The Middle East conflict has disrupted India's gems and jewellery exports, as well as imports of rough diamonds from the United Arab Emirates, because of widespread flight cancellations and airspace closures.
Dubai, a major global hub for polished and rough diamonds and bullion, has suspended numerous cargo and passenger flights, affecting trade flows and shipments of both exports and essential raw materials, industry officials said.
"Exports and imports from the Middle East have come to a standstill, and there are no logistics in place to move goods," Vipul Shah, managing director of Asian Star, a leading diamond exporter, told Reuters.
The Middle East accounts for nearly a quarter of India's annual gems and jewellery exports of around $30 billion, while the United Arab Emirates makes up more than two-thirds of the country's rough diamond imports.
India is the world's largest cutting and polishing hub, handling nine out of every 10 diamonds processed globally.
The country's gems and jewellery exports will fall in March as Dubai is not only a major market for gems and jewellery, but also a key intermediary between diamond-producing countries and major consumer markets, said Shaunak Parikh, vice-chairman of the Gem and Jewellery Export Promotion Council.
"If it (the conflict) drags on, it could hurt demand,” Parikh said.
India has been relying on demand from the Middle East after its top buyer, the US, imposed hefty tariffs on Indian goods last year and curtailed purchases.
Overseas buyers are cautious about placing orders amid volatility in the rupee-US dollar exchange rate and logistical constraints, said Colin Shah, managing director of Kama Jewelry.
The Indian rupee fell to a record low of 92.3025 per US dollar on Wednesday.
Both buyers and sellers know the war has disrupted trade, so they are agreeing to delay shipments, said a Mumbai-based diamond exporter.
