I have spent twelve years in the gemstone trade, sourcing rough from miners in Swat, Hunza, and across the Afghan border, cutting and polishing stones with my own hands. I have watched diamond booms come and go. I have heard "the diamond market always recovers" from traders in Mumbai and Surat more times than I can count.

This time, they are wrong.

What we are witnessing is not a downturn. It is a structural collapse, a convergence of forces that has never hit the diamond industry simultaneously. And while the world's diamond traders scramble for survival, a quieter revolution is underway.

The future of fine jewellery does not sparkle white. It glows in the electric greens of Swat emerald, the olive fire of Kohistan peridot, the violet depth of amethyst. Let me walk you through exactly why, and what it means for consumers in Pakistan.

In December 2023, India opened the Surat Diamond Bourse with grand ceremony. Prime Minister Modi presided. The building was larger than the Pentagon. Nine interconnected towers. Over 4,200 offices designed to house the world's diamond traders under one roof. It was, according to Guinness World Records, the largest office building on Earth.

As of February 2026, the Bourse sits at roughly 2% occupancy. Approximately 175 offices are operational. The vast central corridor stands silent. Doors are locked. On-site cafés remain unfinished concrete shells. Some merchants who purchased offices are already trying to sell.

Even after the Gujarat Deputy Chief Minister personally intervened in January 2026, pressuring traders to relocate, the response was largely symbolic. One hundred offices opened in a single day, and the media celebrated. But 100 out of 4,200 is not momentum. It is a photo opportunity.

One of the project's original backers, Vallabh Lakhani of Kiran Gems, described as the world's largest rough diamond manufacturer, was among the first to relocate. He moved 15 truckloads of gems and an entire workforce housing complex to Surat. Within months, he resigned as Bourse president and moved everything back to Mumbai. Bank branches closed. Restaurants shut. The Amul parlour, which was to feed thousands, never survived.

The Surat Diamond Bourse is not merely an empty building. It is the physical embodiment of an industry that bet its future on a world that no longer exists.

Every diamond downturn in living memory had a single cause: a recession, a supply shock, a political crisis. This one has three hitting simultaneously, and they feed on each other.

1. The Tariff Hammer

Between April 2025 and January 2026, India's gem and jewellery exports to the United States, its single largest market, fell by 45%. When the full 50% tariff kicked in during September 2025, shipments of precious stones to the US collapsed by over 76% in a single month, according to India's commerce department data.

A February 2026 trade framework between India and the US has since reduced the effective tariff to around 18% on jewellery, with duties on loose diamonds and coloured gemstones expected to drop to zero. That is relief, but not recovery. Factories that closed do not reopen overnight. Buyer relationships built over decades were disrupted in months.

Here is what few are discussing: the trade framework specifically zeros out duties on coloured gemstones entering the US. This creates a structural trade advantage for non-diamond gemstone jewellery. The playing field has tilted, and it has tilted toward colour.

2. The Lab-Grown Takeover

In 2025, lab-grown diamonds crossed a psychological threshold: they now account for roughly half of all engagement ring purchases in the United States, according to BriteCo's annual market analysis. That is not a niche alternative. That is the new default for the most emotionally significant jewellery purchase most people will ever make.

The economics are devastating for natural diamonds. A 2-carat lab-grown stone now costs less than a 1-carat natural one. Consumers are not comparing like for like. They are comparing by budget, and choosing double the size for less money. The average lab-grown engagement ring centre stone has grown from 1.3 carats in 2019 to nearly 2.5 carats in 2025.

In Surat, the shift is even more dramatic. An estimated 80% of polishing work now involves lab-grown stones. Workers who still have employment are sorting synthetics for as little as ₹13 to 14 per piece.

This is the core argument against diamonds as a store of value: lab-grown stones have exposed a fundamental vulnerability. If something chemically identical can be manufactured for a fraction of the price, the original's "specialness" depends entirely on marketing. And De Beers' century-long monopoly on that narrative is crumbling.

3. China's Luxury Collapse

China was supposed to be the diamond industry's next America, a billion-person market trained to associate diamonds with love and status. Instead, a prolonged economic slowdown crushed luxury spending. The result was hundreds of millions of dollars in unsold inventory flooding back into India's trading hubs, crashing prices further.

Polished diamond prices have dropped between 5% and 27% depending on category. Bloomberg reports that Antwerp's trade volume has nearly halved from a 2022 peak of $41 billion to approximately $19 billion. Supply is everywhere. Demand is nowhere near enough to absorb it.

If you want a single measure of how severe this crisis is, look at the company that invented the modern diamond industry.

De Beers posted a loss of $511 million in 2025, up from just $25 million the year before. Parent company Anglo American swung to a $3.7 billion annual loss, driven overwhelmingly by its diamond business. Anglo has now written down De Beers' book value three times in three consecutive years, slashing it from $9.1 billion to $2.3 billion. Total writedowns reached $6.8 billion.

Anglo American is actively attempting to sell De Beers, a business founded in 1888 by Cecil Rhodes, the company that literally created the phrase "A Diamond Is Forever." The sale may even happen in stages, CEO Duncan Wanblad told analysts. Multiple consortia, including the governments of Botswana and Angola, are circling.

When the company that defined the diamond's value for over a century is being sold off in pieces, the symbolism is unmistakable. The era of diamond dominance is over.

The statistics tell a devastating story. Over 150,000 diamond workers in Surat have lost their jobs since the crisis deepened. Al Jazeera's December 2025 reporting put the broader figure at nearly 400,000 workers facing layoffs, pay cuts, or reduced hours.

