Diamond companies in Surat pause operations amid industry slump
The companies have granted its manufacturing employees an extended break due to an inventory imbalance in the Indian market, driven by falling prices, the Russia-Ukraine war, and declining exports
Ahmedabad: Diamond units in Gujarat’s Surat, including Kiran Gems and Diamonds, the world’s largest manufacturer of natural polished diamonds, have decided to halt operations for 10 days from August 17 to August 28, with some companies opting for extended holidays and others implementing shorter working hours or reduced weekdays.
Kiran Gems currently employs over 50,000 people, mostly based in Surat.
The companies have granted its manufacturing employees an extended break due to an inventory imbalance in the Indian market, driven by falling prices, the Russia-Ukraine war, and declining exports.
Vallabh Lakhani, Chairman of Kiran Gems, told HT, “We have decided to halt production to align our output with current demand. There is an ongoing recession in the industry.”
Jagdish Khunt, President of the Surat Diamond Association, said that while the association has not officially called for a vacation, some companies may have independently chosen to do so.
“The industry is facing a tough period. The slowdown has impacted many small and medium-sized businesses. Currently, about 3,500 diamond cutting and polishing units are operational. Many units are coping with the crisis by reducing working hours,” Khunt said.
Factories in Surat have already begun implementing shorter workweeks, with many smaller operations taking two to three days off each week, said an industry leader who did not wish to be named. He said that while some diamond artisans are seeking employment in other sectors, there are concerns of job losses when the diamond units reopen on August 28.
The Diamond Worker Union Gujarat (DWUG) had recently submitted a memorandum to the Surat district collector, urging the Gujarat government to announce a financial relief package for diamond artisans who have lost their jobs due to the recession and for those who have committed suicide.
Bhavesh Tank, vice president, DWUG, claimed that as many as 60 diamond artisans have committed suicide in the last 18 months due to the ongoing recession in Surat, the world’s largest diamond cutting and polishing center. “The suicide rate among diamond artisans is rising due to recession and unemployment,” Tank said.
Around 800,000 workers are employed in the diamond industry in Surat who handle the cutting and polishing of 80% of the country’s rough diamonds through over 5,000 processing units, making it a crucial hub for this sector.
The Indian gems and jewelry industry is experiencing a severe downturn. According to the annual report published by the Gems and Jewellery Exports Promotion Council of India (GJEPC), for FY 24, overall gross exports of gems and jewelry totaled $32.02 billion (Rs.2.63 lakh crore), marking a nearly 15% decline compared to the previous year figures. Gross imports also fell by around 14% to $22.27 billion (Rs.1.83 lakh crore) in FY 24. Exports of cut and polished diamonds plunged by 27.58% to $15.97 billion (Rs.1.31 lakh crore) in FY 24, while imports of cut and polished diamonds saw a sharp 46.12% increase, reaching $1.91 billion (Rs.15,700 crore). Imports of rough diamonds, a crucial raw material, declined by 17.85% to $14.27 billion (Rs.1.17 lakh crore), indicating a slowdown in manufacturing activity, according to GJEPC.