Diamond Slump Leaves India's Surat Bourse Empty

The Surat Diamond Bourse was billed as the future of an industry. Spanning more floor space than the Pentagon, the $350 million complex in western India includes nine sleek towers with sloping facades and enough space to accommodate thousands of traders. It was built to showcase Surat’s dominance in the global trade, where nine out of every ten diamonds are cut and polished before being shipped to markets from Dubai to Manhattan.

The problem is it’s empty.

Since opening in 2023, only about 250 of the bourse’s 4,700 offices are operational, according to a spokesperson. The vast central corridor, designed as a hub for traders to meet and strike deals, stands silent. Door after door is locked and on-site cafés remain unfinished concrete shells. Some merchants who purchased offices are already trying to sell.

The $80 billion diamond industry is in a deepening crisis. For more than a century, trade flowed in one direction — from volcanic deposits in Russia and Botswana to Antwerp’s trading rooms, Surat’s polishing floors and jewelry stores around the world. That supply chain minted fortunes at each rung of the ladder, sustaining entire economies along the way. At its center stood De Beers, the world’s largest diamond miner, which practically invented the modern industry and has long kept a tight grip on supply and prices.

But those days are receding as a series of market shocks drags down the going rate for nearly every category of stone. Chinese luxury buyers, once the industry’s main growth engine, are no longer snapping up gems. Sanctions on Russian supplies, which account for roughly a quarter of global output, have forced costly workarounds. Record-high gold prices are discouraging jewelry purchases in the world’s largest consumer markets, as buyers favor bars and coins instead.

Mounting geopolitical tensions are adding to the strain. The latest flashpoint — US-Israel strikes on Iran that have reverberated across parts of the Middle East — is disrupting trade flows and stoking inflation risks, which could further curb discretionary spending on luxury goods.

De Beers lost almost $1.5 million a day last year, weighed down by trade disruptions and the rapid rise of lab-grown diamonds. Chemically identical to mined stones but much cheaper, synthetics are cannibalizing large parts of the market, including in the US, where they were used in nearly half of engagement rings sold between January and August 2025, according to BriteCo data.

De Beers’ parent, Anglo American Plc, is scrambling to offload the business. The company has written down the unit three times in as many years, slashing its book value to $2.3 billion from $9.1 billion. De Beers cut prices in January for stones over three-quarters of a carat and pulled smaller stones from sale, though in recent weeks industry insiders have noted early signs of recovery as supplies tighten.

“Natural diamonds cannot win in a situation where it’s all about the cheapest price,” said Paul Zimnisky, a New York-based independent analyst of the market.

In India, a series of tariffs imposed last year by US President Donald Trump — at one point as high as 50% on exports — has proven to be the final blow. Traders still gather in the narrow lanes of Mahidharpura, a bustling bazaar about 20 kilometers from the Surat Diamond Bourse, but activity has slowed sharply. Export demand has fallen to a two-decade low, and the Hindi word for recession is on everyone’s lips.

The shockwaves are global. Botswana, one of Africa’s richest countries thanks to diamonds, is seeking to diversify after two years of economic contraction. Mineral revenue is projected to fall to 10.3 billion pula ($733 million) this fiscal year, less than half the historical average. In Antwerp, another industry capital, trade has dropped to about $19 billion from a 2022 peak of $41 billion.

Across more than five decades, Dinesh Bhai D. Patel, a diamond broker in Surat, has worked through wars, economic downturns and the 2008 global financial crisis. After each dip, he said, the market recovered after a few months.

“This time is different,” he said. “I’ve never seen anything like this.”

Taken together, the industry’s troubles appear so intractable that many call it the deepest crisis in its modern history. In China, the collapse in luxury demand has been so severe that hundreds of millions of dollars worth of unsold diamonds flowed back to India’s trading hub.

De Beers has struggled to maintain control. Founded in 1888 by Cecil Rhodes, the former monopoly built its dominance on a tightly managed sales model. At the start of each year, the company agrees with customers on the categories and volumes of diamonds they will buy. Ten times annually, it holds highly choreographed sales known as “Sights,” where selected buyers — Sightholders — purchase pre-allocated stones at company-set prices, with no negotiation. They can refuse, but risk losing future allocations.

By early 2025, the system was under strain. De Beers’ official prices stood well above those in the secondary market, where cutters and polishers trade among themselves. Reluctant to cut benchmark prices, the company began offering discreet side deals, granting favored customers discounts of up to 20% — a break from tradition.

De Beers’ strategy was controversial. People close to the company said it provided stability and funneled more goods to the strongest buyers, yet the opaque approach angered clients, with no transparency over who received discounts while others were expected to pay full price. Rough diamond prices have fallen by more than 40% since the pandemic peak, with polished stones also tumbling. As 2025 progressed, side deals accounted for as much as half of sales.

Meanwhile, efforts by De Beers and its Russian rival Alrosa to curb supply were undercut by Angola, where output surged. The country’s diamond sales jumped nearly 70% last year, overtaking Botswana as Africa’s largest producer. Selling at prevailing market prices — well below De Beers’ official rates — Angola further weakened attempts to revive business.

Still, there are signs that prices have stabilized and a partial recovery is taking shape, especially as supplies start to run dry in corners of the market. At its February sale, De Beers raised prices for its largest stones, increasing them by more than 5% for diamonds above five carats. While modest given the scale of earlier declines, the move has been interpreted by some in the trade as renewed confidence that the long-standing glut of stones is finally easing.

De Beers declined to comment.

Yet despite hints of a rebound, in Surat and the surrounding villages, the pain remains nearly universal. At the diamond bourse, authorities have even brought in a priest to bless the vast complex in hopes of reviving momentum.

Thakarshi Bhai Lodaliya spent 25 years building his diamond business, which once employed 35 people. But after Russia’s invasion of Ukraine rattled the market in 2022, orders began to fall. Eventually, they stopped entirely, forcing him to shut the factory last year.

“I spent my life’s savings, and one day there was simply no money left to keep going,” he said.

In India, the wait for better days may never come for some manufacturers. Jewelry makers who once purchased in bulk now order only what they need, when they need it, unwilling to hold inventory as prices keep falling. No one is sure where the floor is.

“They don’t want to keep stock,” said Manoj Borda, a second-generation diamond business owner. “If they do, they will incur a loss.”

Today, many factories across Surat are also adding lab-grown production lines. For most of the industry’s history, the value of diamonds rested on the idea that gems are scarce — that no technology could replicate what the Earth spent billions of years creating. But laboratories from Surat to Shenzhen can now produce the same stone in about six weeks, upending a supply chain that employs roughly a million people in India.

Borda oversees two natural diamond manufacturing operations and a three-year-old lab-grown unit from an office lined with CCTV screens. The screech of polishing machines echoes down nearly every street.

“If you were here two years ago, this entire room was packed,” he said, gesturing toward empty desks in a tightly arranged workspace for polishers. Around 800 workers have left the floor, he said, leaving about 5,000 employees.

“I’d be surprised if things recover,” Borda said.