the US jewellery market, particularly in smaller and entry-level segments, driven by their affordability and growing consumer acceptance.

In the first half of FY27, LGDs accounted for around 55 per cent of export volumes, but only 10.5 per cent of export value, highlighting the sharp divergence between volume-led and value-led segments.

China remained another area of concern as weak consumer sentiment and a sustained preference for gold continued to limit discretionary spending on diamond jewellery.

Even so, natural diamonds retain their appeal in premium segments, where branding, rarity and emotional value remain key purchase drivers.

"The industry's resilience is being driven by value more than volume. LGDs are gaining ground in entry-level jewellery, while natural diamonds continue to command strength in premium categories. This divergence is evident in pricing trends: diamonds above four carats appreciated by high single digits between June and September 2026, while smaller stones were under pricing pressure from LGDs," Crisil Ratings Senior Director Rahul Guha said.

Alongside these shifts in demand, supply discipline is helping restore market balance as controlled rough-diamond procurement, lower inventories across the value chain and production discipline by miners are limiting excess supply and supporting price stability despite weak end-market demand.

However, supply restraint alone will not fully offset the impact of lower capacity utilisation, intensifying competition and subdued export demand on profitability.

Operating margins are expected to moderate by 40-60 basis points to 3.8-4.0 per cent this fiscal and working-capital intensity is also likely to remain elevated, with debtor days expected to increase to 90-95 and inventory days to 165-170. The near-term outlook, therefore, is one of stabilisation rather than a broad-based rebound.

Published on November 4, 2026