Cut and polish diamond workers are staring at a bleak future ahead of peak festival season as the industry attempts to cut corners due to temporary ban on the import of rough diamonds.
The small cut and polish (CP) units in the diamond hub at Surat have already incurred a loss of 35-40 per cent and shut shop while the large ones have reduced the number of working days for workers to 10-12 days in a month.
In a bid to cope with the adverse situation, all the diamond industry bodies have advised members to stop the import of rough diamonds for two months. Polished diamond inventory at the factory level has increased sharply and some of units are making distress sale just to cover their costs.
Kirti Shah, a Surat-based diamantaire told businessline that it is not that easy to just completely stop buying roughs, as each unit has to mandatorily register certain pre-determined turnover assigned by banks to remain as standard asset and draw working capital.
Moreover, there are fixed costs, like paying salaries to workers, electricity, and other expenses that have to be met by running the factory at a minimal capacity, he said.
If the industry is shut for 2-3 months, it takes another eight months to revive back to normal condition, said Shah.
Notwithstanding the sharp fall in exports of CP diamond, cheap import of rough diamonds from Russia through Hong Kong and China at 40-60 per cent discount has hit the industry hard.
Bhupenbhai Mavani, CEO, Amrut Diamonds said the industry’s attempt to play a volume game amid the global recession has backfired as both demand and realisation plunged while the fixed and other costs increased relentlessly.
Workers, who had already taken a 60 per cent salary cut, have been supportive of the industry as they understand the situation, he said.
The overall gross exports of Gems & Jewellery were down 27 per cent at $12 billion in the five months of this fiscal against $16 billion logged in the same period previous year. Cut and polished diamond exports have plunged by 30 per cent to $7 billion ($10 billion).
The industry has attempted to switch cutting and polishing lab-grown diamonds but this has helped only the rough manufacturers as both demand and realisation dipped for C&P companies. Polished lab-grown diamond exports declined 27 per cent to $563 million ($766 million).