In a significant shift in India's export landscape, smartphone exports have now surpassed diamond exports to the United States. In the June quarter of FY24, smartphone exports reached $2 billion, while diamond exports fell to $1.44 billion. This trend began in December 2022 when smartphone exports first exceeded those of diamonds, recording $1.42 billion compared to $1.3 billion for diamonds. The growth in smartphone exports, which surged by 43% quarter on quarter, contrasts sharply with the 4.6% decline in diamond exports [8e6355c9].
The rise of smartphone exports can be attributed to the Production-Linked Incentive (PLI) scheme initiated in 2020, which has significantly boosted India's manufacturing capabilities. In FY23, India exported $11.1 billion worth of smartphones, with over $2.15 billion directed to the US market. Apple has been a key player in this growth, exporting over $5 billion worth of iPhones, which accounted for 66% of total smartphone exports. Currently, India constitutes about 10% of US smartphone imports, which totaled $59.6 billion in 2023 [8e6355c9].
Meanwhile, the diamond industry in India is grappling with challenges stemming from a cooling Chinese economy and shifting consumer preferences. Surat diamond polishers have reported a significant decline in exports due to reduced demand from China, which is the second-largest importer of polished diamonds from India after the United States. The overall market for diamonds has been sluggish, with De Beers reporting a 36% drop in sales in 2023 [c4efcad1].
The decline in diamond exports is further compounded by a growing preference for plain gold jewelry among Chinese consumers. This shift in consumer behavior has raised concerns for the Indian diamond industry, which has traditionally relied on the Chinese market for a substantial portion of its exports. In 2023, the diamond market in China, including Hong Kong and Macau, dropped from $13.7 billion in 2021 to $12.8 billion [079c8d16].
In response to changing consumer preferences, Austrian crystal maker Swarovski has launched a lab-grown diamonds collection in China, offering a more sustainable and cost-effective alternative to mined diamonds. This collection is available at 34 stores in mainland China and three in Hong Kong, reflecting a strategic shift to cater to environmentally-conscious consumers [dd5a0f9e].
As India navigates these changes in the diamond and smartphone markets, the contrasting trajectories highlight the evolving dynamics of global trade and consumer preferences. While smartphone exports are on the rise, the diamond industry faces significant hurdles, prompting a reevaluation of strategies to maintain competitiveness in an increasingly complex market [996559e1].