For the second consecutive year, the Diwali vacation in the diamond factories has exceeded 21 days.
With the industry facing an unprecedented recession, diamond traders have had to resort to all sorts of measures to cut their losses. One such step is to extend the Diwali holidays of diamond workers. Usually the diamond factories close for around three weeks during Diwali, but last year, after the Ukraine-Russia war, the industry workers got a 36-day vacation, the longest till then.
“The global conditions have affected the diamond cutting and polishing industry of Surat. Going by convention, when Diwali vacation used to be of 21 days, the factories should have become functional on November 15. But keeping in mind the present conditions, we will fully start operating only from the first week of December,” said Surat Diamond Association (SDA) president Jagdish Khunt.
This year, the sales of rough diamonds by De Beers, the leading global diamond company, has depleted from 5.6 million carats in 2020 to 2.1 million carats in 2024.
The numbers have had a direct impact on Surat with eight out of every 10 diamonds in the world polished in the Gujarat city in around 5,000 small, medium and big diamond factories. The Surat diamond industry employs 6 lakh people.
Over the last couple of years, with the industry taking a beating, many factories have laid off employees, mostly diamond cutters. According to Diamond Workers’ Union, Gujarat, Vice president Bhavesh Tank, over 65 diamond workers had committed suicide in the current financial year.
The industry is, for the first time in its history, witnessing longer vacations.
SDA president Khunt said, “The diamond factories will start opening next week onwards. We are hopeful that from the first week of December, a majority of the factories will start functioning. The diamond traders have started opening their shops but no major movement is being seen in the market.”
In a report submitted to Gems and Jewellery Export Promotion Council in Mumbai, New York-based independent diamond industry analyst and consultant Paul Zimnisky said De Beers’ results fall in line with the company’s production guidance, which has been cut twice in 2024 in response to market conditions. In July, full-year guidance was cut to 23-26 million carats from 26-29 million carats in April, which was itself previously cut from 29-32 million carats.
On a global natural diamond production basis, Zimnisky forecasts output of just 105 million carats this year — the lowest since 1995.
“The supply is only one side of the equation, but materially, cutting goods to market is clearly the right path for the industry at the moment. These proactive and aggressive measures should translate to significantly reduced industry-wide stocks as we head into 2025, which ideally will allow profitability, and importantly, confidence, to return to the trade,” he said in his report.
While addressing industry stakeholders at GJEPC head office in Mumbai, he said, “While the present scenario may appear challenging, the long-term prospects are closely tied to global population growth, expanding middle classes, and increasing wealth even as a significant price recovery is not expected until at least
2025.”
Former president of SDA and an industry veteran, Dinesh Navadia, said, “The diamond industry was hit by global recession in 2008 as well but during that time, the demand for polished diamond was still there. However, the situation now is quite grave as there is not much demand. We have not seen such a recession in our life.”
He further said, “The major factors affecting the industry is the Russia-Ukraine war, followed by the Israel-Palestine war. Locally, the diamond factory owners are facing a lot of problems in running the factories and paying salaries to the diamond polishers. To overcome the financial burden, the factory owners have cut short production, and also given two to three days off per week to workers (as against the norm of one day off a week). We are hopeful that with the new US president-elect Donald Trump, the global factors affecting the industry may be resolved.”
