India’s once-thriving diamond industry, centered in Surat, Gujarat, is grappling with a severe downturn, leaving thousands unemployed and families in despair. Nikunj Tank, a diamond polisher who had worked for seven years in Surat’s diamond polishing hub, lost his job in May as his unit shut down due to financial challenges. As the family’s sole breadwinner, supporting his parents, wife, and daughter, the pressure was immense. Unable to find new employment, Tank tragically died by suicide in August, one of many affected by the industry’s crisis.
Surat processes 90% of the world’s diamonds, employing over 800,000 workers across more than 5,000 units. However, India’s diamond exports have plummeted, with cut and polished stone exports dropping from $23 billion in 2022 to $16 billion in 2023, and further declines to $12 billion expected in 2024. Prices for polished diamonds also fell between 5% and 27% in 2023 due to lower global demand and an oversupply in the market.
Mahesh Virani of Star Gems explains that many polishing units continued production despite the lack of demand, exacerbating their financial losses. The Diamond Workers’ Union has reported that over 30,000 workers have lost their jobs in just six months, with 65 suicides allegedly linked to the economic downturn.
Factors Behind the Decline
Several factors have contributed to the decline of India’s diamond industry. The COVID-19 pandemic, the Russia-Ukraine war, and the recent Israel-Gaza conflict have severely impacted international markets. Vallabh Lakhani, chairman of Kiran Gems, noted that the polished diamond business has decreased by more than 25-30% due to the global recession.
India imports 30% of its rough diamonds from Russia, which are then cut and polished in India before being exported, mainly to Western markets. However, sanctions imposed by the European Union and G7 countries on Russian diamonds have severely disrupted this supply chain. External Affairs Minister S. Jaishankar expressed concerns that these sanctions harm lower-tier workers more than the Russian producers themselves, as the industry struggles to find alternative sources for rough diamonds.
Surat-based exporters like Kirti Shah echoed these concerns, pointing out that India operates at the lower end of the diamond industry’s value chain. This dependency on global markets for raw materials and final sales has left the country vulnerable to economic downturns in key regions, including the G7 countries, the UAE, and Belgium—India’s primary export destinations.
The Rise of Lab-Grown Diamonds
The industry’s troubles have been compounded by a rise in demand for lab-grown diamonds, which are significantly cheaper than natural diamonds. This shift has contributed to the overall decline in natural diamond sales, further straining businesses in Surat. However, even lab-grown diamonds have faced challenges, with prices falling from $300 to $78 per carat due to overproduction.
Impact on Workers and Families
While larger companies like Kiran Gems have responded to the slowdown by giving employees time off, smaller units have been hit hardest, with many forced to close down. The Diamond Workers’ Union launched a helpline in July, receiving over 1,600 distress calls from workers in need of financial assistance or employment. For many, help has come too late. Vaishali Patel lost her husband, Nitin, two years ago after the polishing unit he worked for laid off most of its employees.
Brokers and traders are also struggling. Dilip Sojitra, a diamond broker in Surat, described how the market has come to a standstill, with little to no sales or purchases taking place.
Despite the current challenges, some industry insiders remain hopeful for a recovery. Nandlal Nakrani, president of the Surat Diamond Brokers Association, believes that the situation could improve if rough diamond prices decrease and polished diamond prices rise. Additionally, the upcoming festival season, including Diwali and Christmas, may provide a much-needed boost to the market.
As Sojitra optimistically put it, “This too shall pass.” However, the road to recovery remains uncertain for the thousands of workers and families impacted by the downturn.
India’s diamond industry is in crisis, with exports and prices plummeting due to global conflicts, sanctions, and economic downturns. The rise of lab-grown diamonds and job losses have led to a wave of suicides in Surat, the hub of diamond polishing. Despite the struggles, industry experts hope for a recovery, particularly with the upcoming festival season.
