The global economic slowdown has hit India's diamond processing industry in a big way. An estimated 50,000 unskilled, semi-skilled or skilled labourers have been laid off so far this year in Surat, the country's largest cutting and polishing centre for precious stones.
Most of them are daily wage workers and they have been asked to go on leave till their employers directed them to resume work. The leave of one month has been extended to three months at least. But, if the downturn continues the lay-off may stretch beyond the present three months.
In Mumbai too, the slowdown in demand from the US because of the economic crisis has resulted in over 10,000-12,000 job losses in the last one-and-a-half months.
India's over Rs 100,000 crore diamond processing industry is facing serious economic crisis as the demand from the US has fallen tremendously. According to industry estimates, the US demand has fallen almost 50 per cent during the last one year and the deepening economic crisis has only worsened it.
New orders for Christmas, which usually starts coming around the first week of November, have dried up this year. Instead, India's exporters to the US have started recalling unsold inventories to test the domestic market.
The demand for diamond jewellery is growing in China, Japan and West Asia and the unsold inventories from the US are expected to be diverted to these markets.
Confirming the lay-offs, Vasant Mehta, chairman of Gems & Jewellery Export Promotion Council (GJEPC) said the real numbers would be known only after a month or so when labourers generally resume the post-Diwali work by November-end as normal practice. According to Mehta, labourers have been asked to stay back until inventories fall from pre-Christmas sales.
Meanwhile, Diamond Trading Company, the trading arm of global diamond mining major De Beers, has reduced the box size or the value of site for Indian customers for the remaining two months of the current calendar year and has decided to divert the rough diamond to countries like South Africa and Belgium.
Praveen Nanavati, joint secretary of Gujarat Heera Bourse, feels Indian site holders have already lifted the quantity for the whole year within 10 months on growing demand for rough and semi-processed diamond globally. The industry now has a huge pile-up of inventory worth about Rs 80,000 crore, equivalent to India's annual exports. Hence, asking workers to return could only add to the overheads, said Nanavati.
Demand for luxury goods declines during recessions. Hence, the export of diamond jewellery may be hit badly this year, said Mehta.
Meanwhile, the public sector MMTC Ltd has also recorded "zero" orders from its limited 4-5 customers to procure rough diamonds on their behalf.
"We have had no orders from our customers during the last three months," said an official involved in import of roughs mainly from Russia and Israel.
