Diamond Industry Crisis in Surat: Job Losses, Suicides, and Hope for Recovery Amid Global Downturn

Nikunj Tank, a worker in Surat, India’s diamond polishing capital, tragically took his own life in August after losing his job in May. The financial crisis that hit the unit where Tank had worked for seven years left him and many others unemployed. As the sole breadwinner for his family, Tank was left devastated. His father, Jayanti Tank, recounted, “He couldn’t find a job and unable to bear the loss, he took the extreme step.”

Surat, located in Gujarat, is responsible for polishing 90% of the world’s diamonds. With over 5,000 units and more than 800,000 polishers, the city is a major hub in the global diamond industry. The city boasts 15 major polishing units, each with annual revenues surpassing $100 million. However, the diamond industry in India has been in turmoil recently, suffering from a deep recession.

The fall in India’s exports of cut and polished diamonds has been steep, dropping from $23 billion in 2022 to $16 billion in 2023. Projections suggest this figure will decline further to $12 billion by 2024. The price of polished diamonds has also seen a significant decrease, falling between 5% and 27% in 2023. Analysts attribute this to a combination of oversupply and declining demand. Mahesh Virani, from Star Gems, explained that many polishing units continued producing despite reduced demand to avoid shutdowns, exacerbating their losses.

Over 30,000 workers have lost their jobs in the last six months alone due to the industry’s downturn, according to Gujarat’s Diamond Workers’ Union. The union has reported that 65 diamond workers have died by suicide in Gujarat over the past year and a half due to job losses and the financial strain. These figures were compiled from police records, family statements, and media reports, although the BBC has not independently verified them.

Experts suggest that various global factors have contributed to the industry’s decline. The Covid-19 pandemic, Russia’s invasion of Ukraine, the Israel-Gaza conflict, and falling demand in key markets have all had a negative impact. Vallabh Lakhani, chairman of Kiran Gems, commented, “The business of polished diamonds has gone down by more than 25-30% due to global recession.”

The war in Ukraine has played a particularly significant role. India imports about 30% of its rough diamonds from Russia, where Western sanctions have severely disrupted supplies. These rough diamonds, which are typically cut and polished in India, are sold primarily in Western markets. In March, the European Union and G7 nations imposed additional sanctions on Russian unpolished diamonds, including those polished in India and then sold through third countries. In response to this, India’s External Affairs Minister, S. Jaishankar, voiced concerns in April, stating that these sanctions were harming those lower down the supply chain more than Russia, as the latter often finds alternative markets.

In Surat, many traders echo this sentiment. Kirti Shah, a diamond exporter, noted, “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.” Key markets like the G7 countries, the UAE, and Belgium have all seen economic downturns, which has further impacted India’s diamond trade.

The rise of lab-grown diamonds, a more affordable alternative to natural stones, has also contributed to the current crisis. Lab-grown diamonds have become increasingly popular, pushing down demand for natural diamonds. Furthermore, the war in Gaza has added to the strain, as diamonds are a significant part of India’s trade with Israel.

“The diamond sector in Surat is passing through a bad phase,” said Kumar Kanani, a lawmaker from Gujarat’s ruling Bharatiya Janata Party (BJP). He noted that authorities were investigating the suicides connected to job losses and assured that “the government is ready to provide all possible help to polishers, traders, and businessmen.”

However, the families of workers who died have claimed they have received little assistance from the government. Many of the layoffs have occurred in small to medium-sized polishing units, where workers are employed to check the quality of rough diamonds and polish them. Larger players in the industry have not been immune to the crisis either. Last month, Kiran Gems, one of the biggest employers, asked its 50,000 workers to take a 10-day vacation due to the slowdown.

In response to the crisis, the Diamond Workers’ Union launched a helpline in July, which has since received over 1,600 calls from distressed polishers seeking either financial help or new employment opportunities.

Some families have suffered tragically because help did not arrive in time. Vaishali Patel lost her husband Nitin two years ago after he was laid off by the polishing unit he worked for. The unit had been forced to drastically reduce its workforce due to the downturn.

The crisis has also impacted brokers and traders. With little demand in the market, many brokers in Surat, like Dilip Sojitra, have found themselves with no work. “We have been sitting idle for days. There is hardly any sale or purchase,” Sojitra said.

Even the prices of lab-grown diamonds, which were initially a beacon of hope for the industry, have fallen sharply due to overproduction. Prices dropped from $300 to $78 per carat, hitting another sector of the diamond market. According to Nandlal Nakrani, president of the Surat Diamond Brokers Association, the situation could improve once the prices of rough diamonds decrease and those of polished diamonds rise.

Despite the gloomy outlook, there is still some optimism for the future. Industry veterans remember how the sector bounced back after the 2008 financial crisis, which had forced the closure of hundreds of polishing units and left thousands without jobs. Mr. Sojitra, one of many hoping for a turnaround, expressed confidence that upcoming festival seasons like Diwali, Christmas, and New Year could help boost sales and reinvigorate the market.

“This too shall pass,” Sojitra said, expressing a belief shared by many that the industry will eventually recover, just as it has in the past.