India’s diamond crossroads: challenges and shifting markets

Learning outcomes

This case is suitable for teaching courses such as Economics, International Business, Global Project Management and Supply Chain Management. It is useful and engaging for the post- graduate students pursuing Master of Business Management to understand international business dynamics and develop global supply chain strategies. After reading the case, students will be able to gain an understanding of the case at the various levels of Bloom’s Taxonomy (BT) as follows:

Case overview/synopsis

In the bustling city of Surat, once the unchallenged diamond capital of India, Naresh Bhai Mehta addressed a worried crowd. The air, generally filled with the rhythmic sounds of cutting and polishing, was heavy with the concerns of struggling workers, traders and manufacturers. For decades, India had proudly produced nine out of ten of the world’s diamonds, a feat driven by skilled artisans and a booming export market. However, the winds of change were blowing strongly. The association outlined the harsh conditions faced by diamond workers, brokers, traders and manufacturers, caused by seemingly declining export orders, price swings and a rising inventory of cut and polished diamonds, as well as debts and cash flow issues. A wider crisis was knocking at the door of the Indian diamond industry. On one side, the rise of LGDs, identical in appearance but significantly cheaper, is reshaping consumer preferences in light of stricter environmental, social and governance standards.

In contrast, the global market for natural diamonds experienced high price volatility, primarily because of upstream value dilution resulting from decreased mining output and the geopolitical crisis in global trade triggered by the Ukraine–Russia war. Adding to this chaos, a new tariff of about 27% imposed by the USA, a significant export market, sent shockwaves through the industry. Factory closures and job losses increased, causing significant distress among workers. Faced with declining demand for natural diamonds and the pressure of tariffs, stakeholders found themselves at a crossroads. Should they stick with the familiar but declining natural diamond trade, or explore the less profitable yet potentially sustainable world of LGDs? The future of the Indian Diamond Industry and the livelihoods of its million diamond workers remain uncertain, requiring strategic and resilient adaptation to a rapidly changing global market.

Complexity academic level

This case is suitable for teaching courses such as Operations Management, Economics, Logistics and Supply Chain Management and International Business.

Subject code

CSS5: International Business.