From Diamonds to Disinflation: De Beers, RBI, and the Business of War | Who said what? #23
Hello, Welcome to another episode of Who said what? I’m Kashish, filling in for Krishna and this is the show where he dive into interesting comments by notable figures from across the world—whether it’s finance or the broader business world—and dig into the stories behind them.
Today I have 3 very interesting comments for you. It’s about De Beer’s CEO on India has it’s biggest market, then Nomura on how India’s worst inflation is behind and finally from Solar Industries on the state of defense in India
A diamond is forever…this time in India?
For decades, diamonds were not just marketed as precious stones but as a profound symbol of eternity. At the heart of this transformative marketing brilliance was De Beers, a company that single-handedly convinced generations globally that a diamond ring wasn't merely jewelry—it represented love itself, permanence, and legacy. However, the dazzling veneer carefully crafted by De Beers has faced unparalleled challenges recently, shaking the diamond industry at its very foundation.
You might have guessed that I am talking about lab grown diamonds or LGDs.
Al Cook, the global CEO of De Beers, has positioned India at the forefront of this evolving landscape. In an interaction with the Economic Times, Cook emphasized India's emerging dominance in natural diamonds, stating:
"Having toppled China as the world’s second-biggest market for natural diamonds, India is shining bright for De Beers."
He contrasted India's consumer behavior starkly with the growing U.S. inclination toward lab-grown diamonds (LGDs). He further said that:
"One can buy 20 LGDs for the price of 1 carat of natural diamond. LGD will remain mass-produced, low-cost, pretty, and fun jewellery to wear. Indian consumers are more sophisticated, and they like natural things. They believe in the uniqueness of natural diamonds, and therefore the demand is growing."
India has decisively overtaken China, a market historically prominent in diamond consumption but currently struggling. According to the Gems & Jewellery Trade Association, China's diamond market contracted drastically from 100 billion yuan ($14 billion) in 2021 to merely 43 billion yuan ($6 billion) by 2024, reflecting broader economic uncertainty and shifting consumer preferences towards gold, influenced by surging gold prices.
Concurrently, the United States, the largest diamond market globally, is significantly shifting toward lab-grown diamonds. These synthetic diamonds mirror their natural counterparts in both physical and chemical properties but come at significantly lower costs, coupled with an eco-friendly and conflict-free image heavily marketed toward environmentally conscious and younger demographics. Highlighting this shift, Cook noted a stark decline in lab-grown diamond prices, stating:
“Lab-grown diamond wholesale and retail prices continued to fall through 2024, accelerating notably as retailers introduced deep discounts amidst heightened competition. Some U.S. retailers have even started warning consumers explicitly that lab-grown diamonds may lose their resale value significantly.”
India's largest jewelry retailer, Titan—owner of Tanishq, CaratLane, Mia, and Zoya—revealed notable insights in their recent earnings call. Titan’s in wait-and-watch mode, but for now, it’s sitting this one out.
They’re not yet convinced that the economics of lab-grown diamonds has settled down. The price of lab-grown diamonds has been falling steadily as production gets cheaper. From around ₹50,000–60,000 per carat a year ago, many players are now selling at ₹30,000 per carat. And even at that price, the margins are still healthy — which means that even more new players might enter the market. More price-cutting is likely. This isn’t an environment that rewards a brand like Titan.
So far, they don’t seem to be missing much. While lab-grown diamonds are rapidly eating into the market for solitaires, it hasn’t yet taken over the market for smaller stones. Over 95% of Titan’s studded jewellery sales come from small natural stones, not large solitaires. That part of the market has remained resilient. If anything, the company has seen strong growth in buyers for small stones.
