The promise of Surat’s carat lane
As the sector grew exponentially, diamond traders first moved into Prasad Chambers, and eventually in 1975 into its exclusive building of Pancharatna
As our car turns from the smooth Gujarat highways into Surat we are hit by an incongruity – its traffic management. The city which was hit by the plague epidemic in 1994 sharpened its civic awareness and governance to consistently rank second to Indore in the Swacch Bharat Survekshan since 2020. The blatant disregard for traffic rules by its citizens mars its claim of a well-governed city.
This dissonance is equally reflected in its latest ambitious project -- the Surat Diamond Bourse (SDB), even as the diamond trade is facing a sharp downturn, and has hit the diamond workers, the backbone of city’s diamond economy.
Last month 55-year-old diamond worker Vinu Moradiya, his 50-year-old wife, 20-year-old son and 15-year-old daughter consumed a pesticide-laden substance and died by suicide near a canal in Sarthana, Surat city. While this was one of the reported suicides by diamond workers, Bhavesh Tank, a former diamond polishing worker who set up Surat Diamond Workers’ Union, says similar incidents have gone unreported. Questions are being raised whether the impressively built SDB, rivalling Mumbai’s Bharat Diamond Bourse (BDB), on the outskirts of Surat city will take off successfully in Diwali this year.
Touted as a single building complex larger than the Pentagon, the bourse, built with a cost of ₹3500-crore, is tentatively scheduled to open in November this year; and there are plans to invite Prime Minister Narendra Modi to launch it.
It recently offered a waive-off of maintenance for one year if diamond traders moved into the bourse by November 21, and also promised to permanently display names of the companies prominently if they moved in soon. This was interpreted as a way to woo Mumbai’s big diamond companies to operate from Surat.
The genesis of SDB
The markets of Zaveri Bazaar became the traditional hub of diamonds and jewellery business more than 50 years ago. As the sector grew exponentially, diamond traders first moved into Prasad Chambers, and eventually in 1975 into its exclusive building of Pancharatna, a 25-storey landmark in Opera House.
“It took 20 years for traders to move into Panchratna. Bharat Diamond Bourse’s construction was delayed and it took a long time for traders to move in. Then the 2011 Zaveri Bazaar bomb blast made everyone move to BDB,” says Naresh Mehta of Neel White Exports Pvt Ltd, who was former secretary of BDB and is presently the secretary of Pancharatna building.
The bourse, set up in a 20-acre high-security complex, houses 2,500 offices in Mumbai’s central business district of BKC. It has all facilities required by the diamond trade within the complex including seven banks, 19 restaurants, two online trading platforms, three testing labs, five suppliers of precision instruments and equipments, two trading halls, and a customs clearing house.
While BDB handled global trade, Surat emerged as the major centre for cutting and polishing rough diamonds owing to cheap labour costs, and the Kathiawadis, the farming community from Saurashtra moved into the business and eventually became leaders of the craft. They operated in Surat’s Maidarpura, Varachha and Katargam areas where the factories are located. Mumbai’s BDB, dominated by the old elite Palanpuri Jain community, remained the essential trading centre where global clients made the deals.
Mathurbhai Savani, a core committee member of SDB dismisses the reported rivalry between Surat and Mumbai, and Palanpuri and Kathiawadi communities, saying, “There is no truth in this as we have formed SDB together. On the other hand, the offices in the bourse are pre-booked and there is nothing to sell now. The maintenance-free offer was not meant only for Mumbai traders, but everyone who booked offices with us from Mumbai, Delhi, Dubai, Antwerp and other cities.”
When asked if the diamond industry has the scope to accommodate two bourses, Savani gives the example of Surat’s textile hub. “Earlier, Ahmedabad was the centre of textile business though cloth was manufactured in Surat. In 1975, Morarji Desai convinced Surat’s industry that if it wished to grow, it had to become the trading hub too. That’s how Surat became a textile manufacturing and a trading hub,” he says, speaking to HT at Kiran Hospital, a new multispeciality facility in Surat set up with generous help from the diamond industry for providing affordable healthcare.
It was therefore important for a manufacturing center to transform into a trading hub as well, observes Savani. “Out of 100 diamonds manufactured in the global market, 90 are manufactured here in Surat. The idea of the bourse came about when Vallabhbhai Patel of Kiran Exports brought together 30 key members of the industry and first mooted the idea. All 4,200 members collectively decided to set it up. It is a cooperative project. Surat needs to rightfully become a trading hub,” says Savani.
