With heightened geopolitical tensions around the globe ever since Russia invaded Ukraine last year, trade routes and commerce have been badly hit. Sanctions have meant a slow-down of production and a near stop of demand. This is especially true in the case of diamonds, given that Russia provides the highest volume of the mined uncut stone for further polishing.
Surat’s diamonds have thus been robbed of their dazzle. In November, nearly 5,000 diamond polishing artisans are estimated to have lost their jobs across the city after workshops were forced shut owing to the economic slowdown. There are about 4,000 units in Surat which cut and polish unsophisticated diamonds into finished pieces. Their work is assigned by larger diamantaires, including those based overseas. In fact, 90% of the world’s diamonds are cut and polished in Surat. In all, the diamond cutting and polishing units employ about 8 lakh people.
Provisional data sourced from Gems and Jewellery Export Promotion Council (GJEPC) shows that the country’s cut and polished diamonds (CPD) exports accounted for Rs 1.8 lakh crore in the 2021-22 fiscal, making up a major part of the Rs 2.91 lakh crore of gems and jewellery exports. From April to December 2022, CPD exports fell by 1.24% to Rs 1.32 lakh crore against Rs 1.33 lakh crore in the previous corresponding period.
In December 2022, the gems and jewellery export declined by 11.25% to Rs 19,432 crore against Rs 21,896 crore in December 2021.
Elaborating on the trend, chairman GJPEC, Vipul Shah, stated: “The industry is battling inflation and the likelihood of a recession in the US. India’s diplomatic relations with China also have a bearing on the figures.”
With the demand hitting an all-time low, many units in Surat are looking at downsizing operations. According to Nanubhai Vekarya, president, Surat Diamond Association: “We are aware of cutting down production and reducing work hours. This is because of low supply of unrefined diamonds. However, reports of large-scale layoffs or closure of units need to be verified.”
Sharing insight into the lackluster diamond trade, Dinesh Navadiya, member, GJPEC regional council says: “We witnessed a dramatic growth in 2021. People bought diamond with a renewed learning that investments are to be made and enjoyed while one lives. Then came the Russia-Ukraine war and its embroiled slowdown. The rise and fall were hugely apart. Bearing its worse impact have been the artisans who live on work commissioned on basis on demand.”
Meanwhile, the only silver lining appears to be the rise in demand for lab-grown diamonds (LGD). In India, the LGD exports grew by 54% to Rs 10,587 crore from April To December 2022, against Rs 6,865 in the same period in 2021.
As long as the war in Europe continues to rock the world, supply of uncut diamond from Russia’s Alrosa (which accounts for more than a quarter of global supplies) remains questionable. The assurance of a steady supply of LGDs, physically and optimally identical to natural diamonds, has thus grown.
“It is also 60% cheaper. To boost consumer trust, jewellers have buy-back policies on the same. Hence, while it might not be the connoisseurs’ best friend, LGDs sure are emerging the consumer and hence, the industry’s best bet,” clinched Nishat Soni, former secretary, Jewellers’ Association Of Ahmedabad.
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