We came across their commentary through The Chatter, where we pick the most juiciest and interesting comments from the earnings call so you don’t have to dial in 🙂
Coming back, the industry's shifting sands forced De Beers, historically protective of diamond prices, to undertake an unprecedented move: significant price cuts of up to 15%. Such a step, described as "capitulation" by market observers, starkly contrasts the company’s previous price stability strategy. Additionally, De Beers has amassed an inventory of rough diamonds valued at approximately $2 billion—reminiscent of challenging times similar to the 2008 financial crisis.
Yet despite these market strains, De Beers remains deeply invested in the Indian narrative. Cook articulated an ambitious growth trajectory, forecasting the Indian natural diamond market could double from $10 billion currently to $20 billion by 2030. Cook emphasized this potential strongly, noting India's natural diamond consumption saw a robust 12% year-on-year growth in 2024 alone.
However, beneath these affirmations lies an intriguing contradiction. Historically, De Beers leveraged the compelling slogan "A Diamond Is Forever," embedding a notion of perennial value and rarity in consumer consciousness. Yet, amonds have returned virtually no investment gains over the past 22 years, undermining De Beers' long-standing marketing narrative.
The inflation game changer
This week, while the world obsessed over tariffs, trade tensions, and central bank hand-wringing, one line quietly cut through the noise. It came from Sonal Varma at Nomura, and it captured something most people hadn’t noticed yet—but might look back on as the turning point.
India, she said, is entering a new phase. A quieter shift with enormous implications: after years of fighting inflation, India may finally have won.
To grasp why this is a big deal, you have to rewind to 2019. Inflation had been a chronic problem for India—sticky, persistent, and unpredictable. The pandemic made it worse. Then came war, supply shocks, and climate swings that sent food prices soaring. For six long years, inflation stayed above the Reserve Bank of India’s 4% target. Policymakers could do little more than react, always one step behind.
The data behind the turnaround
The shift isn’t just a one-month fluke. It’s rooted in real, tangible changes across the economy:
Food prices are falling fast. Vegetables are down 11%, pulses by 5%, spices by 3%. Rains have been generous, reservoirs are full, and the rabi harvest looks good. Even the famously volatile food basket is behaving.
Global disinflation is helping. U.S.-China tensions have diverted cheaper Chinese goods to markets like India. Imports from China jumped 26% year-on-year in March-April, easing input costs.
Domestic costs are easing. Fertiliser, diesel, fodder—key inputs in agriculture—are cheaper. Rural wage growth is muted. Industrial and energy costs are softening. Even urban wage growth, proxied by listed company salary expenses, is slowing.
There’s slack in the system. Credit growth is tapering, private investment remains cautious, and global demand is weak. That keeps a lid on demand-driven inflation.
The rupee isn’t under pressure. A soft U.S. dollar, concerns over U.S. fiscal health, and Northeast Asia trade dynamics are giving the rupee more breathing space.
This isn’t just low inflation—it’s broad-based, sticky, and cyclical disinflation. As Varma notes, trimmed mean CPI inflation fell below 4% back in January 2024 and was just 3.3% this April. The RBI’s core inflation gauge looks elevated only because of gold prices—exclude those, and core inflation is running at 3.5%.
Why this changes everything
If inflation is finally under control, then the RBI has room to act—and it already has. The central bank cut rates by 50 basis points and adopted an "accommodative" stance.
But Varma is going further: she expects another 100 basis points of cuts, bringing the repo rate to 5%. That would be a full-blown easing cycle—deep, deliberate, and very different from the last six years of caution.
This also gives India the rare freedom to diverge from the U.S. Fed. While the Fed worries about tariff-induced inflation, India can focus on growth. As Varma puts it, “disinflation in India will stand in stark contrast to the tariff-induced inflationary shock expected in the US.”
What this means for everyone
This quiet tailwind has sweeping effects:
Households get a break—lower EMIs, cheaper credit, and relief at the grocery store.
Companies see better margins—input costs are falling while borrowing costs ease.
The Government gets policy headroom—less need for fiscal firefighting, more space to consolidate.
Investors can see macro stability—low inflation, strong reserves, and steady growth expectations.
