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Dulling Diamond Industry

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Just a year ago, Surat, home to nearly five million people in India’s Gujarati state, was dubbed ‘the diamond city’ when hundreds of employees in polishing companies received over-the-odds bonuses. This year, the same employees are struggling just to hold on to their jobs as companies are closing or downsizing dramatically.

One of many people whose livelihoods have been hit hard by the crisis is Ashokbhai Patel, of Ahmedabad, north of Surat. Until two years ago, Patel was a wealthy man, with 300 diamond-polishing units. The declining market has steadily taken its toll on his wealth – and the stress on his health – and today Patel’s operation has been whittled down to just 10 units.

It is a telling sign in an industry which employs nearly a million people across India, two-thirds of them in Surat alone, and which polishes 80 per cent of diamonds globally. One major contributor to the downturn is the depreciating rupee.

China Takes the Diamond Race Lead

The other, of course, is that Surat’s diamond manufacturing sector faces increasing competition, not least from China, which has the clout to demand direct rough diamond supplies from producer countries. Not only is China committed to investing in the development of local industry in cities such as Guangzhou and Shenzhen, but it has also been welcoming the establishment of factories by foreign manufacturers – among them Indian ones – to polish rough stones from Russia and South Africa, among other producers.

The situation has been aggravated by the default of two major Chinese companies on payments, creating an avalanche of economic misery.

Not only has the trend already reduced employment opportunities in ‎Surat, nearby Ahmedabad and further afield, but the prognosis for Surat’s hard-won reputation as the world’s leading centre for diamond polishing is a gloomy one.

Patel Agitation Snowballs

The news has hit Surat’s polishing houses at a time of unrest in the state of Gujarat, with hundreds of thousands of members of the Patel (also known as Patida) community demanding changes to the reservation policy for government colleges and jobs. What started as a students’ movement – led by 22-year-old Hardik Patel – to demand reservation for the Patel community has become violent state-wide agitation.

Over the past several years, an economic downturn and crop failures have led to a preference for government jobs over farming. The Patel community in Gujarat has always been seen as socially and economically influential, and their demands, largely, have been taken seriously, particularly since the diamond-polishing industry here is dominated by Patels. The agitation seems to have struck a chord with the youth and rural masses and rattled established community organisations and their leaders.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the Indian government to address the issue and ensure a ‎secure, reliable and adequate long-term supply of raw materials for domestic industries. The organisation remains positive in its forecast that India’s polished diamond exports will continue to grow by as much as $16 billion over the next two years.

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