Usually, business in Surat, which hosts about 10,000 diamond units, peaks around Christmas and New Year. But the slowdown in the US and Europe has meant the orders have dried up. Around 60 per cent of diamonds polished in Gujarat are sold in the US, and the slowdown in the US has cost the state half of its business.

The industry’s troubles are compounded by the fact that it had earlier bought rough diamonds at peak prices. “The market demand was bound to go down. The way units were buying rough diamonds was abnormal. Despite higher prices, people bought the diamonds due to higher demand. After the slowdown in the US, they are now panicking,” says Sevanti Shah of Venus Jewels, based in Surat. Venus Jewels is one of the largest suppliers of polished diamonds to the US and is credited with pioneering the concept of online stocks for increasing sales. But with buyers drying up, the diamond units are now extending their forced vacation. While most units have closed, some like Surat’s Bhavani Gems has retrenched more than 300 workers. 

The boom
THE industry’s bleak times have come after two decades of boom, a period that triggered a wave of migration from the drought-prone districts of Amreli and Bhavnagar to Surat. Agricultural labourers and small-time farmers who made about Rs 50 a day, left their barren land for Surat’s booming industries where they could earn Rs 300 a day. The migrants account for 90 per cent of the 10-lakh work force of Surat’s diamond industry and live together in a ghetto in Varaccha in Surat.

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