1. Why is Surat known as India's Diamond City?
Surat, located in Gujarat, holds the title of India's Diamond City because it plays a central role in processing a significant portion of the world's diamonds. About 90% of all diamonds purchased globally undergo cutting and polishing in Surat. The city is home to over 6,000 units that handle rough diamonds sourced from various parts of the world.
2. What is the economic impact of the diamond industry in Surat?
The diamond industry in Surat employs over a million craftsmen and workers. Its annual revenue is estimated to be around ₹1.6 trillion or more. In the financial year 2022-23, India's gem and jewellery exports reached around ₹1.76 trillion. Cut and polished diamonds accounted for approximately 65% of this export value.
3. Are there geopolitical factors influencing the diamond industry?
Yes, geopolitics plays a role in the diamond industry. India sources nearly 35% of its rough diamonds from Russia. However, due to curbs imposed after the Ukraine conflict, diamonds produced or processed in Russia are facing restrictions. This has led to a reduction in the availability of cheaper Russian rough diamonds, impacting Indian players.
4. What challenges is the Surat diamond industry facing?
The diamond industry in Surat is currently facing a crisis. Several factors have contributed to this situation, leading to a loss of jobs and reduced earnings for workers. A series of suicides among industry workers has highlighted the severity of the issue. Factors include a slowdown in demand due to economic challenges in the US, Europe, and China, as well as increased competition from lab-grown diamonds.
5. How do lab-grown diamonds affect the industry?
The growing demand for lab-grown diamonds is affecting the natural diamond market. Lab-grown diamonds, produced through scientific processes, are gaining popularity due to their lower price and quality comparable to natural diamonds. These lab-grown diamonds are difficult to differentiate from natural ones. India produces around three million lab-grown diamonds annually.
6. What are the main factors contributing to the crisis in the diamond industry?
The crisis in the diamond industry can be attributed to multiple factors. Slower demand from consumers in the US and Europe, higher interest costs, and a slowdown in China's economy have all contributed to reduced consumer sentiment. Additionally, the global offtake of diamonds has dropped by nearly 30% in the last three months, further impacting the industry's prospects.
