Global meltdown rubs off the sheen from Indian diamond industry

India's diamond industry seems to be losing its sheen with global recession hitting its exports.

Those associated closely with the industry at Surat in Gujarat are struggling to survive the current recessionary trends.

The traders say that the diamonds processed in Surat are sent to various parts of the world including the Middle East from where manufactured jewellery is then sold across the globe.

The US, one of the largest markets for diamonds and other gemstones, would import 60% of diamonds manufactured in Surat. But these imports have come down by half due to deep economic crisis that America is currently reeling under.

With the financial turmoil spilling over to the rest of the world, the demand for diamond jewellery is declining in the international markets. Diamond traders said that domestic markets too are no better and don't see any respite in the near future.

"Due to the global recessionary trends the diamond industry world over is facing problems and so is our fraternity in Surat. The effect is being feltmore than ever before and we are trying to fight it. But how long would the industry be able to fight it and survive, it is a matter of concern. I don'tsee any respite in the near future," said CP Wananai, President, Diamond Association, Surat.

The Surat diamond industry is worth Rs800,000mn and accounts for more than half of the total diamond exports from India. It employs more than 700,000 workers from across the country. Over 2.5mn people are indirectly associated with the trade. These workers are uncertain about their jobs. The one-month annual vacation that these workers get during Diwali, the Hindu festival of lights, is being extended, sparking off fears that many companies might have to close down.

"I have been in this industry for around 10 years now. We have already had a vacation of 40 days now. My salary is just Rs7000 per month and I had spent almost all of it during the festive season. I don't have anything now. I am somehow trying to survive. The situation is really bad. I don't even want to think about what can be done if the situation doesn't improve," said Manish Bhai, a diamond worker.

With the 40-day vacation ending on Monday (November 17), the diamond unions are scheduled to meet to discuss the situation and likely possibilities to save the livelihood of the millions of workers associated with diamond trade. Reducing the number of working hours and decreasing the salary proportionately are among various options being thought of as against laying off of workers.

Meanwhile, the diamond industry is lobbying hard to get a bailout package from the government. India's diamond industry has been reeling under a spate of problems. Around 2,000 factories out of 10,000 have already shut down.

The worst-hit diamond cutters and polishers have not yet lost hope about the markets regaining their lost glitter but feel that would take a couple of months.