India's gems and jewellery exporters could face a $2 billion hit if the ongoing West Asia conflict persists for three months, industry representatives have warned, citing disruptions to key trading hubs and rising logistics costs.
Sabyasachi Ray, Executive Director of the Gem & Jewellery Export Promotion Council (GJEPC), said Dubai remains a critical global hub for diamonds and Indian exports, making the sector particularly vulnerable to prolonged geopolitical tensions in the region.
"If the war continues for three months, the industry could face a hit of about $2 billion. We may be able to divert roughly $800 million worth of exports, but there would still be an estimated $1.2 billion impact," Ray said.
The sector had been showing signs of recovery before the conflict, especially after disruptions caused by the growing popularity of lab-grown diamonds, which had dented demand for natural diamonds.
Ray said the diamond polishing industry in Surat had begun stabilising prior to the crisis, supported by resilient demand from key markets such as the United States and China. "Despite the challenges, we remain optimistic that diamonds will make a recovery," he said.
Dubai also plays a major role as a trading hub for gold, though the industry has so far managed to limit disruptions by shifting shipments through transshipment routes. Since most gems and jewellery cargo is transported by air rather than sea, the direct logistical impact has been relatively lower compared to other export sectors.
However, sentiment has turned cautious and costs have increased. Ray said logistics and insurance costs have risen sharply, with logistics alone seeing around a 10% spike, on top of the already elevated gold prices.
Looking ahead, the industry is banking on free trade agreements to support export growth. Ray said upcoming trade deals with the United Kingdom and the European Union could significantly boost the sector.
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He added that India's existing agreements are already delivering results. The India-UAE Comprehensive Economic Partnership Agreement has led to fourfold growth in trade over the past three years, while the India-Australia Economic Cooperation and Trade Agreement has helped drive 50-60% export growth.
Ray said the industry is also looking to deepen bilateral trade with the United States and other major markets, especially as geopolitical shifts reshape global trade flows.
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