Surat diamond bourse awaits Mumbai glitter
Mumbai traders say they do not want to incur establishment cost, transport cost and take on overheads of maintenance when the trading business is facing a tough road ahead
The newly built Surat Diamond Bourse (SDB), is a stunning 6.7 million square feet space, but for now it is an empty empire. The Kathiawadi diamond merchants may have taken over large parts of the trade over the years, but Mumbai’s Palanpuri diamantaires are hanging on to not just their business but also the city.
On Saturday, the SDB management made its biggest offer to woo the Mumbai diamond merchants over to Surat: Mumbai diamond merchants who set up their office in Dream City in Khajod on the outskirts of Surat will not have to pay the maintenance charges if they settle in before the scheduled inauguration on November 21 this year, said an SDB circular issued on May 27.
The maintenance charge is crucial because, at present, Mumbai diamond traders who operated from Panchratna at Opera House earlier now work from the Bharat Diamond Bourse at BKC where the rentals and maintenance charges are steep. The rent at the Bharat Diamond Bourse at BKC is in the range of ₹700 per sq ft, while the maintenance costs at additional ₹150-200 per sq ft.
Mumbai traders say they do not want to incur establishment cost, transport cost and take on overheads of maintenance when the trading business is facing a tough road ahead. Many of them have retained their offices at Pancharatna and they are paying maintenance for both the old office as well as the Bandra Kurla Complex office. If they begin operations at the Surat bourse, they will have to pay maintenance charges there too. This is why the SDB has now offered to waive off these charges. The diamond trading business is facing headwinds with virtually no trading taking place after Ramzan. The global conflict in Ukraine and its economic impact, the recession in the US and the dollar rate and increased burden of taxation in the hubs of Dubai and Antwerp in Belgium have put the brakes on trading, say insiders.
The nature of the diamond trading has also changed. Earlier, there were dalal who worked hard to get the business due to 2 per cent commission involved, but now the business has become trader to trader online, eliminating the middleman.
The inauguration of the Surat Diamond Bourse was earlier scheduled in November last year but was postponed after only 400 members agreed to move there. Among the big names, Kiran Export,
which is also has a seat on the board of the bourse, announced that they would soon move in and which is when the SDB began wooing traders from Mumbai to move their trading business to Surat. Sources say that while several of the Mumbai diamond traders have invested and purchased an office there, they are unlikely to start operating from there.
Naresh Mehta, former secretary in Pancharatna and Bharat Diamond Bourse, said, “It is difficult for Mumbai traders to move their base to Surat. I know that nearly 99 per cent of them will not move to Surat-- there is poor connectivity, the bourse is 15 kms outside the city. When the bullet train is operational, Surat will be just one hour away, and perhaps then they can go and return to Mumbai on the same day.”
There other issue is that Surat offers none of the charms of Mumbai. The traders say they prefer inviting their international clientele to the glitzy Bandra Kurla Complex, which has
two five-star hotels, and several high-end restaurants for entertaining them rather than to the Surat bourse which does not have adequate social infrastructure yet. Unlike BKC, SDB also does not have a customs’ clearing house to process shipments.