Recession takes shine off Surat's diamond industry

SPARKLE'S GONE: Among the worst hit of this fallout are the 10-lakh diamond unit workers.

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Surat: The global economic crisis is taking its toll on Surat's diamond industry as well. Festive season usually means more work, but this year many units have extended holidays for their staff.

Kirtibhai Shah, who owns a diamond polishing unit in Surat, has seen several ups and downs in the last two decades, but this is perhaps the first time that his diamond cutting and polishing machines have gone silent for so long.

Recession, he says, is to be blamed for it.

“Over the past three months, we have cut down production by over 50 per cent. If things continue this way, I will have to announce closure. In fact, many units have already been shut down for extended vacations," a worrisome Kirtibhai says.

A general shortage of rough diamonds, coupled with the global economic crisis, has hit most diamond units of India.

Diamond traders are also being extra cautious to deal with American and European countries for export of polished diamonds.

The cascading effect:

• Over 60 per cent of polished diamonds from Surat are purchased by American companies
• Global recession has resulted in lesser demand for polished diamonds
• There is a general recession in the domestic markets as well
• Production costs have gone up due to inflationary pressures

Not wanting to take too many risks, most diamond company owners have decided to extend the Diwali closure of their units from customary 20 days to 45 days.

“The conditions are such that it makes more sense for unit owners to shut shop and save costs rather than face monetary risks,” Joint Secretary, Surat Diamond Association, Rohit Mehta, says.

Among the worst hit are 10-lakh odd diamond unit workers who can now only hope for market conditions to improve.