Syllabus: GS3/Economy
Context
- Diamond industry in India is facing mass scale job losses, pay reduction and uncertainty about work, which employs around seven lakh workers in thousands of factories in cutting and polishing rough diamonds and exporting them in multiple countries.
Geographical Distribution of Diamond Fields
- Diamonds are precious gems, formed deep within the Earth’s crust over millions of years, hold both cultural and economic significance.
- India’s diamond occurrences date back to prehistoric times, and the country is home to several diamond-bearing regions.
- South Indian Tract (Andhra Pradesh): This region comprises parts of Anantapur, Kadapa, Guntur, Krishna, Mahabubnagar, and Kurnool districts. Andhra Pradesh hosts significant diamond reserves and extraction activities.
- Central Indian Tract (Madhya Pradesh – Panna Belt): Madhya Pradesh, particularly the Panna belt, is renowned for its diamond deposits.
- Panna has a long history of diamond mining and continues to contribute to India’s gem industry.
- Gujarat: The diamond sector in Gujarat shines brightly.
- Surat, often called the ‘Diamond City’ processes around eight lakh (800,000) rough diamonds, making it a global hub for diamond polishing. Recently, the Surat Diamond Bourse has further boosted the industry.
- With an estimated annual turnover of ₹2 lakh crore (approximately $27 billion), this bourse is set to provide employment to an additional 1.5 lakh people.
India’s Dominance in Cut and Polished Diamonds
- Exports: Indian exports of finished diamonds amount to a staggering $23 billion annually.
- Employment: The diamond sector directly employs around 1 million people in India.
- Additionally, it indirectly supports approximately 5 million jobs across various related industries.
- Global Leadership: India processes over 90% of the diamonds used in jewellery worldwide. Indian artisans skillfully transform rough stones into exquisite gems that adorn fingers, necks, and ears across the globe.
Key Concerns
- Lowering Exports: India’s cut and polished diamond exports in 2023-24 plunged 27.5% from a year ago to a $15.97 billion due to sluggish demand from the United States, China and the United Arab Emirates
- The fall in exports forced the world’s biggest diamond polisher to reduce imports of rough diamonds by 18% from a year ago to $14.27 billion in the financial year 2023-24.
- Mass Job Losses and Pay Reductions: Approximately seven lakh workers find employment in Surat’s diamond factories, but uncertainty now looms large.
- Global Factors at Play: Since 95% of polished diamonds from Surat are exported, global factors significantly impact the industry.
- Geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Palestine issues, have disrupted demand for diamonds worldwide. These conflicts ripple through the supply chain, affecting Surat’s factories.
- Inventory Woes and Supply Chain Disruptions: Surat’s factories are left with substantial inventories. It is because Russia, a major supplier of rough diamonds, has faced sanctions and geopolitical challenges.
- The delicate balance between supply and demand has been upset.
- Recession’s Toll: In 2022, Surat’s diamond industry boasted a turnover of nearly ₹2,25,000 crore. Alas, that figure has dwindled to around ₹1,50,000 crore today.
- The recession has been relentless, casting a shadow over the city that once sparkled with diamond brilliance.
Other Factors
- Market Dynamics: Fluctuations in global demand and rough diamond prices impact revenue.
- Technological Shifts: The rise of lab-grown diamonds and changing consumer preferences necessitate adaptation.
- Sustainability: Balancing growth with environmental and ethical considerations remains crucial.
