As diamonds from Zimbabwe continue to penetrate the global market, leading diamond companies including De Beers, Alrosa and Rio Tinto are reportedly losing out on the Indian market.
De Beers, Alrosa, Rio Tinto and BHP Billiton account for up to 70% of rough diamond global production.
According to Mineweb website, diamond traders in India said diamonds from Zimbabwe were about 50% cheaper compared to traditional sources.
Diamonds from Zimbabwe have brought stiff competition to the international market, causing prices to fall sharply, Santosh Desai, diamond trader at Mumbais Zaveri Bazaar told Mineweb.
An immediate consequence of their arrival was that diamond prices have crashed by 25% in the markets of Mumbai and Surat since November 2011, he added.
Zimbabwe diamonds were said to be available at $40 per carat, which was considered cheap compared to other sources where they were sold for $100 per carat.
The Kimberley Process watchdog in November last year authorised the resumption of diamond sales from Mbada Diamonds, Anjin China and Marange Resources.
Last month Diamond Mining Corporation (DMC), a joint venture between Zimbabwe Mining Development Corporation (ZMDC) and a Dubai-based firm, became the latest mine to receive the Kimberly Process approval to sell its gems.
DMC is a 50-50 partnership between ZMDC and Pure Diamonds.
The company joined Marange Resources, Mbada Diamonds and Anjin in getting approval to sell diamonds from the resource-rich Marange fields.
Going forward, Desai believes diamonds from Zimbabwe would influence prices and demand for rough diamonds in 2012, largely as a result of increasing demand from India.
Traders told Mineweb close to 11 million carats of Marange diamonds were expected to flood the Indian market this year.
In 2010-11, India imported rough diamonds worth $11 billion, out of which more than 50% were of low-range quality.
Prices of rough diamonds from De Beers and Alrosa have also slipped by around 10% per month in Surat as a result of diamonds from Zimbabwe entering the market. About 30% of the diamond pieces currently manufactured in Surat are Zimbabwean stones.
Since India consumed about 80% of rough diamonds produced by Alrosa in 2011, Zimbabwe is bound to take away a large chunk of this consignment this year, said Uday Mahandale, a diamond trader.
Indias Commerce ministry in September last year gave the go-ahead for the importation of a shipment of rough diamonds from Zimbabwe valued at over $153 million.