Surat SEZ lures Mumbai jewellery businessmen with its labour force and an upcoming bourse

With the markets opening worldwide after the Covid-19 lockdown, the gems and jewellery industry seems to be in recovery mode and exports have begun to markets in the United States, China, Hong Kong, Europe and other countries.

Jewellery manufacturers from Mumbai have been making a beeline to Surat Special Economic Zone (SurSEZ) in Sachin area of the diamond city to set up shop or expand their business, thanks to the availability of labour and the diamond bourse coming up at Khajod area.

Four diamond jewellery manufacturers have shifted to SurSEZ, Sachin, from Mumbai since February, even after the Covid-19 outbreak. According to officials, since April 2019, 22 new units started operations in the SurSEZ, of which 18 are diamond jewellery firms of Mumbai, the rest being from Surat.

Local laws and taxes do not apply in the SEZ, favouring businesses. Sources at the SEZ said the unit owners get exemption on import duty on raw materials and other taxes on the condition that final product is exported and cannot be sold locally.

“During unlock period, we received proposals from four jewellery firms in Mumbai who wanted to expand their manufacturing to Surat SEZ. They have been cleared, while more are in the pipeline. The land given to the unit owners is on lease for 15 years and can be renewed later,” said an official on condition of anonymity.

With the markets opening worldwide after the Covid-19 lockdown, the gems and jewellery industry seems to be in recovery mode and exports have begun to markets in the United States, China, Hong Kong, Europe and other countries.

Exports picked up from 36 million US dollars (USD) in April during the lockdown to USD 1764.06 million in August, although overall exports exports reported a 41.55 per cent decline compared to last year.

According to the Gems and Jewellery Export Promotion Council (GJEPC), gross exports in August 2019 was USD 3018.32 million (Rs 21,518.73 crore).

Kunal Doshi, a diamond manufacturing businessman who has a unit at Mumbai Santacruz Electronics Export Processing Zone (SEEPZ), with a labour strength of around 300 skilled artisans working in a 7,000 square-feet factory, expanded business to SurSEZ.

Doshi set up a manufacturing unit named VM Kreations on around 1,500 square feet area in Sachin with 40 skilled labourers in May. The labourers were sourced from the local labour contractors for the unit where new imported machines were installed. Doshi hails from Kutch district but his father shifted to Mumbai when he was child, and started diamond trading business.

Doshi said, “Diamond industry is flourishing in Surat city while diamond-studded jewellery industry is also growing. Mumbai is the hub of diamond trading but we face problems of production site, procuring the diamonds, etc., which are easier in SurSEZ.”

Doshi’s firm exports diamond-studded gold and silver jewellery to the US, Japan and Australia. “We had been planning to expand but land prices are high in Mumbai and there was no space in SEEPZ. So we decided to come to Surat, which is the hub of cutting and polishing rough diamonds. We have invested around Rs 70 lakh for the unit in SurSEZ. We will watch the progress and decide on further expansion,” he said.

According to Doshi, low-cost labour is easily available in Surat and cost of leasing land is also around 25 per cent less compared to his space in Mumbai.

The under-construction diamond bourse at Khajod area in Surat is likely to be operational by next year and could offload some business from the Bharat Diamond Bourse in Mumbai’s Bandra Kurla Complex frequented by international buyers. Sources in the diamond industry said that many merchants from Surat and Mumbai have already booked offices at the upcoming diamond bourse.

Rahil Chovatiya, another businessman from Mumbai, also expanded his business to Surat in February this year and manufactures gold and silver jewels studded with diamonds by the name of RHG Global in SurSEZ.

“Manpower is easily available in Surat with no issues of labour union. We started a unit here with 50 skilled labourers from West Bengal, Uttar Pradesh and Bihar. The supervisor and back office people are from Gujarat. Also there are no issues of power disruption and labourers are accommodated in nearby areas. In the coming months, many more diamond jewels manufacturing units will come to Surat. Once we meet the production targets, we hope to start a bigger unit in Surat and stop manufacturing in Mumbai,” said Chovatiya.

According to him, diamond industry is based on trust, and employing local people for supervising and back office work is important for security.

SurSEZ, spread on 150 acres of land at Sachin, has around 160 licenced units at present, and construction has been done on 85 per cent of land.

According to the official, the overall exports of Surat SEZ in the previous financial year was Rs 12,500 crore, out of which Rs 10,000 crore is from the diamond jewellery industry. “There is no shortage of land at SEZ and we are ready to allot to more people who want to start their units here,” he said.

GJEPC chairman Colin Shah is optimistic about exports picking up after lockdown.

He told The Indian Express, “There are initial signs of recovery from markets in the US, China and Europe… and export orders have seen a steady rise over the past 4-5 months. The gems and jewellery export units are working in full swing and trade is getting back to normal. We are optimistic about a decent recovery of exports… We are hopeful of restricting the downside of exports to over 20-25 per cent at the closure of the fiscal year, as compared to the previous year.”

Courtesy:  Indian Express