Workers who once earned ₹25,000 to 30,000 monthly now report incomes of ₹12,000 to 13,000. Some have left the industry entirely, driving cabs or selling street food. The Diamond Workers' Union Gujarat has received over 2,500 distress calls on a helpline launched to address the crisis. Multiple reports document over 100 diamond worker suicides in the past two years, driven by financial distress and uncertainty.

Dinesh Bhai D. Patel, a broker Bloomberg spoke with who has worked through five decades of industry cycles including wars, recessions, and the 2008 financial crisis, said flatly: "This time is different. I have never seen anything like this."

When a man who has worked fifty years in diamonds says this downturn is unprecedented, it is worth listening.

For the Pakistani consumer, this global crisis should theoretically represent an opportunity. Diamond prices have collapsed. Supply is abundant. If you wanted to buy a diamond, this is the cheapest the market has been in a generation.

But here is the problem: Pakistan has no formal diamond trade to speak of.

The State Bank of Pakistan's foreign exchange regulations make the legal import of diamonds all but impossible for most traders. Under the SBP's Foreign Exchange Manual, the import of precious and semi-precious stones is permitted only against export performance. That means you can bring stones in only if you are already exporting jewellery of equivalent value. For a retailer simply wishing to stock diamonds for the domestic market, there is no viable formal channel. The forex restrictions, designed to protect Pakistan's precarious dollar reserves, have the unintended consequence of pushing the entire diamond supply chain underground.

The result is that virtually every diamond sold in Pakistan's retail jewellery market arrives through informal channels. Stones enter via Dubai, Bangkok, and Mumbai through personal baggage, undeclared courier shipments, and the same cross-border networks that move everything from gold to electronics. There are no bills of entry. There is no customs trail. And critically, there is no certification.

Consider the irony: Pakistan is the world's eighth-largest gemstone producer, sitting atop world-class deposits of emeralds, rubies, sapphires, and peridot. Yet a September 2024 parliamentary committee hearing revealed that official gemstone exports stand at a mere $8 million, while an estimated $5 billion worth of gemstones are smuggled out of the country annually, primarily to Thailand and India, where they are cut, polished, and resold at enormous margins. The Pakistan Gemstone and Jewellery Development Company was established with five regional centres that were operational for a period, but by around 2017, all had been shut down due to chronic lack of government support and funding. The infrastructure meant to formalise and develop this sector simply ceased to exist.

This is the absurdity: we sit on billions in natural gemstone wealth, we have no infrastructure to certify or regulate the diamonds being sold to our own citizens, and the SBP's well-intentioned forex policies have inadvertently created a market where the consumer is entirely unprotected. If you are buying a diamond in Pakistan today, you are trusting the seller's word. And in the current global environment, that word may be worth less than the stone itself.

The diamond's troubles are not merely creating a vacuum. They are accelerating a shift that was already underway. Coloured gemstones (emeralds, sapphires, rubies, peridot, amethyst, tourmaline) are emerging as the intelligent alternative, and the reasons go well beyond aesthetics.

The Investment Case

CNBC reported this month that wealthy consumers are increasingly turning to coloured gemstones as tangible assets, citing macroeconomic volatility and the appeal of hard-asset hedging. Christie's saw a Paraíba tourmaline necklace sell for $4.2 million in December, ten times its low estimate. Knight Frank's 2024 Wealth Report found that 23% of ultra-high-net-worth individuals now consider gemstones as alternative investments, up from 18% in 2022.

The coloured gemstone market is projected to grow at a compound annual rate of 10 to 11% through 2035. Meanwhile, the natural diamond market faces an existential reckoning with lab-grown alternatives that will only become cheaper and more abundant.

The logic is simple: you cannot invest in something that can be manufactured in infinite quantity. Scarcity that is geological, not marketing-dependent, is the only durable foundation for long-term value. A fine Swat emerald, a Burmese ruby, a Ceylon sapphire: these appreciate because the earth is not making more of them. A diamond, natural or otherwise, no longer has that advantage.

The Cultural Case

For Pakistani consumers specifically, coloured gemstones carry a significance that diamonds never authentically could. The diamond engagement ring is a 20th-century American marketing invention, exported globally by De Beers. It has no roots in South Asian bridal tradition, Islamic culture, or Mughal aesthetics.

Coloured gemstones, by contrast, are woven into the region's identity. Lapis lazuli, sourced from Afghanistan's Badakhshan province but traded and processed through Pakistan for millennia, is one of the oldest continuously traded gemstones in human history. The peridot of Kohistan is among the finest in the world. Emeralds carry deep significance in Islamic scholarly traditions. Ruby and garnet adorn Mughal-era jewellery across the subcontinent. When you wear a coloured gemstone sourced from this region's mountains, you are not buying into someone else's marketing narrative. You are wearing something that belongs to this land.

The Practical Case

Unlike diamonds, coloured gemstones sourced domestically do not require forex outflows, do not depend on smuggling networks, and do not expose the buyer to the lab-grown fraud risk that now plagues the diamond market. When you purchase a peridot pendant, an amethyst ring, or a green aventurine bracelet from a transparent, direct-to-consumer source that controls its own supply chain from mine to market, you know exactly what you are getting. That certainty, in the current environment, is worth more than any diamond.

I do not say this with any pleasure. The collapse of the diamond industry is destroying livelihoods in Surat, in Botswana, in Antwerp, and among the many families across India's diamond corridor who have known no other trade for generations. The human cost is real and ongoing.

But the market does not reward sentiment. It rewards scarcity, authenticity, and value. On every one of these dimensions, coloured gemstones are now the superior proposition. The data supports it. The market trends confirm it. And for Pakistani consumers, whose own country sits atop some of the finest gemstone deposits on Earth, the alignment of interest, culture, and economics has never been stronger.

The diamond's century is ending. What comes next glows in colour.