A month after the sudden announcement by the Indian government that it was withdrawing 500 and 1,000 rupee notes as part of a battle against corruption, the shockwaves are still being felt by the country’s diamond industry from the so-called demonetization.
Around 85-90 percent of the world’s rough diamonds end up in India for cutting and polishing. Those goods are usually bought in cash and then sold on credit by several thousand companies in the sub-continent.
Cash is king, and it is the oxygen that is vital for the Indian gems and jewelry business all the way from small plants in Surat to the major retailers.
Anecdotal evidence appears to show that there has been a drop of around half in the number of visitors and buyers to jewelry retailers in India since panic set in after the demonetization. And since India is the world’s third-largest diamond consumer, a decline in domestic demand is certain to have effect on the global trade as well.