Rating agency ICRA expects the Indian cut & polished diamonds (CPD) exports to further decline by 7-10% in FY2026 on a YoY basis to about $12 billion, after witnessing 20-year low exports in FY2025. This is largely attributable to pressure on demand in the US, exacerbated by uncertainties surrounding the imposition of US tariffs. ICRA has thus maintained its sector outlook at Negative.
In FY2025, CPD exports from India contracted by 17% to $13 billion, led by worsened global macroeconomic conditions and increasing competition from lab-grown diamonds (LGD) and fancy-coloured diamonds (FCD).
Driven by a shift in consumer preferences for comparatively inexpensive diamonds and their perception of LGD’s ethical sourcing, these diamonds have gained momentum, with their market share increasing to 8% of polished diamond exports in FY2025 vis-à-vis 1% in FY2019.
While the prices of rough diamonds declined by 8% in FY2025 as miners implemented price cuts to boost demand, any considerable correction in rough prices in the near term is unlikely. Miners are expected to curtail their production output in FY2026; controlled supply shall keep rough prices at their current level.
Polished diamond prices dropped to an all-time low in H2 FY2025, as demand remained tepid, resulting in the polished diamond prices in FY2025 declining by 7% YoY, after a 17% YoY fall in FY2024.
Q1 is generally a slow quarter for the industry, which, coupled with the evolving tariff situation, is expected to result in range-bound polished prices in H1 FY2026.
In FY2025, the operating profit margin (OPM) of ICRA’s sample set of CPD companies declined by around 400 basis points to 4%, led by negative operating leverage. ICRA expects the OPM for entities in its sample set of companies to decline further to 3.6-3.7% in FY2026, as the extent of passing on the price increases led by US tariff imposition remains limited in the backdrop of restrained demand.
The credit profile of Indian CPD players is likely to remain subdued in FY2026 amid reduced earnings and a stretched working capital cycle. Going forward, inventory management will remain critical from the credit perspective.
In FY2025, CPD exports from India contracted by 17% to $13 billion, led by worsened global macroeconomic conditions and increasing competition from lab-grown diamonds (LGD) and fancy-coloured diamonds (FCD).
Driven by a shift in consumer preferences for comparatively inexpensive diamonds and their perception of LGD’s ethical sourcing, these diamonds have gained momentum, with their market share increasing to 8% of polished diamond exports in FY2025 vis-à-vis 1% in FY2019.
While the prices of rough diamonds declined by 8% in FY2025 as miners implemented price cuts to boost demand, any considerable correction in rough prices in the near term is unlikely. Miners are expected to curtail their production output in FY2026; controlled supply shall keep rough prices at their current level.
Polished diamond prices dropped to an all-time low in H2 FY2025, as demand remained tepid, resulting in the polished diamond prices in FY2025 declining by 7% YoY, after a 17% YoY fall in FY2024.
Q1 is generally a slow quarter for the industry, which, coupled with the evolving tariff situation, is expected to result in range-bound polished prices in H1 FY2026.
In FY2025, the operating profit margin (OPM) of ICRA’s sample set of CPD companies declined by around 400 basis points to 4%, led by negative operating leverage. ICRA expects the OPM for entities in its sample set of companies to decline further to 3.6-3.7% in FY2026, as the extent of passing on the price increases led by US tariff imposition remains limited in the backdrop of restrained demand.
The credit profile of Indian CPD players is likely to remain subdued in FY2026 amid reduced earnings and a stretched working capital cycle. Going forward, inventory management will remain critical from the credit perspective.
