By Shital Patel, BBC Gujarati, Surat
Nikunj Tank, a worker in the world’s diamond polishing capital Surat in western India, had been desperate since losing his job in May. The unit he worked at for seven years was facing a financial squeeze and closed down, leaving him and over a dozen others unemployed.
Tank was the family’s sole breadwinner – he was supporting his parents, wife and daughter and had no savings. ‘‘He couldn’t find a job and unable to bear the loss, he took the extreme step,” said his retired father Jayanti Tank. Tank died by suicide in August.
The last few years have been tough for India’s recession-hit diamond industry. Surat, in Gujarat state, processes 90% of the world’s diamonds in over 5,000 units and employs more than 800,000 polishers. The city has 15 big polishing units with an annual turnover of more than $100m (£75m).
India’s exports of cut and polished stones fell from $23bn in 2022 to $16bn in 2023 and are expected to drop further to $12bn in 2024.
The price of polished diamonds dipped by 5%,s to 27% in 2023, due to lower demand and oversupply, say analysts. Mahesh Virani of Star Gems explained that oversupply occurred because polishing units continued production despite limited demand to keep operations running, ultimately increasing their losses.
The state’s Diamond Workers’ Union, a group representing polishers, told BBC Gujarati that more than 30,000 have lost their jobs in the past six months alone due to the downturn.
The union says that as per their data collected from victims’ families, police records and news reports, 65 workers have died by suicide in the state over one-and-a-half years due to this slowdown. The BBC could not independently verify this figure.
Experts say the Covid-19 lockdown, the Russia-Ukraine and Israel-Gaza wars, and falling demand in key markets have adversely impacted India’s diamond industry.
“The business of polished diamonds has gone down by more than 25-30% due to global recession,” said Vallabh Lakhani, chairman of Kiran Gems, a leading manufacturer.
India imports 30% of its rough diamonds from Russian mines – now under Western sanctions due to the war – and cuts and polishes them, then sells them mostly in Western markets.
In March, the European Union and G7 countries imposed a fresh ban on the import of Russian unpolished diamonds, including those processed in India and sold in the West via third countries.
After the fresh ban, India publicly raised concerns, with External Affairs Minister S Jaishankar stating in April that such measures hurt those lower in the supply chain more than Russia, as producers usually find alternative routes.
Traders in Surat echo that.
“India is at the low end of the value chain of the diamond industry. The country is highly dependent on the global market, both for raw materials as well as for final sales,” said exporter Kirti Shah.
Additionally, an economic downturn in G7 countries and the UAE and Belgium – India’s key export destinations – has impacted business.
The downturn is also attributed to a rise in demand for lab-grown diamonds, a cheaper alternative to natural diamonds, and to the war in Gaza, as the gems form a sizeable chunk of India’s trade with Israel.
“The diamond sector in Surat is passing through a bad phase,” said Kumar Kanani, a lawmaker from the state’s governing Bharatiya Janata Party (BJP). He said the police were investigating the suicide cases attributed to job losses.
“The government is ready to provide all possible help to polishers, traders and businessmen,” he said.
But the families of at least nine workers, who recently took their lives, said they had received little help from the government.
The majority of layoffs have occurred in small and medium-sized units, which typically hire workers for quality checks of rough diamonds and for polishing and shaping them.
But bigger players are impacted too. Last month, Kiran Gems asked its 50,000 employees to go on a 10-day vacation, citing the slowdown as a reason.
In July, the Diamond Workers’ Union started a helpline which received over 1,600 distress calls from polishers seeking jobs or financial help.
But there have been others who couldn’t get help in time. Vaishali Patel, 38, lost her husband Nitin two years back. The polishing unit he worked for had laid off a majority of its staff because of a lack of business. Brokers and traders too are facing the brunt.
“We have been sitting idle for days. There is hardly any sale or purchase,” said Dilip Sojitra, one of the 5,000 brokers in Surat who sell diamonds to customers, traders and other brokers.
Lab-grown diamonds, once in high demand, have also seen prices drop from $300 to $78 per carat due to overproduction, impacting the market. Surat Diamond Brokers Association president Nandlal Nakrani believes the situation will improve when rough diamond prices decrease and polished diamond prices rise.
Despite the slowdown, some hope the industry will recover, as it did after the 2008 Great Recession, which shut hundreds of polishing units and left thousands jobless.
Mr Sojitra says he believes the upcoming festival season, including Diwali, Christmas, and New Year, will help boost business momentum. “This too shall pass,” he says.