Dineshbhai Navadia, chairman of the Surat Diamond Institute, also refuted the perceived rivalry between Palanpuris and Kathiawadis. “In the 1980s the Palanpuri community first stepped into Belgium – the finance centre for diamond trade. Now, Kathiawadis too are growing strong. The two communities are inter-dependent. Out of 4,200 members in SDB, close to 2,000 are from Palanpuri community,” says Navadia, who also served as the former president of the Surat Diamond Association.
But, the downturn in the diamond trade has alarmed the industry, and moving into a brand new bourse is not exactly on their agenda. A local diamond trader of synthetic diamond manufacturing and trading units in Varaccha and Katargam says, “When the market is down, why increase our establishment cost and overheads. We may look to move to SDB once the market stabilises.” The market for polished as well as rough diamonds is down by 25 to 30 per cent since March. He adds, given the prices, investors have backed off from expensive natural diamonds, and are opting for the lab grown variety if there is a demand.
Vijaykumar Mangukiya, regional chairman, Gujarat, Gems and Jewellery Export Promotion Council, says the jewellery export has been down 32% and polished diamonds export by 10-12 %, owing to the recession in the US, the global conflict between Russia and Ukraine, and new taxes imposed in Belgium and Dubai. “Basically, there is no demand for luxury items like diamonds in the market,” he says.
Speaking from Las Vegas where he attended the JCK show, Mehulbhai Shah, vice president, BDB, says, “Indian diamond trade is dependent on US and China which accounts for 50% and 20-25% of the diamond and jewellery business respectively. US economy is in recession which is likely to continue at least for a year and the Chinese economy has not fully recovered after Covid.”
Mumbai vs Surat
Mumbai’s diamantaires argue that Surat does not offer the same social capital that India’s financial capital offers to foreign clients. “Surat is in a dry state. Even if alcohol is allowed in its two five star hotels, there is a lot of paperwork involved. We can entertain clients in Mumbai well – the city offers multiple five star hotels, good restaurants and is the financial capital of the country. Mumbai is connected to every world capital. Surat is not even connected to Dubai yet,” says a Mumbai trader.
“Initially, the SDB had proposed to offer the offices at the rate of ₹3,500 per sq ft; by the time it was built, the rate shot up to ₹8,500 psf. If I have to indeed operate from there, I can easily work out of somebody’s office. Why should I incur such high establishment costs?” he says.
Mahesh Gadhvi, CEO, SDB, refutes the criticism that the bourse is located on the outskirts of the city. “Surat’s connectivity is improving. Vande Bharat trains from Mumbai reach here in just 2.5 hours. When the bullet train starts, Surat will be just an hour away. The phase I of the Surat Metro is called the Diamond Route because it connects the hubs to SDB. Surat airport has already started three flights a week to Sharjah and the occupancy is 85%.”
But, Mumbai’s diamond traders are not impressed. Mehul Shah of BDB says constructing a diamond bourse is easier than settling people in. “BDB was first proposed in 1990, but it was in 2002 when Anoop Mehta became the president, the project took final shape. After working very hard to make the project, we found that people were reluctant to move from Opera House. So, we went to offices – small or big – and persuaded them to move. We started a free shuttle service from Opera House and suburban local stations to BDB for more than a year,” he says.
Shadow under the shine
While shopping malls and luxury apartments priced between ₹2.5 crore to ₹3 crore are coming up around the business hub, the downturn in the diamond trade has already hit the estimated 7.5 to 10 lakh workers employed in its more than 5000 cutting and polishing units hard, a majority of them Kathiawadi.
Recently, 54 workers were laid off in a polishing unit of Karp Impex, a large company that exhibited a 50-carat lab-grown diamond in Las Vegas show last month. “They lost their jobs as there was no supply of rough diamonds. According to labour laws, if a worker is employed for 240 days, he is entitled to three months’ severance pay. They were all deprived of that,” Tank says. An estimated 10,000 workers have been laid off as a result of the slowdown.
Mehul Shah blames the paucity of supply on the Russia-Ukraine conflict, as he says, “The Russian roughs are primarily smaller diamonds used in jewellery. With supply affected, the polishing has also suffered, and jewellery orders have also been scaled down. There is a 20-30% impact on employment in Surat.”
Tank and the union leaders met Gujarat Labour Minister Balwant Sinh Rajput on May 29 and sought a financial package for diamond workers, who are a hapless lot now. Diamond worker Moradiya, whose family did a suicide pact, was employed in a small factory. “He was not fired, but his work hours had been reduced, which caused stress. We hope the government will help,” says Tank.