The US sanctions imposed on the Russian diamond producer Alrosa, after the Russia-Ukraine war, has led to a crisis in the diamond industry in Surat where polishing units had to cut down on working hours, thus leading to a hefty wage cut for polishers , some of whom have taken loans to run their households.
At least 30 per cent of the diamonds cut in Surat are sourced from Alrosa, thus causing a shortage in the rough diamond resource. Besides, diamond factory owners The Indian Express spoke to, said that the US, which is a huge market for diamonds, has made it mandatory for diamond makers to certify that the rough diamonds are not sourced from Russia.
Surat has over 4,000 small and large diamond polishing units which employ nearly five lakh workers, who would earlier work for ten hours a day or seven days a week, and are now working for eight hours, five days in a week, since the sanctions were imposed a month ago. Diamond workers get paid on the basis of the raw diamonds they polish in a day.
A diamond factory owner of Surat, Bhupat Virani, who employs around 1,000 diamond polishers at his factory, said, “Globally, Surat city is also known as a diamond cutting and polishing hub, as out of 10 polished diamonds found in the world, eight are cut and polished here. The rough diamonds enter through different ways in Surat and Mumbai. Majority of them are through the registered sight holders of DTC (Diamond Trading Corporation). As much as 10 per cent of the diamond merchants source the gems directly from Alrosa, or Dubai or Africa, while the remaining 90 per cent rely on these merchants. The polished diamonds are studded in the jewellery and later exported to USA, UK, Gulf countries, etc. While some of the diamond factories also export loose polished diamonds to USA, UK, Hong Kong and others.”
Gems and Jewelery Export Promotion Council’s (GJEPC) Gujarat chairman Dinesh Navadia said, “Over 30 to 35 per cent of rough diamonds imported from Alrosa directly come to the Indian market at Surat and Mumbai for cutting and polishing. Besides, Alrosa exports rough diamonds to other countries worldwide which finally come to Surat for polishing through different routes. This has created a vacuum of raw materials among the industry. DTC at Antwerp also procures diamonds from mines worldwide and sells rough diamonds to their Indian sight holders and others. Due to a short supply, many factory owners have reduced their production and curtailed working hours of diamond polishers and have kept two days of holiday in a week.”
The industry had barely recovered after Covid and achieved a growth of 29.85 per cent in the export of cut and polished diamonds in the 2021-22. However, its growth is likely to be negatively impacted once again.
The Diamond Workers Union Gujarat’s Surat unit had on May 4 sent a memorandum addressed to Gujarat Chief Minister Bhupendra Patel seeking financial aid to be given to the diamond workers. In the memorandum, the association had said that there were over 20 lakh diamond workers working in the diamond factories running in Surat, Navsari, Ahmedabad, Bhavnagar, Botad and Bhavnagar in Gujarat.
The memorandum had said, “Those units where over 20 laborers work should have to register their factories and get license as per the norms of Factory Act. 1948. Majority of the factory owners have not registered themselves under Factory Act. The laborers working in the units get benefits covered under Factory Act rules. The diamond polishers are left out of government benefits as their factories are not registered.”
They also demanded that professional taxes taken by civic organizations of Ahmedabad and Surat be abolished and salaries of diamond polishers during the lockdown period to be paid. The union has sought a “financial package of Rs 1,000 crore for the diamond polishers”.
“The government should form a Ratnakalakar Kalyan board, for the betterment of diamond polishers and their families and also for the families of diamond polishers who had committed suicide due to financial crises,” said the memorandum sent to the Chief Minister’s Office.
Russia started the invasion of Ukraine from February 24, 2022 and the US imposed sanctions on several products exported from Russia around mid-April.
A diamond factory owner of Surat, who has 300 employees, says there were many traders of rough diamonds who, “taking advantage of the situation, raised the prices of the rough diamonds”.
“Those who are financially fit can survive. The rough diamonds sourced from Russia’s Alrosa company were majorly used by the small and medium-size factory owners in Surat as their caratage was less. Facing such a tough time, we and the others have kept two days’ holidays at the factories and have curtailed the working hours of diamond polishers.”
This factory owner said, “Due to the sanctions, firms involved in exports of diamond-studded jewellery and polished diamond exporters of India, mainly in Surat and Mumbai, have to mention in the bills that the diamonds do not originate from Russian mines. The payment in the diamond business worldwide is done in dollars. Those who cheat can be easily tracked and identified.”
Diamond polisher Deep Limbachiya (32), a resident of Varachha and native of Bhavnagar, has been polishing and cutting diamonds for a living for ten years. He has been working at a factory for the last five years which has 500 employees. Limbachiya said, “We cut low carat and small sized diamonds which are from Russian mines. The diamonds from African, Canadian and Australian mines are different in colour, shape, size and clarity. Due to the short supply, the factory owners have, from the last week of April month, curtailed working hours and kept two days holidays on Saturday and Sunday.”
He added, “Our salaries depend on the number of diamonds we work on, so with less time, we are not given sufficient numbers of diamonds, as a result of which, it directly impacts our salary. My average salary is between Rs 18,000 to Rs 20,000 per month. With short working hours and two days’ holiday, I am getting between Rs 13,000 and Rs 15,000 a month and in this amount we have to pay house rent, light bills, apartment maintenance charges and bear expenses for the education of my children.”
He further said, “I have taken a loan of Rs 10,000 on May 1 and had assured him that I will return it with interest after a few months. We are concerned about the education of my daughters. Among them, one has appeared for her Class 4 exams and another for her Class 3 exams. I am yet to pay the fees for the next academic session. We cannot ask for money from my parents who are farmers in my native place as they are also facing financial problems. Due to the war, the lives of diamond polishers have become miserable. We have also complained about the working hours being curtailed and two days’ off to the union and they are also fighting it with the factory owners.”
Surat president of Diamond Workers Union (a statewide body of diamond polishers) Bhavesh Tank said, “Majority of the diamond factories are not covered under the Factory Act so the diamond polishers do not get any benefit. These diamond factory owners earn a lot when the markets boom and during that time, they take care of polishers by giving them snacks and tea twice a day at the workplace only to make the polishers work extra time. Now, in such a critical condition, they are not helping the polishers who are facing financial constraints.”
According to the provisional statistical data from the GJEPC, an organization set up by the Government of India’s Ministry of Commerce and Industry with an aim to promote gems and jewellery, there was a rise of 29.85 per cent (36.81 per cent in Indian rupees) in Exports of cut and polished diamonds during the time period between April 2021 to March 2022, which is 24,236.57 million US dollars (Rs 1,80,618.06 crore) as compared to 18,664.88 million US dollars (Rs 1,32,017.80 crore) for the same period of April 2019 to March 2020.
Apart from this, the figures further show a growth of 45.35 per cent in the import of rough diamonds between April 2021 and March 2022, which is Rs 18,933.15 million US dollars (Rs 1,41,235.17 crore) (1,662.46 lakh carat) compared to 13,026 million US dollars (Rs 92,168.81 crore) (1,514.70 lakh carat) between April 2019 and March 2020.
Surat Diamond and Jewelery Manufacturer Association President Nilesh Bodki said nearly 30 per cent of the international orders of diamond-studded jewellery have been canceled and the price of polished diamonds have “gone up by 15 per cent in the local market”.
“There are some players who are taking advantage of the present situation and they have raised the prices of polished diamonds for financial gains. For diamond-studded jewelleries exported to USA, which buys 60 per cent of the diamonds, we have to mention on the sales bills that the diamond used in the jewellery is not of Russian origin, countries like China, Hong Kong and Gulf countries, which does not mandate this condition.”