A combination of factors has led to a nearly 50% decline in production by small diamond manfacturing units in India, not the least of which is a significant decline in the price of small diamonds (0.30 carats), writes the Times of India (TOI). According to the most recent RapNet Diamond Index, the price index for diamonds weighing 0.30 carats has fallen by 16% over the past year, and about 25% since January. The vast majority of these stones are manufactured in Surat and has caused already-low margins for manufacturers to plummet.
The Times of India this past weekend was the bearer of somber news from the Surat diamond industry, writing that, "Most of the small and medium diamond manufacturers have literally stopped the manufacturing of diamonds ahead [of Diwali] and are waiting to down their factory shutters early." With Diwali coming on October 19 (compared to October 30 last year), De Beers CEO Bruce Cleaver was optimistic as rough diamond sales in Cycle 6 (ended 31 July) surged to $572 million.
Indian diamond manufacturers, brokers and merchants in the manufacturing center in Surat have unanimously decided to shut the industry for a day on June 17, demanding exemption of the polished diamonds from the 3% Goods and Service Tax (GST), writes The Times of India (TOI). They have formed a committee to lead the protest against the GST council's decison to impose 3% GST on polished diamonds and 18% GST on diamond trading.
Forevermark diamond, part of the De Beers Group, announced it had inscribed its two millionth diamond, a 3.48 carat round brilliant which now bears the unique inscription of ‘2,000,000’. The diamond was mined, cut and polished in Namibia, then inscribed in the Forevermark Diamond Institute in Surat and will be set in a piece of jewelry at the Forevermark Design innovation Centre in Milan, Italy.
Kiran Gems, based in Surat, India, which is said to be the world's largest diamond manufacturing firm and among the top three jewelry suppliers to the U.S., is continuing its corporate restructuring by offloading several subsidiaries in the U.S. and Hong Kong. Kiran Jewels Inc., Unique Design, SDIL and Prestige, which are located in the United States, and Kiran Export Hong Kong will no longer belong to the Kiran Gems Private Limited group of companies. The company's announcement states that the restructuring will technically end all the relations between these companies and Kiran Gems Pvt.
The Surat Diamond Association (SDA) and the Gem and Jewellery Export Promotion Council (GJEPC) have written to Prime Minister Narendra Modi requesting the government provide an international airport at Surat as soon as possible to facilitate smooth imports and exports of polished and rough diamonds, write The Times of India. Estimates are that polished diamonds worth $21 billion are processed in Surat and exported to various countries via Mumbai every year, while India imports approximately $14 billion in rough diamonds annually.
Small and medium diamond traders in Surat, the world's largest diamond cutting and polishing center, are facing difficult days due to the cash crisis and the government's demonetization decision.
Gujarat chief minister Vijaybhai Rupani on Sunday laid the foundation stone for the Surat Diamond Bourse (SDB), saying it would put the city and the state on the map of world. "With this complex becoming operational, Surat will find its place among the world diamond trading hubs. This will boost the trade prospects for diamond traders from Surat," said Rupani. SDB is a company floated by diamond barons who plan to invest Rs1.25 trillion to establish it over a period of four years.
Hundreds of diamond brokers from Varachha and Mahidhapura diamond markets have got together to form their separate association to take up the issues pertaining to the trade and the merchants, reports The Times of India. Diamond merchants took the decision two days ago after the police - following a complaint from the regional chairman of the Gems and Jewellery Export Promotion Council (GJEPC), Dinesh Navadiya - arrested two merchants in connection with a cheating case reported one year ago.
Diamond traders of Mahidhapura and Varachha diamond markets have taken a unanimous decision to expose defaulters active in the industry and to sever business links with those who have defaulted in the last one-and-a-half-year, writes Times of India. Traders held a meeting with Surat Diamond Association (SDA) on Sunday to discuss this move. The traders also decided to close safe deposit vaults at 7:30 pm, curbing the use of promissory notes and discouraging credit transactions.
Over a dozen diamond traders in Surat, Mumbai and elsewhere have reportedly lost a combined $7.5 million following a default by an Indian dealer. Market sources said that the defaulter had an office at the Bharat Diamond Bourse in Mumbai and bought light-brown colored diamonds from traders in Surat and Mumbai for sale abroad, according to a report in The Times of India. He had been trading for many years and therefore enjoyed 120 days credit from suppliers in Surat and Mumbai.
Dozens of traders and small manufacturers in Surat are at the receiving end as four polished diamond traders operating from Bharat Diamond Bourse (BDB) at Bandra Kurla Complex (BKC) have defaulted on payments to the tune of over Rs150 crore ($22.5 million) in the last three days, reports The Times of India.
Following a series of defaults that rocked the industry since January 2016, involving amount to the tune of over $60mn by parties in Mumbai and Surat, the Surat Diamond Association (SDA) has urged diamond traders and manufacturers in Surat to implement 'know your customer (KYC)' norms before dealing in precious diamonds with anyone, reported the Times of India.
