Gujarat: Indian diamond industry struggles to stave off war and slowdown impact

Nikunj Tank, a employee on the earth’s diamond sharpening capital Surat in western India, had been determined since dropping his job in Could.

The unit he labored at for seven years was dealing with a monetary squeeze and closed down, leaving him and over a dozen others unemployed.

Tank was the household’s sole breadwinner – he was supporting his dad and mom, spouse and daughter and had no financial savings.

‘‘He couldn’t discover a job and unable to bear the loss, he took the acute step,” mentioned his retired father Jayanti Tank.

Tank died by suicide in August.

The previous few years have been robust for India’s recession-hit diamond trade. Surat, in Gujarat state, processes 90% of the world’s diamonds in over 5,000 models and employs greater than 800,000 polishers. The town has 15 large sharpening models with an annual turnover of greater than $100m (£75m).

India’s exports of reduce and polished stones fell from $23bn in 2022 to $16bn in 2023 and are anticipated to drop additional to $12bn in 2024.

The worth of polished diamonds dipped by 5%,s to 27% in 2023, because of decrease demand and oversupply, say analysts. Mahesh Virani of Star Gems defined that oversupply occurred as a result of sharpening models continued manufacturing regardless of restricted demand to maintain operations operating, in the end growing their losses.

The state’s Diamond Employees’ Union, a bunch representing polishers, advised BBC Gujarati that greater than 30,000 have misplaced their jobs previously six months alone as a result of downturn.

The union says that as per their information collected from victims’ households, police data and information reviews, 65 staff have died by suicide within the state over one-and-a-half years because of this slowdown. The BBC couldn’t independently confirm this determine.

Consultants say the Covid-19 lockdown, the Russia-Ukraine and Israel-Gaza wars, and falling demand in key markets have adversely impacted India’s diamond trade.

“The enterprise of polished diamonds has gone down by greater than 25-30% because of international recession,” mentioned Vallabh Lakhani, chairman of Kiran Gems, a number one producer.

India imports 30% of its tough diamonds from Russian mines – now beneath Western sanctions as a result of struggle – and cuts and polishes them, then sells them principally in Western markets.

In March, the European Union and G7 international locations imposed a fresh ban on the import of Russian unpolished diamonds, together with these processed in India and offered within the West through third international locations.

After the contemporary ban, India publicly raised concerns, with Exterior Affairs Minister S Jaishankar stating in April that such measures harm these decrease within the provide chain greater than Russia, as producers normally discover different routes.

Merchants in Surat echo that.

“India is on the low finish of the worth chain of the diamond trade. The nation is very depending on the worldwide market, each for uncooked supplies in addition to for last gross sales,” mentioned exporter Kirti Shah.

Moreover, an financial downturn in G7 international locations and the UAE and Belgium – India’s key export locations – has impacted enterprise.

The downturn can also be attributed to an increase in demand for lab-grown diamonds, a less expensive different to pure diamonds, and to the struggle in Gaza, because the gems kind a sizeable chunk of India’s commerce with Israel.

“The diamond sector in Surat is passing by way of a nasty section,” mentioned Kumar Kanani, a lawmaker from the state’s governing Bharatiya Janata Get together (BJP). He mentioned the police have been investigating the suicide circumstances attributed to job losses.

“The federal government is able to present all attainable assist to polishers, merchants and businessmen,” he mentioned.

However the households of at the least 9 staff, who lately took their lives, mentioned that they had obtained little assist from the federal government.

Nearly all of layoffs have occurred in small and medium-sized models, which usually rent staff for high quality checks of tough diamonds and for sharpening and shaping them.

However larger gamers are impacted too. Final month, Kiran Gems requested its 50,000 workers to go on a 10-day vacation, citing the slowdown as a cause.

In July, the Diamond Employees’ Union began a helpline which obtained over 1,600 misery calls from polishers looking for jobs or monetary assist.

However there have been others who couldn’t get assist in time.

Vaishali Patel, 38, misplaced her husband Nitin two years again. The sharpening unit he labored for had laid off a majority of its workers due to an absence of enterprise.

Brokers and merchants too are dealing with the brunt.

“We now have been sitting idle for days. There may be hardly any sale or buy,” mentioned Dilip Sojitra, one of many 5,000 brokers in Surat who promote diamonds to clients, merchants and different brokers.

Lab-grown diamonds, as soon as in excessive demand, have additionally seen costs drop from $300 to $78 per carat because of overproduction, impacting the market. Surat Diamond Brokers Affiliation president Nandlal Nakrani believes the scenario will enhance when tough diamond costs lower and polished diamond costs rise.

Regardless of the slowdown, some hope the trade will get better, because it did after the 2008 Nice Recession, which shut tons of of sharpening models and left 1000’s jobless.

Mr Sojitra says he believes the upcoming pageant season, together with Diwali, Christmas, and New Yr, will assist enhance enterprise momentum.

“This too shall cross,” he says.