Surat Diamond Industry Faces Vacation Trend; 8 Lakh Jewelers Affected by Downturn

For a long time now, the world-renowned diamond industry in Surat has been experiencing a slowdown. This downturn has begun to grip the sector more tightly, leading to a situation akin to a vacation. Surat’s diamond industry is directly linked to foreign markets. Any significant movement on the international level has a direct impact on the diamond industry. Polishing and cutting of rough diamonds from around the world take place in Surat. Of the ten polished diamonds in the world, nine are prepared in Surat. Due to this downturn, the financial condition of gem artisans has deteriorated, and they are struggling to manage their households.

Persistent Slowdown in the Diamond Sector

The diamond industry has been experiencing a downturn for the past two years. Specifically, the situation due to the Russia-Ukraine and Israel-Hamas conflicts has led to countries, including the United States, enduring the impact of the slowdown. Sixty percent of diamonds from India are exported to the U.S. Recent job data released in the U.S. has also been disappointing, exacerbating the economic gloom and affecting India directly.

40% Reduction in Salaries

Currently, there are about 700 large and 2,500 small diamond units operating in Surat. Together, these 3,200 units employ 800,000 gem artisans. Additionally, there are around 200,000 administrative staff. In total, 1 million people are involved in the diamond industry. The employment and income of all these individuals are severely affected. For example, if a gem artisan previously earned between 50,000 to 55,000, it has now dropped to between 30,000 to 35,000, representing a 40% reduction in income.

Suicides Among Gem Artisans

According to a recent appeal by the Diamond Workers’ Union to the collector, the economic crisis in the diamond industry has led to severe financial distress for gem artisans and increasing unemployment. Consequently, suicide cases among gem artisans have been rising alarmingly. Over the past 18 months, approximately 60 gem artisans have committed suicide. It is imperative that the government and industry stakeholders come together to assist gem artisans during these challenging times.

Impact on Lab-Grown Diamonds

The diamond industry in Surat has been facing a downturn for the past five months. Although there was some demand for lab-grown diamonds internationally, which Surat was meeting, it is now also experiencing the effects of the slowdown. The diamond industry is facing challenges from all sides, with no visible demand for diamonds or jewelry in the global market. Consequently, exports of jewelry and polished diamonds from Surat have come to a halt.

Russia-Ukraine Conflict Worsens Conditions

Russia plays a crucial role in Surat’s diamond industry. The largest rough diamond mines in the world are located in Russia. A significant portion of the rough diamonds that arrive in Surat come from Russia. The Russia-Ukraine war has led to other countries also becoming involved, resulting in stricter regulations by European countries affecting diamond import-export. Despite the conflict being between Russia and Ukraine, countries like the U.S. and China have also played indirect but significant roles. U.S. sanctions on Russia have further impacted the diamond industry.

Overproduction in the Lab-Grown Diamond Industry

Over the past three to four years, global demand for lab-grown diamonds has surged significantly. At one point, lab-grown diamonds reached up to 30% of natural diamonds. The increase in lab-grown diamonds worldwide was up to 600% compared to natural diamonds. However, due to the Russia-Ukraine conflict affecting the diamond industry, this ratio is decreasing, leading to a downturn in Surat. The lab-grown diamond industry in Surat is now facing overproduction. With a decline in international demand and increased local production, difficulties have arisen.

Anticipated Worsening Conditions

In 2008, during the global recession, thousands of gem artisans became unemployed, many committing suicide or changing professions. The current situation mirrors that of 2008, and if it persists, it would not be surprising to see thousands of gem artisans becoming jobless in the coming days. Gradually, many small units are beginning to lay off artisans, while even large factories are declaring vacations instead of laying off workers. If this trend continues and international demand for diamonds and jewelry does not recover, Surat’s diamond industry will face dire conditions within a month.

Bangladesh Faces Severe Conflict

As the Russia-Ukraine conflict remains unresolved, Bangladesh finds itself facing a severe conflict. Previously, a substantial amount of jewelry was supplied from India to Bangladesh, with skilled gem craftsmen from West Bengal contributing to jewelry production. This situation in Bangladesh is expected to impact other countries and exacerbate the overall conditions, significantly affecting the diamond industry.

Credit Card Bill or Household Expenses?: Gem Craftsman

Gem craftsman Vinod Choudhury told Divya Bhaskar that work from merchants has decreased, with breaks given two to three times a week, leading to incomplete work. This impacts salaries, making it difficult to manage household expenses and pay off credit card bills. Many artisans have taken loans for household or business needs, and with salaries being halved, repaying these loans has become a challenge.

Weak Market First Affects Us: Manufacturer

Diamond manufacturer Kishore Singh Dabhie expressed to Divya Bhaskar that his company used to get significant work, but now the company has clearly stated to halt work until demand picks up. Initially, companies commit to work and payments, but during a downturn, they often break their commitments. The weak market first impacts workers, and the financial strain is evident in increased suicides in Surat, which Dabhie attributes to economic conditions.

Current State of the Diamond Industry: Diamond Association

Jagdish Khunte, President of the Diamond Association, commented on the poor state of the diamond industry. The international situation, including the Russia-Ukraine war, has had a negative impact. The diamond industry was affected from the start of the conflict, and global instability continues to dampen demand. As diamonds are a luxury product with 95% of exports, economic downturns and conflict reduce exports. No official vacation announcements have been made by the association, and factory operators decide on their unit operations based on their circumstances. The situation remains challenging, and the association appeals for patience from all involved in the diamond industry.