Central Idea

Surat, acclaimed as India’s diamond city, is grappling with a distressing upheaval in its diamond industry. Job losses and tragic suicides have plagued the once-thriving sector.
This article delves into the origins of the crisis and its complex implications.

Surat’s Diamond Dominance

Economic Hub: Surat, located in Gujarat, is renowned for processing 90% of the world’s diamonds, with over 6,000 units cutting and polishing rough gems sourced globally.
Employment Powerhouse: Employing more than a million craftsmen and workers, the diamond industry contributes significantly to India’s economy, generating an estimated annual revenue of Rs1.6 trillion or more.
Exports Significance: Cut and polished diamonds constitute 65% of India’s gem and jewellery exports, amounting to Rs1.76 trillion in 2022-23.

Tragedy Strikes: Amidst the turmoil, nine individuals tied to the diamond industry have tragically taken their own lives. Over 20,000 workers have lost their jobs as the sector grapples with a multifaceted crisis.
Diminished Earnings: Many workers have experienced wage reductions of up to 30% due to shortened working hours, fewer workdays, and unpaid leaves during the summer, extending up to a month for some.
Gone Bonuses: The customary lavish Diwali bonuses, once a source of joy for diamond industry workers, have become a distant memory.

Sluggish Demand: Global consumer spending cuts due to high interest rates in the US and Europe and a slowing Chinese economy have contributed to a demand downturn.
Offtake Plunge: Despite exports totalling Rs1.76 trillion in 2022-23 (marginally lower than the previous year), global diamond demand plummeted by almost 30% within three months.
Geopolitical Impacts: With Russia being a significant source of rough diamonds (around 35% of supply), political tensions such as the Ukraine conflict have led to restrictions on Russian diamonds. Sanctions on major diamond miner Alrosa have disrupted the supply chain.
Lab-Grown Rivalry: The emergence of lab-grown diamonds, replicated under lab conditions and cheaper than natural counterparts, poses a significant challenge. These synthetic gems are becoming more popular and are 20% cheaper than natural diamonds of the same size.

Surat’s diamond industry, once a beacon of prosperity, finds itself at a crossroads.
The convergence of economic shifts, geopolitical dynamics, and technological advancements has disrupted its foundation.
As Surat navigates this tumultuous terrain, a resilient and adaptable strategy is essential to ensure the industry’s longevity and viability in a changing world of diamonds.