A deadly combination of Diwali and elections in Gujarat is bound to take the diamond and jewellery prices to new heights.
Gujarat goes to polls on December 11 and 16 and the state is witnessing big campaigns by the leading political parties. With the diamond and jewellery workers going on a holiday during Diwali and the elections coming immediately after that they may extend their holiday till December 16, last day of polls.
This may hit the industry as the production will come to a standstill while the Christmas season demand from US and other countries go up.
Following this, diamond prices are likely to soar 15 per cent this Christmas. Around 500,000 workers are employed in Surat's diamond cutting and polishing industry. Of this 375,000 are from Saurashtra. Usually, these workers from Saurashtra go for a 20-day Diwali
break.
With elections round the corner, the vacations are likely to be stretched by another 15-20 days.
To add to that, demand from the US and European countries will go up by around 20 per cent this time.
That will result in the diamond exporters reaping in rich dividends from the election season in Gujarat.
India's net annual diamond exports are in the region of $17-18 billion (Rs 70,000 crore). Most exports take place during November-December and January.
India is the world's largest exporter of cut and polished diamonds, 90 per cent of which are manufactured in Gujarat. Out of these, 85 per cent are cut and polished in Surat.
India's exports of cut and polished diamonds grew to $8.16 billion during April-October 2007 from $6.30 billion in the same period last year.