China is threatening to emerge as a viable rival to India in the cut and polished diamonds market, as an increasing number of diamond processors from Israel, Belgium and even India are setting up facilities there, according to ICRA.
Although India currently enjoys a dominance in the world's cut and polished diamonds market, China is seen as a competitor destination due to its cheap and disciplined labour force and high economic growth over the past decade that has resulted in a significant increase in potential consumers in the high income segment within the country.
In comparison, India has to rely almost solely on exports. The quality of Chinese workmanship is also steadily improving.
In the short-term however, India still has a significant advantage over China, as China processes only around 2.4 million carats of diamonds annually, as compared with 180 million carats in India.
China has about 20,000 people working in the industry, compared to India, which has well over a million.
However, China has rapidly become the world's second largest diamond manufacturing centre, when measured in manpower terms. Technology is another area where the Indian industry faces a long-term threat from China.
While diamonds are cut, polished and processed in nearly 30 countries, India, Israel, Belgium, and the US dominate the diamond cutting and manufacturing industry globally.
Other aggressively emerging centres besides China include the north western territories of Canada, and Thailand. India accounted for 53 per cent share of the global polished diamond market in terms of value, 80 per cent share in terms of caratage, and 95 per cent share in terms of pieces in the global production of cut and polished diamonds.
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