Thousands of diamond workers in Surat face an uncertain future as the industry grapples with a global downturn. The once-shining heart of India’s diamond trade is now struggling to maintain its sparkle. A prime example is the unprecedented decision by Kiran Gems, a leading diamond exporter, to grant its 5,000 employees a 10-day company-wide leave.
This drastic measure reflects the industry’s battle against plummeting global demand, exacerbated by economic instability and geopolitical tensions.
Dinesh Lakhani, global director of Kiran Gems, who is hopeful that demand for diamonds will pick up in the next two or three months, told CNBC TV 18, that this is a temporary measure to match the demand-supply gap.
Kiran Gems, with an annual turnover of Rs17,000 crore, is also among the largest exporters of polished diamonds and deploys 5000 employees. The decision has been taken by the company in response to the slow demand for polished diamonds.
The sluggish demand from the United States, China, and the United Arab Emirates led to a decline in India’s cut and polished diamond exports by 27.5% to $15.97 billion in 2023-24 as compared to the last year.
The industry has been struggling with the consistent decline in demand for the precious element.
India’s gem and jewelry exports fell by 13.44% in June 2024 compared to the same period last year. The total value of exports dropped to Rs 15,939.77 crore ($1.91 billion) from Rs 18,413.88 crore ($2.24 billion) in the previous year. This data was released by the Gem and Jewellery Export Promotion Council.
The impact of global economic conditions
The current geo-political situation due to the Russia-Ukraine war has badly impacted the diamond industry in Surat. India sources a major chunk of its rough diamond requirements from Russia which is facing restrictions from the western countries.
More than 30% of rough diamonds mined in Russia are imported to India. Restrictions on Russia led to a reduction in the availability of cheaper Russian rough diamonds, impacting Indian players.
The slowdown in the global economy has adversely impacted the demand for luxury goods and diamonds are one of the costly luxury items. The slow global economy has shifted consumer behavior.
Unconventional workforce management
A 10-day leave plan for Kiran Gems can be a temporary major to regulate the market, however, it paints a gloomy picture of the once shiny market India, mostly confined in Surat.
According to reports, the Indian diamond market has been going through a rough phase. There has been a constant drop in the price. With each passing day, they are losing the value of their stock which is disheartening.
Other companies, however, are yet to announce anything similar to curb the situation. This move may be seen as a temporary layoff at the shining diamond industry in Surat if the situation does not improve in time to come. The road to recovery will require effort from industry stakeholders, government support, and a willingness to adapt to changing market dynamics.