Surat Diamantaires More Optimistic as Demand Picks Up – Report

Finance and Trade
18/04/2016 09:30

Surat’s diamond sector is feeling more upbeat following the end of the national jewelers' strike and rising demand from China and the United States for polished goods. After picking up in January-February, trade again plummeted in March due to the nationwide jewelers' strike over a proposed new tax on gold that served to put a dent in domestic demand for diamonds, The Business Standard reported. Traders believe that a rise in domestic and international demand as well as the effect of the end of the strike will create a rise in business levels. The Index of Industrial Production (IIP) figures for February showed that the gems and jewelry sector rose by 33%, the paper reported.

It cited Surat diamond manufacturer Kirti Shah as saying that the recent slowdown was the worst in the past decade or so. “It is worse than the 2008 slowdown, when recovery was relatively quicker. On top of that, the jewelers' strike has taken off further sheen from the diamond market here," he said. Of the 300 units that closed during the slump, many have re-opened, and Dinesh Navadia, president of the Surat Diamond Association, said there was now a labor shortage of 20-25% due to several thousand workers being laid off during the slowdown around Diwali and Christmas last year who have moved to other jobs.

Surat normally employs over 600,000 people in around 5,000 workshops, but at the end of 2015 only around 350,000 were working, with many on reduced wages. "Finding skilled workmen is now a challenge in Surat," Navadia said. Meanwhile, the industry's inventory levels have also improved from a six-month inventory in September-October last year to around a month’s inventory with units now as rough goods saw a price decline and polished showed rises, making manufacturing financially feasible again, the report added.