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Diamond traders protest over Bharat Shah's arrest

Diamond traders and jewellery exporters in Bombay have begun their protest against the arrest of powerful financier Bharat Shah.

Shah, a wealthy diamond merchant, wields influence in Bollywood as well as the stock markets.

State-run All India Radio said that both diamond and jewellery traders have joined the strike in the nation's financial centre, where stock markets were rattled on Tuesday by Shah's arrest.

Police arrested Shah on Monday under the Control of Organised Crime Act, alleging that he was linked to the underworld. Shares of Indian media stocks fell for a second straight day on Tuesday amidst fears that Shah's arrest could expose links between India's entertainment industry and the underworld.

Shah, one of India's biggest movie financiers, was the third film bigwig to be detained in less than three weeks under the western Indian state of Maharashtra's stringent new law.

Last month police arrested movie producer Nadeem Rizvi and his assistant Abdul Khan under the same act. Rizvi's Hindi film, Chori Chori Chupke Chupke was funded by Shah.

Shah, however, denies having any crime links and says that he funded the film with his own money. He has been remanded in custody until January 18. The police now have up to 90 days to lay formal charges under the act.

Bombay churns out an average of one Hindi film every two days and most of them are extremely popular. But until a few years ago, despite its importance, the industry was refused recognition as an officially approved industry.

Traditional lending institutions shied away because its finances seemed opaque and police say that organised crime exploited the opportunity, viewing films as a lucrative and glamorous outlet for their funds.

Shah, who has financed more than 100 films in the Hindi film industry, was admitted to a Bombay hospital's intensive care unit on Tuesday after complaining of chest pain.

Domestic media reports say Shah has also been involved in financing stockbrokers and traders, in addition to being a key investor in media stocks.

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