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.
A major article in India's Economic Times describes the developing battle lines between natural, mined diamonds and their lab-grown counterparts. The Bharat Diamond Bourse (BDB) in Mumbai, home to around 2,500 diamond companies and one of the world's largest exchanges, decided last September to act against traders and manufacturers who dealt in lab-grown diamonds. The outlawed trading in lab-grown stones due to increasing instances of such diamonds being added into parcels of natural mined goods.
Prices of some categories of polished diamonds have risen by 4-5% since the start of the year in India due to shortages in the market, according to the Economic Times. The report cited Vipul Shah, the managing director of diamond manufacturer Asian Star Company, as saying: "It is good for the manufacturing industry, which has been languishing for so long. But rising prices can affect the retail demand for diamond [jewelry] in India," he said.
The significance of the announcement of the entry of the latest diamond grading lab to the industry, De Beers' International Institute of Diamond Grading & Research (IIDGR), is discussed by JCK's Rob Bates. The IIDGR previously mostly issued reports for De Beers’ Forevermark brand diamonds. The uniqueness of the new lab different is that it relies heavily on technology for grading, De Beers spokesperson David Johnson tells Bates. It uses automated devices for all color grading from VS to I3, and is used as a “grader aider” for higher grades, Johnson explained.
About nine-tenths of the world's natural diamonds pass through the Indian state of Gujarat where they are cut and polished before being sold on through the trading houses of Antwerp and Dubai. But a worldwide glut, as a result of falling demand, is hurting businesses and nowhere harder than in the city of Surat, where factories are closing leaving hundreds out of work. The BBC's Sameer Hashmi went to Surat to find out more for India Business Report.
The Financieele Dagblad (Netherlands) takes a look at the level of transparency in the small and middle-sized diamond trade in Surat, India, concluding that traders on the local market still turn a blind eye to demands for official invoicing. The little paper envelopes with scribbled details of the contents and price – so familiar in the diamond trade – are the only paperwork to be found at the dusty street-side Hira Bazar (diamond market) in Surat. “This is how we do business worth millions of rupees,” says local dealer Prakash Kathri.
The Surat Diamond Association (SDA) has made it compulsory for diamond merchants and manufacturers to buy and sell diamonds by exchanging promissory notes, which are a valid sales document, and has abolished the long-used system of paper chits which have been used in the diamond trade in India's largest diamond manufacturing center for more than six decades. In recent years some traders had failed to pay up despite handing over a chit. Promissory notes, on the other hand, permit legal recourse for fraud victims.
Microsoft India recently announced that they are going to be teaming up with the Surat Diamond Association to help over 20,000 small businesses adopt technology into their growth strategy. The Surat Diamond Association is a group that is dedicated to helping maintain the growth of several industries, including the diamond industry, healthcare, and social welfare. With the help of Microsoft India, it’s their hope that they can help some of the more than 200,000 businesses in Gujarat adopt the recent technological advances in the world – namely cloud technology – into their dealings.
The Economist provides a behind the scenes view of the diamond industry in Surat, India's largest diamond manufacturing center. The article states that Surat "must be the world’s biggest cottage industry. Perhaps 2,000 of the 5,000-odd operations that buy diamonds for polishing are reasonably large operations, employing 300-500 grinders, most of them migrant workers. The rest are small-scale, family-owned affairs with maybe a couple of grindstones.
Surat Diamond Association President Dinesh Navadia is backing a request by the income tax authority that Surat diamantaires should pay their taxes in the city and not in Mumbai as a way of helping both the industry and the local population. Surat is India's and the world’s largest diamond cutting and polishing center. Most of the larger diamond firms in Mumbai have their manufacturing units in Surat but pay taxes in Mumbai where their offices are registered. Paying income tax in Surat will enable the city to receive more benefits under central government funding schemes.
Indian diamantaires are making frantic inquiries after trade alerts that a diamond jewelry firm with offices in Hong Kong and Bangkok has gone bankrupt and defaulted on payments of almost $55 million to polished diamond companies in Surat and Mumbai. India exports $28 billion of polished diamonds annually, of which almost $9.5 billion goes to Hong Kong.
India's Surat manufacturing industry, hit hard by decreased global demand for diamonds, is still struggling as 25 workers agreed to go back to work, agreeing to a 4% salary cut, dna.com reports. The 25 polishers reportedly first lost their job, after refusing an 8% wage cut. Throughout the polishing centre of Surat, in the past months, many workers have been laid off, and salaries cut by up to 30% as a consequence of the crisis.
High rough diamond prices and weak demand in China and elsewhere for polished diamonds is creating large numbers of jobless in India, The Times of India reported. In particular, 50,000 diamond workers from Bihar have either moved out of Surat or found jobs in the textile and other industries.
