Iran war fractures India’s vital gems corridor through Dubai

Logistical breakdowns linked to the war in the Middle East have disrupted India’s gems and jewelry trade through Dubai, exposing the sector’s reliance on a single trade corridor.

The disruption has affected shipments of rough diamonds and finished jewelry, with flight cancellations and airspace closures limiting cargo movement between India and the UAE, a key global hub for diamond trade flows. This high-risk environment has led to a sharp increase in ins. premiums, further weighing on shipments.

Why it matters: The India-UAE corridor is the lifeblood of the sector. The Middle East accounts for nearly a quarter of India’s annual gems and jewelry exports — around INR 2.5 tn (USD 30 bn) — while the UAE makes up more than two-thirds of the country’s rough diamond imports.

The immediate fallout: India’s gems and jewelry exports dropped around 35% y-o-y in March. “The disruptions have been quite broad-based, but we see them as more short-term in nature at this stage,” Kirit Bhansali, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), tells EnterpriseAM.

By the numbers: Exports to the GCC plunged nearly 67.8% in March, down to USD 325.92 mn from USD 1.01 bn, “which shows that the impact was across categories, including plain gold jewelry, cut and polished diamonds, and studded gold jewelry,” Bhansali says.

Imports and exports hit simultaneously

The disruption has affected both ends of the value chain. As the world’s largest diamond cutting and polishing hub, India — handling nine out of every 10 diamonds processed globally — depends on steady inflows of rough diamonds to sustain processing activity.

“In some cases, even completed diamond export parcels could not be shipped, which reflects the extent of movement constraints,” Bhansali tells us. “That said, we expect this to be temporary; if geopolitical tensions ease, exports should recover. However, if uncertainty continues, we could see ongoing volatility, especially in segments like gold jewelry.”

Shipment delays and rising costs

Industry estimates paint a stark picture: Roughly USD 3 bn worth of exports faced disruption risks between February and April. While exporters have managed to mitigate about USD 1.43 bn of that exposure, another USD 1.54 bn remains on the line if the logistical paralysis persists. “Exporters are facing logistics bottlenecks and a sharp increase in ins. costs due to the high-risk environment, which is making shipments more expensive and difficult to execute,” Bhansali tells us.

Dependence on Dubai in focus

The disruption has highlighted the risks of relying on Dubai as a single trade and logistics hub, both for sourcing and redistribution. “This kind of concentration does pose a risk, and the current situation has brought that into sharper focus. It may lead to some rethinking around diversification over time,” says Bhansali.

A structural shift on the horizon? A prolonged squeeze could accelerate the search for alternative trade routes and also fuel ambitions to build domestic trading infrastructure in India.