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

Since losing his job in May, Nikunj Tank, a contractor in Surat, northern India’s capital of stone cleaning, had been in desperate need.

He and dozens of others were left without jobs after the system he had been working for seven years shut down.

Tank was the family’s single breadwinner- he was supporting his relatives, wife and daughter and had no benefits.

‘ ‘ He was n’t find a job and unable to bear the loss, he took the extraordinary step,” said his retired parents Jayanti Tank.

Tank died by suicide in August.

The last few decades have been strong for India’s recession-hit gemstone industry. Surat, in Gujarat position, processes 90 % of the world’s diamonds in over 5, 000 models and employs more than 800, 000 polishers. With a turnover of more than$ 100 million ( £75 million ), the city has 15 large polishing companies.

India’s exports of cut and polished stones fell from$ 23bn in 2022 to$ 16bn in 2023 and are expected to drop further to$ 12bn in 2024.

The price of polished diamonds dipped by 5 %, s to 27 % in 2023, due to lower demand and oversupply, say analysts. According to Mahesh Virani of Star Gems, oversupply occurred because polishing models continued to produce despite a lack of desire to keep operations running, eventually leading to an increase in losses.

The country’s Diamond Workers ‘ Union, a party representing polishers, told BBC Gujarati that more than 30, 000 have lost their jobs in the past six months only due to the downturn.

The union says that as per their data collected from victims’ families, police records and news reports, 65 workers have died by suicide in the state over one-and-a-half years due to this slowdown. The BBC could not independently verify this figure.

Authorities say the Covid-19 shutdown, the Russia-Ukraine and Israel-Gaza war, and falling need in essential markets have severely impacted India’s gemstone industry.

” The enterprise of polished diamonds has gone down by more than 25-30 % due to global crisis,” said Vallabh Lakhani, president of Kiran Gems, a leading company.

India imports 30 % of its rough diamond from Russian mining, which are currently facing Western sanctions as a result of the war, cuts and polishes them, and sells them primarily in European markets.

In March, the European Union and G7 countries imposed a fresh ban on the import of Russian unpolished diamonds, including those processed in India and sold in the West via third countries.

After the fresh ban, India publicly raised concerns, with External Affairs Minister S Jaishankar stating in April that such measures hurt those lower in the supply chain more than Russia, as producers usually find alternative routes.

Traders in Looking sound that.

India is located at the bottom of the stone industry’s price chain. Exporter Kirti Shah remarked that the nation is very dependant on the worldwide market for both fresh materials and final products.

Also, an economic decline in G7 countries and the UAE and Belgium- India’s key trade destinations– has impacted company.

The decline is also attributed to a rise in demand for lab-grown pearls, a cheaper option to normal pearls, and to the conflict in Gaza, as the gems form a huge part of India’s deal with Israel.

” The diamond market in Surat is passing through a bad step,” said Kumar Kanani, a senator from the country’s governing Bharatiya Janata Party ( BJP). He claimed that the police were looking into the murder cases attributed to work loss.

” The state is ready to offer all possible support to polishers, merchants and traders, “he said.

But the households of at least nine employees, who just took their lives, said they had received little support from the state.

The majority of cuts have taken place in small and medium-sized businesses, which usually employ employees to polish and shape rough diamonds and perform quality checks on them.

But bigger players are impacted too. Last month, Kiran Gems asked its 50,000 employees to go on a 10-day vacation, citing the slowdown as a reason.

In July, the Diamond Workers’ Union started a helpline which received over 1,600 distress calls from polishers seeking jobs or financial help.

But there have been others who could n’t get help in time.

Vaishali Patel, 38, lost her husband Nitin two years ago. Due to a lack of business, the cleaning company he worked for had dismissed the majority of its workers.

Agents and traders are also in the spotlight.

We have been lying empty for weeks. There is hardly any sales or order,” said Dilip Sojitra, one of the 5, 000 agents in Surat who sell diamonds to consumers, investors and various brokers.

Lab-grown diamonds, once in high demand, have also seen prices drop from$ 300 to$ 78 per carat due to overproduction, impacting the market. Nandlal Nakrani, president of the Surat Diamond Brokers Association, predicts that the condition will improve once harsh and polished diamond prices are lower.

Despite the decline, some hope the market will restore, as it did after the 2008 Great Recession, which shut lots of polishing products and left thousands homeless.

Mr Sojitra says he believes the upcoming festival season, including Diwali, Christmas, and New Year, will help boost business momentum.

” This too shall pass, “he says.