Kolkata: Surat’s diamond industry has declared a month-long closure till November 30 this year, instead of the usual 15 days around Diwali, amid tepid demand for natural diamonds from the US and China, its two biggest customers.
The largest diamond hub of the country, Surat has about 5,000 diamond-cutting and polishing units, employing nearly 800,000 people. The industry has been reeling under sanctions imposed by the G7 countries on diamonds originating from Russia following the Russia-Ukraine war.
“There have been job losses and wage cuts over the last few months. But now the month-long Diwali holiday, which is an unusual phenomenon in Surat, has raised concern among the workers as factory owners have informed us that they will call them once the holiday ends. This is a hint that there may be job cuts when they reopen. This did not happen even during the 2008-2009 recession,” said Bhavesh Tank, vice-president of Diamond Workers Union, Gujarat.
Even last year, when the sanctions became effective, the diamond manufacturing units did not declare a month-long holiday for workers. India is a major natural diamond cutting and polishing centre, with nine out of 10 diamonds available globally manufactured in the country. Exports of cut and polished diamonds from India fell 20.6% in the first half of FY25 to $6,909.61 million from $8,702.41 million a year ago.
Kirit Bhansali, vice-chairman of the Gem & Jewellery Export Promotion Council (GJEPC), said the industry had pinned hopes on the new US president, to be elected on Tuesday, to revive the American economy. “If that happens, then the first quarter of 2025 will show exports to the US moving up,” he said.
Lab-grown diamonds (LGDs) have also made their headway into the US market, but Bhansali said LGDs are a different category that has no competition with natural diamonds.
China is buying gold as during Covid-19, distressed Chinese households, which had been earnestly purchasing the precious stone over the decade, discovered to their dismay that diamonds, unlike gold, did not fetch resale value when they needed it the most. As Chinese customers increasingly turned towards a more fungible asset like gold, diamond demand from China, once accounting for about one-third of the cut and polished diamond market, shrank.
Now, efforts are underway to woo Chinese buyers back. The GJEPC, along with Chinese diamond retailer Chow Tai Fook and De Beers, has planned a campaign in China to restore the confidence of Chinese customers in diamonds. “The campaign will begin next week and we are hopeful that the situation in China will improve from the first quarter of 2025,” said Bhansali.
