Surat diamond workers face gloomy Diwali as conflicts abroad hit business

Diwali to Christmas marks the peak sales period for diamond business, but this year the diamond units are saddled with a large unsold inventory, with a slowdown in the biggest markets – the US and China. Diamond businessmen are not sure if they can give Diwali bonuses and some have reduced working hours to five days a week.

Last month, the national Gems & Jewellery Export Promotion Council (GJEPC), in a letter to the industry, appealed for a freeze on import of rough diamonds from October 15 to December 15, given the large inventories of unsold finished diamonds.

One of Surat’s top diamond manufacturers, Hari Krishna Exports, which claims to have more than 8,000 “skilled assets” and is famous for giving away flats, cars, scooters and jewellery to its employees on Diwali, has not planned any gifts this year.

Its promoter Savji Dholakia told The Indian Express, “Business is not doing well this year. We have not witnessed such a recession in the diamond industry. The diamond factory owners are somehow running the factories in survival mode, their capital jammed, trying to maintain the brand image of the company. Every year, we give gifts during Diwali, this year there will be no gifts on Diwali to diamond polishers.”

With uncertainty looming, Sanghani, who earns Rs 25,000 a month from polishing diamonds, said his wife has taken up a job of embellishing saris. She gets Rs 10 for every embellished sari. The couple have three school-going children.

“We had a good Diwali last year. This year, the industry is not doing well and we also understand the situation of factory owners. We are getting less salary and to run a family of three school-going children, and also to pay the house rent, it is difficult. We are also not sure if our factory will reopen after Diwali. I have started looking for jobs in another sector in Surat. If nothing goes well, I will return to my native place and start farming,” said Sanghani.

Surat has nearly 5,000 diamond units employing over 6 lakh workers, and polishes 8 of 10 diamonds in the world. The unit owners and polishers hail from different villages in Saurashtra and north Gujarat and are settled in Surat. Some of the Surat manufacturers also outsource polishing work to artisans in Bhavnagar and Amreli districts.

Mumbai’s Bharat Diamond Bourse continues to be the trading hub, although the soon-to-open Surat Diamond Bourse may offload some of its trading volume.

The downslide began after the US imposed sanctions on one of the biggest diamond miners, Alrosa, in Russia in April last year, after it went to war with Ukraine. And just when the diamond industry was exploring new markets in smaller countries of the Far East like Cambodia, Vietnam and the countries of the Gulf Co-operation Council late September, the Israel-Hamas war broke out, raising concerns. Although small, Israel is a market for diamonds exported from Surat.

With the slowdown in the US and China markets, the GJEPC on September 29 organised a two-day international Buyer Seller Meet for gems and jewellery in Mumbai, which was attended by over 30 buyers from countries such as the UAE, Egypt, China, Lebanon, Saudi Arabia, Panama and US.

GJEPC Chairman Vipul Shah said, “The gem and jewellery industry has encountered its fair share of difficulties in recent times, primarily due to decreased demand caused by global economic downturns and geopolitical instability. Nevertheless, we are dedicated to enhancing exports by exploring new markets and hosting such events that allow us to engage with buyers, gaining insights into their current preferences and trends in gems and jewellery in their markets.”

Data from GJEPC shows the overall gross exports of cut and polished diamonds fell by 9.78 % in the financial year ending March 2023, while imports of rough diamonds fell by 8.42 %, compared to the previous financial year. Gross imports from April 2023 to September 2023 fell by 20.81 % compared to the corresponding period last year. The exports of finished diamonds show a decline of 28.76 % in the same period this year.

In Surat, Rakesh Patodiya (60), owner of Vaishali gems at Katargam, which employs 500 diamond polishers, said his business went down by “50 per cent”.

“We sell polished diamonds in the local market and also export to the US, China, Middle East among others. We are not seeing good signs in upcoming months due to the geopolitical conditions,” he said.

“After the Covid pandemic, the market of polished diamonds surged till 2022 and with the starting of this year, the market started collapsing and now it has reached to such an extent that the diamond factory owners are struggling for their survival. The factory owners have adopted different means to maintain their image in the market,” Patodiya said.

“Last year, we gave one month’s salary as bonus to our employees and this year we are not in a position to even give them their full salary and our employees are aware of this.”

Surat Diamond Association president Jagdish Khunt said: “We have not seen such a recession in the history of the diamond industry.”

“In the present situation, we have requested the diamond factories of Surat to continue their production till Diwali. We have come to know that many factories have cut short their production and some of them have also kept two days holidays in a week to survive in the present situation. It is a collective effort as diamond factory owners and diamond workers should also understand the complex situation.”