Things may be about to get a lot more difficult for the struggling global diamond industry. Almost 80 percent of the world's gem diamonds come from India, where the rocks are paid for with cash upfront and sold on credit, according to Olya Linde, a partner with Bain & Company.

With the government of Prime Minister Narendra Modi pulling 500- and 1,000-rupee notes from circulation as part of his campaign against corruption, the cash link in the industry is about to get weaker.