Surat may lose cutting edge in diamond trade

The diamond cutting and polishing hub of Surat will lose business to rivals China, Thailand and African countries unless it quickly comes out of the lockdown and resumes work, Bruce Cleaver, chief executive of global diamonds giant De Beers, told ET.

“Surat is the biggest diamond polishing hub in the world. Having said that, it won’t be the only place for polishing diamond. There are other places where polishing is done on a smaller scale like southern Africa. There are other diamond polishing centres like China and Thailand,” he said.

Diamond trade at Surat has come to a halt because of the lockdown. Further, industry bodies have decided to stop importing rough diamonds for a month in view of business uncertainty in the face of the spread of Covid-19 across the globe. Many migrant workers in the business have left Surat.

De Beers wants work to resume quickly.

“Customers of De Beers and midstream are flexible and smart. They can look at other places for some polishing work though India will continue to be the most important cutting and polishing centre in the world.”

However, Babubhai Kathiria, president of Surat Diamond Association, said that nearly 500,000-600,000 workers are leaving Surat for their home towns. “No production can begin before June. We have to put in place the social distancing norms before the factories can restart. There are 5,000 units in Surat that are engaged in diamond polishing and cutting.”

De Beers has cut its production guidance for 2020 by nearly 25% from its initial estimate of 32-34 million carats to reduce pressure on Indian midstream diamond trade. It has also given more flexibility to purchasers of rough diamonds.

“We recognise that Indian diamond industry is in a difficult condition due to the ongoing pandemic. But global trade is important. Where we can and where there is demand, we don’t shut off economic activity. If there is demand, there should be no artificial barrier in way of demand. We should keep the supply chain going,” Cleaver said.

Reacting to Cleaver’s comment, Colin Shah, vice-chairman, Gem and Jewellery Export Promotion Council, said, “Our stand is clear. We will not import rough diamonds for a month as there is no demand in the global markets. Also we have to put in place the SOP (standard operational practice) before starting production.”

Cleaver said that, while the economic impacts of the pandemic will be different in the main consumer markets, encouraging signals coming out of China point to the beginnings of a recovery. Consumer demand has started to return in the country as the lockdown has eased.”

“Demand from the US is expected to return in the second half of 2020. The medium and long-term prospect of the industry looks good. As people re-emerge from lockdown, they will seek to mark those relationships that are most important in their lives, and we believe diamonds will play a meaningful part in that ritual,” said Cleaver.

Courtesy: Retail ET