A slowdown in demand for diamonds in China and West Asiais estimated to have caused a 10-15% job loss in the diamond cutting and polishing hub in Gujarat in the first four months of this fiscal year.
Prices of polished diamonds have dropped 6-10% in the past four months due to weak demand and the industry does not foresee the demand to pick up soon.
“Job loss to the tune of 10-15% has already happened in the diamond hub of Gujarat which is spread over Surat and smaller centres like Amreli and Bhavnagar,” Colin Shah, the vicechairman of the Gem & Jewellery Export Promotion Council, told ET. “A slowdown in global demand, coupled with liquidity crisis, has affected the trade. Though demand in the US and Europe is steady, demand has dropped by 15-20% in China which is a major market. Demand in the Gulf countries is also not encouraging.” The US-China trade war has taken the sheen out of the Indian diamond trade. Exports of cut-and-polished diamond dropped 18.15% in July and 15.11% for the first four months of fiscal 2020, compared with a year earlier. Overall, gem and jewellery exports fell 6.67% during April-July.
The diamond trade in Gujarat employs around 20 lakh people, said Babu Gujarati, a former president of the Surat Diamond Association. Of these, around 8 lakh people are engaged in cutting and polishing of rough diamonds.
India is the world's largest cutting and polishing centre of rough diamonds, processing as many as 14 out of every 15 rough diamonds in the world.
Gujarati said the slowdown had affected the trade from the beginning of the current fiscal year. “Diamond traders have cut down shifts to tide over the situation. There has been job loss too. But gradually, the trade is coming in terms with the present situation.”
Shah of the export promotion council said there could be some revival in the December-January period. Gross exports of gem and jewellery declined 11.08% from a year earlier to Rs 18,633.10 crore in July 2019. The value of exports during the April-July period was Rs 84,272.30 crore. Gold jewellery exports in July fell 5.62% to Rs 6,626.92 crore, while for the first four months of this fiscal, those dropped 2.11% to Rs 28,359.43 crore.