India’s diamond industry is taking steps to reduce its bank financing needs in response to the declining global demand for gems, which has put pressure on the industry’s liquidity. With the slowdown in demand, diamond traders are focusing on clearing their inventory instead of creating new stocks that would require additional borrowing. There has been a sharp decline in diamond financing, and traders have stopped imports of rough diamonds for the next two months. The industry is being transparent with banks about the challenges it is facing and is cautious about not creating excess inventory. Despite the challenges, there is optimism about the potential of the domestic market in India and the resurgent Japanese economy. However, concerns remain about China’s underperformance in diamond jewellery consumption and the impact on banks’ capital costs. To revitalize profitability, build trust, and restore confidence in the diamond market, de-inventorizing the diamond chain has been highlighted as a critical step.