Surat: For Jaysukhbhai Patel, a job cutting diamonds in Surat was the ticket to a better life for him and his family of four. Last November, Patel’s ticket expired when the small factory he worked in was shut like hundreds of others in India’s diamond hub, as demand for the gems dipped in the US and Western Europe, leaving at least 100,000 workers jobless.
“I have worked in this industry for nearly 30 years, and I have seen many ups and downs,” said Patel, father of three, who now works in a local library for less than half his previous wage of about Rs4,000 a month. “But I have never seen factories being shut like this.”
Shattered dreams: A diamond processing unit in Surat. An estimated 30-40% of factories here have shut. Amit Dave / Mint
The woes of Surat reflect a wider downturn for India’s export sector, which accounts for one-fifth of Asia’s third largest economy. Exports have fallen four months in a row and the latest data available shows a slide of 16% in January.
During the boom years, an estimated 800,000 workers spent 10-12 hours a day in thousands of factories and workshops, cutting and polishing tiny rough diamonds for export. Now mostly silent and shuttered, the factories are victims of a global crisis that has hit demand for the gem that defined this city for decades.
India processes about seven in every 10 of the world’s diamonds, mostly cheaper stones less than a carat. Surat is the heart of the industry, built on the skills of its craftsmen, its cheap migrant labour and its legendary entrepreneurial spirit. “People have worked hard to build this business for the last 30-40 years, but this downturn has made people risk-averse and afraid to trust their own people,” said Anoop Mehta, president of Bharat Diamond Bourse, the exchange in Mumbai.
Tighter liquidity and a weaker rupee, which lost 19% against the dollar last year and has slipped more than 5% this year already, are also weighing on the industry, he said. “What they’d earned over several years has been lost in a flash. This business runs on trust, so when payments are delayed, when orders are cancelled, it shakes your confidence.”
At about $11 billion (about Rs57,000 crore), India’s exports of cut and polished diamonds is down about 3% so far this fiscal year from April, according to Gem and Jewellery Export Promotion Council.
Several diamond units have abandoned their business entirely, installing textile machinery or taking on other work.
It is hard to come by accurate data on the number of factories or workers employed in Surat, as most units are small and do not maintain employee records, paying workers per diamond. Estimates range from 500,000-800,000 workers in 6,000-10,000 factories and workshops. The industry estimates that about 30-40% of factories have shut. At least 70 workers have committed suicide since the downturn, welfare organizations said.
The industry has appealed to the state and the central bank for assistance, and has also put together an emergency package of about Rs50 lakh for workers.
But that has not been of much comfort to Patel. “The assistance they are offering is too little.”
Surat, notorious for its opaque dealings, has long been criticized for its sweatshop-like conditions.
Babu Jirawala, leader of the Surat Diamond Workers’ Association, hopes the crisis will bring about change.
“These workers have no job security, no insurance, no pension, not even an ID at their workplace,” he said in his tiny office, where workers drop by from time to time for updates.
“So far it was like a family, now it’s been torn apart, and owners have abandoned the workers. Now, if the central bank helps, then they must lay down conditions on these factories,” he said.