The Surat Diamond Association (SDA), diamond merchants and manufacturers from the Mini Bazzar have formed a 21-member 'peace committee' following a series of protests by different groups that have disrupted business in the heart of India's diamond manufacturing center.
The Surat Diamond Association (SDA) ran a campaign a few months back to spread awareness on adopting a cash system to curb defaults and liquidity crisis, and it appears their efforts are paying off. SDA estimates that roughly 85% of diamond traders and manufacturers have adopted a cash system, which it says is a "major transformation". Gems and Jewellery Export Promotion Council (GJEPC) regional chairman Dinesh Navadia told TOI, "The majority of diamantaires in the industry have adopted a cash system. We are hopeful of achieving a 100% cash system by this month-end.
India's Ministry of Commerce has approved a change of status for the Gujarat Hira Bourse (GHB) project in Surat from a Special Economic Zone to a gems and jewelry manufacturing industrial park. GHB President Chandrakant Sanghavi said that infrastructure for the park has been carried out and that the park would provide a modern and well-equipped setting for manufacturing and that he now expected more companies to begin construction work.
Dharmanandan Research Centre (DRC Techno), a technical research arm of Dharmanandan Diamonds in Surat, has developed what they claim is the world's first device that not only detects loose synthetic diamonds from a diamond lot, but also tests and verifies whether diamonds mounted on jewelry are natural.
Sevantibhai Shah, industrialist and one of the founders of the world’s leading solitaire manufacturing company - Venus Jewels - has advised Indian diamond manufacturers to banish the long-term credit system and adopt cash transaction to bring the Indian diamond industry from the jaws of the ongoing recession. He said that manufacturers of larger stones in Surat have been doing business in cash for the last five to six years, and not a single one is facing difficulties.
SURAT DIAMOND MANUFACTURING INDUSTRY IN NUMBERS
4,000 polishing units
85% SME (Small & Medium sized Enterprises)
6,000 polishers working in SME's
300 SME polishing units shut down since Oct 2014
Thousands of Indians from the Patidar community working in the Surat diamond industry are off the job today to attend a rally to demand education and jobs, leaving the diamond district largely deserted, according to a report.
The Times of India reports that for the first time in its history, the Surat Diamond Association (SDA) terminated the membership of a diamond manufacturer accused of selling undisclosed synthetic diamonds to the diamond merchants on Wednesday. SDA office-bearers, who met at the executive meeting on Wednesday, unanimously decided to terminate the membership of Chandu Sheta, a diamond manufacturer in Varachha, who had sold 110 diamond pieces weighing 1.28 carats to two diamond merchants in Varachha's Mini Bazaar diamond market in February 2015.
The number of diamond cutters working in Antwerp, widely acknowledged as the capital of the world diamond trade, has declined from a peak of around 30,000 in the 1970s to approximately 500 specialists today, writes Swiss newspaper Le Temps. The Syndicate of the Belgian Diamond Industry notes that this number does not include independent contractors and an additional 500 diamond workers in Antwerp's manufacturing industry, which would bring the figure higher.
Gemological Science International (GSI) says it is the first and only lab in India to begin batch testing for star and melee sized diamonds. The lab offers cost-effective testing by utilizing a powerful and mid-IR spectrometer used for routine and advanced laboratory analysis. “The infiltration of synthetics into the melee trade has become a legitimate concern to the industry,” says GSI CEO Mark Gershburg. “We, at GSI, view ourselves as a highly technologically savvy entity…This allows us to deliver this testing method, which may be the long awaited solution to the time consuming and ineffi
Antwerp’s diamond business had long been controlled by its Jewish community, but today, Indians have come to control almost three-quarters of Antwerp’s diamond industry. First arriving in the 1960s, they started at the bottom of the business with low quality roughs that offered small profit margins and were of little interest to established Jewish diamantaire houses. These stones were sent to family members back in India for cutting and polishing, where labour costs were a fraction of Antwerp’s.
The continued crisis in the local diamond industry has hit the execution of the Surat Diamond Bourse (SDB) project at the proposed Diamond Research and Mercantile (DREAM) City at Khajod, which was officially presented in February. Although the project commitee had received letters of some 12,000 diamantaires interested to set up shop in the new complex, none of the interested buyers showed up for a follow-up meeting last week.
The Times of India (TOI) reports that in two separate incidents in Surat, a jobless diamond worker and a trader committed suicide Thursday night. The newspaper says it is the third case of a diamond worker committing suicide in the last month. Many of the diamond workers who lost their job due to the ongoing crisis in the local diamond industry return to Amreli and Bhavnagar districts to take up farming, but vast tracts of farmlands have been washed in June floods.
India's diamond cutting and polishing center is seeing an "unprecedented" decline, says Surat Diamond Association President Dinesh Navadia. "This happens quite a time, but after three or four months, the situation usually improves. This time, the crisis has lasted for a long time," he said, adding that rumors that diamond firms are about to go bust are making the situation even worse.