And in a world where economic surprises tend to be nasty, this is a rare kind of surprise—positive, sustainable, and under the radar.
The risks
Of course, nothing in economics ever moves in a straight line. She flags key risks: erratic weather, geopolitical shocks, global financial volatility. And if there’s a deeper global slowdown, even India’s momentum could wobble.
But here’s her central insight: unlike before, India now has the room to absorb shocks. Inflation isn’t the constraint—it’s the cushion.
After years of treating inflation like a chronic illness, India is suddenly in a position of strength. And nobody’s really talking about it—yet.
Varma’s phrase—“quiet tailwind”—is more than a clever turn of phrase. It captures a real economic inflection point: where low inflation, restrained demand, and stable fundamentals converge to give policymakers space.
This might be the most underappreciated story in the global economy right now. While the rest of the world scrambles to tame prices, India’s challenge is the opposite: how not to waste this disinflation dividend.
The question isn’t whether the RBI can cut rates further. It’s whether they can afford not to.
Solar Industries: When War Becomes Business
In the final story of the day we're diving into Solar Industries' earnings call, where CEO Manish Goenka made some remarkably candid comments about how global conflicts are driving their defense business to unprecedented heights.
Here's what Goenka said about the current geopolitical climate:
"If you look at the current geopolitical situation and media articles, the government is definitely trying to buy many items on emergency procurement."
But it was his next comment that really raised eyebrows:
"If you look at history... after World War Two, there was no big event like this. Sometimes these conflicts can convert into bigger wars. Nobody wants them. But to secure ourselves, all nations would like to invest in this sector."
What's Really Going On Here?
Solar Industries isn't just any company - they're India's largest private explosives manufacturer, and they've been quietly building a defense empire. And the numbers back up Goenka's view of where the world is heading.
Just last month, the Stockholm International Peace Research Institute released some staggering data: global military spending hit $2.7 trillion in 2024 - that's a 9.4% jump and the steepest rise since the Cold War ended. Over 100 countries increased their defense budgets.
Here's the context that makes Goenka's comments so significant:
The Numbers Tell the Story:
Their defense revenue exploded 162% this year
They're sitting on a massive order book worth billions
Next year, they're targeting 30% of their total revenue from defense alone
When Goenka talks about conflicts "converting into bigger wars," he's not being alarmist - he's reading the room. The SIPRI data shows European military spending surged 17% in 2024, while Middle East spending jumped 15%. Russia doubled its defense budget since 2015, and even Germany - traditionally cautious about military spending - increased its budget by 28% to become Europe's biggest defense spender.
With ongoing tensions in Ukraine, the Middle East, and rising defense budgets globally, Solar Industries has positioned itself perfectly for what they clearly see as a defense spending supercycle.
The Strategic Masterstroke
Here's what makes this particularly interesting: while most companies stumbled into defense opportunities, Solar Industries has been playing the long game. Goenka admitted:
"Very few companies in this market have really spent on building capacities for defense products, and Solar is one exception which has kept investing."
They've spent years qualifying their products with international customers, building state-of-the-art facilities, and developing everything from rockets to advanced munitions. When geopolitical tensions started rising, they were ready.
The Uncomfortable Truth
What Goenka is essentially saying - though he'd never put it this bluntly - is that global instability is great for business. Solar Industries has become a direct beneficiary of what they see as an inevitable increase in military spending worldwide.
Their products were reportedly used in recent military operations, and they're expecting more "emergency procurement" orders as governments rush to beef up their arsenals.
The Bottom Line
Solar Industries has turned geopolitical uncertainty into a ₹15,000 crore opportunity. Whether you find that pragmatic or unsettling probably depends on your perspective.
But one thing is clear: in a world that feels increasingly unstable, companies like Solar Industries are positioning themselves not just to survive, but to thrive.
Please let me know what you think of this edition🙂
Well articulated!
Exhaustive brainstorming... 🤘🏻