Surat’s secret market of artificial diamonds blooms

Surat: Defying the Bharat Diamond Bourse’s (BDB) ban on the trading of lab-grown diamonds, Surat has an underground market flourishing in Varachha and Mahidharpura. Here, diamond merchants deal ‘under the table’ in artificial diamonds with their fixed clients from Mumbai and Delhi.

Hub of diamond polishing, Surat’s lab-grown diamond market has more than 500 units manufacturing Rs 5,000 crore worth of diamonds per annum.

“You won’t find these merchants openly dealing in lab-grown diamonds, as they would do with real diamonds in the diamond streets. There are many who are doing brisk business with artificial stones,” said a merchant in Mahidhapura on condition of anonymity.

He further said that he has been trading in real diamonds for the past 17 years. However, looking at the artificials’ lucrative market, he too started dealing in synthetic diamonds for the last few months. He has his buyers based in Mumbai and Delhi. “I procure goods from the local units and sell them to the buyers with good profit margin,” he added.

Decreasing profit from worldwide dip in demand for real diamonds has forced many diamantaires to secretly deal in the labgrown diamonds. The attraction towards the lab-grown diamond business in India is mainly due to the rising demands in the international markets including the US and the UAE, besides higher profit margin. Though these are almost 50% cheaper to the
real diamonds, the export of lab-grown diamonds is increasing from India.

Going by Gems and Jewellery Export Promotion Council (GJEPC) data, India’s export of lab-grown diamonds has increased by 107% between April and December 2019 at Rs 2,200 crore.
But industry experts rue that there is no governing body in the country, mainly in Mumbai or Surat markets, to check illicit trading of lab-grown diamonds. Diamond merchants carry the illegal business in their own individual capacity, a source said.

Box

What adds to the fake sparkle

Market estimates claim about Rs 50 crore worth of lab-grown diamonds are traded in Surat every month

Profit margins in these deals range between 5 and 6% on the total value of the goods, much higher than real diamonds

Lab-grown diamonds are 50% cheaper than the natural diamonds and used in bling and fashion jewellery

Surat diamond market does not come under Mumbai-based BDB’s purview and so there is no supervision

Also, the diamond markets in Varachha and Mahidhapura are decentralized and unorganized

There is no punishment as such for diamond merchant caught selling artificial diamonds

Quotes

“Both the diamond markets are unorganized and there are no rules as such for the lab-grown diamonds. There are many who deal in lab-grown diamonds with limited customers. We want complete disclosure of the diamonds on the part of the merchants” Babu Kathiriya, president, Surat Diamond Association.

“There is no fear of undisclosed mixing of diamonds, as the majority of the diamond offices have their own synthetic diamond detection equipment. Even if the merchants are dealing in lab-grown diamonds they are doing it with full disclosure” Manhar Sutaria, member, Mahidhapura diamond brokers association.

Courtesy: TOI