Lights still out in many diamond units as exports dim

KOLKATA: Nearly 30% of Surat's 15,000 diamond cutting and processing units have not reopened after the Diwali vacation, as demand from the US is still weak and China has yet to resume purchase.

In places like Saurashtra, Bhavnagar and Amreli in Gujarat that house small diamond processing units, nearly 50% of the facilities are still closed. Gujarat's diamond units employ nearly a million people and many of them are not getting any wages because of the closure or operations. The Diwali holiday, which stretched for a month this year, ended on November 28.

"Workers will be in real problem if the units do not reopen. Already the daily wages have come down from Rs 1,200-Rs 1,300 to Rs 700-Rs 800 and there is not adequate work for them at the diamond cutting and polishing units," said Ramesh Zilariya, president of the Gujarat Diamond Worker Union. Nine out of 10 diamonds available in the global markets are believed to be cut and polished in India, primarily in Surat and other centres in Gujarat.


Vipul Shah, chairman of the Gem & Jewellery Export Promotion Council, said: "China is not keen to buy diamonds and we do not know when the country will start buying from India." Exporters are waiting for the inauguration of Donald Trump, hoping that his policies may give some impetus to diamond exports to the US, he said.

When the economy is stagnant, Chinese consumers are more cautious and avoid purchasing assets, including diamonds, Shah said, adding: "Gold is seen as a way to store wealth and preserve value, and so they are buying gold."

While the diamond cutting and polishing units in Surat are struggling to stay afloat, natural diamond miner De Beers has dropped its rough diamond prices by 10-15%. Russian diamond miner Alrosa too has reduced the prices of rough by 10%, taking a cue from De Beers.

Over this past year, prices of polished diamond have fallen by about 15-20%, as the Chinese market crashed and lab-grown diamonds ate into the demand for natural diamonds in the US. As a result, De Beers' rough prices were 20-25% above open-market rough tender prices.

"De Beers' rough prices are still too expensive, but its lower rough prices will allow sightholders to lose less money," said Vipul Shah. Sightholders are business houses that buy rough diamonds in bulk from the miners.

"We do not see any major impact on polished diamond post the price correction of De Beers, as this was like a price adjustment of rough diamonds to align with the existing polished diamond prices," said Jignesh Mehta, managing director of Divine Solitaires, adding: "That (price cut) was long overdue."

Meanwhile, workers feel the price drop by De Beers will lessen the financial burden of the cutting and polishing units and help them get back their jobs.