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Slowdown takes sheen out of diamonds

Premsshankar Patel,a 24-year-old diamond polisher in Amreli,is worried.

Written by Hiral Dave | Rajkot/surat |
August 24, 2012 5:11:52 am

Premsshankar Patel,a 24-year-old diamond polisher in Amreli,is worried about how he will feed his family. His income is likely to dip by at least 20 per cent this month because the shift at his diamond polishing unit has been reduced by two hours — from 8 hours to 6.

He owns almost three bighas of land in Bagasara village of Rajkot district. Thanks to a delayed monsoon,he has no hope to cultivate crops and support his family of six including his parents,two children and wife.

“I earn around Rs 15,000-18,000 per month. We get paid by hours. Shorter shifts mean loss of 14 hours in a week,” said Patel.

“We need to get loans for buying seeds and pesticides,but with hardly any rain,even that is not possible,” he said.

At least two lakh diamond polishing workers in Amreli and Bhavnagar districts have the same story. Usually when diamonds fail,they find refuge in agriculture,but this time they face a double whammy,with the monsoon also presenting a bleak picture.

While global slowdown has adversely affected the business in the international market leaving local diamond polishing units with less work,unlike 2008-2009 (last financial crisis) they do not even have the choice to fall back on farming this time.

Surat,known as the Diamond city,cuts and polishes nine of every 11 diamonds in the world. The city has around 4,000 small and big diamond units where rough diamonds are cut and polished by around four lakh diamond workers. The gem then goes to the local trading market in Mahidharpura Mini Hira bazaar and Varachha Mini Hira bazaar where it is hawked on the streets by brokers. Jewellers buy the rough diamonds to set it in gold or silver to be sold in local markets.

An average diamond polisher works for eight hours in a day in two four-hourly shifts – in the morning and evening – and earns up to Rs 10,000 per month depending on the finesse of his work. According to Gems and Jewellery Export Promotion Council,the diamond jewellery market annual turnover is over Rs 1 lakh crore per annum.

It was severe drought in the 80s that pushed youths from Amreli and Bhavnagar to migrate to Surat. Gradually,Surat diamantaires also opened subsidiaries in Amreli and Bhavnagar.

Surat-based diamantaire Babubhai Mavani,who is into the diamond industry for more than 20 years,said,“Majority of the diamond polishers are from different districts in Saurashtra region. They were farmers,who were forced to migrate to Surat because of water scarcity and train in cutting and polishing diamonds. Some turned manufacturers. There are many examples of people who had come to Surat with just one pair of clothes and now have become millionaires through diamond business. Others who failed,turned to works like embroidery and textiles business.”

“There are some 450 diamond polishing units in Amreli of which 60-odd have closed down. Rest have reduced working hours,” president of Amreli Diamond Unit Owners Association Lalit Thummar said.

Unlike Patel,Natha Koli does not own any land. But during last crisis,he found employment as farm labourer. “If there are no crops,who wants labourers in farm,” he said.

Thummar,who is also a big time farmer,added,“Workers who did not own any land found work as labourers in the farms in the last crisis. But this time it is different.”

While Bhavnagar have other ancillary industries like,plastic,Amreli’s economy mainly depends on agriculture and diamond polishing.

“We have bought raw material when rupee was a bit stronger against dollar. Now when product is ready for sale,we stare at huge disparity following Indian currency depreciation,” said Vithal Mendapara,president Bhavnagar Diamond Unit Owners Association,adding,“Besides,crisis in the Euro zone,which is biggest market for diamonds,has led to fall in demand.”

Surat diamond association president Dinesh Navadia said,“Generally,the rough diamond comes from mines from different African countries,Canada,Russia,etc. The Diamond Trading Corporation sells diamonds to its sight holders while Alrosa and other major players of rough diamonds found from Canadian and other countries,sell diamonds in the market through tendering process.”

Gems and Jewellery Export Promotion Council Gujarat region chairman Chandrakant Sanghavi said,“The diamonds business is done in dollars,starting from the mines to the DTC and other major players of rough suppliers,takes payment in dollars. With the rupee downfall against the,dollar the Indian market players have to pay more and even their profit margin gets low.”

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