Strike takes shine off Gujarat diamond industry
The diamond industry in Ahmedabad, Gujarat, is in a state of turmoil. More than 0.2 million diamond workers are agitating for better wages and have refrained from going to work for the third consecutive day on Friday, July 16. Demanding a pay rise, workers have been demanding wages similar to their counterparts in Surat, who were granted a wage hike of 30% post the recessionary conditions of last year. The agitation was launched after unit owners in Bhavnagar rejected the workers’ demand. Though the main hub of the agitation is in the Bapunagar area of the city, there are diamond processing factories in the surrounding Odhav and Naroda junctions. The workers have threatened to continue the agitation till their demands are met. The diamond industry in Gujarat accounts for over 72% of the world’s processed diamonds and 80% of India’s diamond exports. Exports of gems and jewellery accounted for about 15% of the country’s total exports worth $185 billion in 2008-09.The number one contributor to India’s export basket, gems and jewellery exporters have seen a reversal of fortunes since November 2009, after almost a year of downturn which followed the recession in several key markets in the US and Europe. In February this year, export consignments have reportedly grown by an impressive 55% to $2.2 billion, highlighting demand pickup in the western markets. However, discontent in the Gujarat city’s diamond sector could well take the shine off the industry.Discontent has been brewing for some time now, as Gujarat’s share of the global gems and jewellery market appears to be slipping, though it has in its fold over two-thirds of the market in diamond processing.Post the global slowdown scenario, Surat’s diamond industry has reportedly seen some demand momentum return from the domestic and international markets, notably China. ``Demand for polished diamonds has picked up in last two months,’’ said the ex-regional chairman of Gujarat, Gems and Jewellery Export Promotion Council, C Sanghvi. Despite the recession, India exported $6.6 billion worth of diamonds directly to China last year.However, a different situation was playing out in the US and Europe. The UAE is the main destination for India’s gems and jewellery, accounting for 31% of the total exports, followed by Hong Kong and the US.During the downturn, the diamond industry of Surat had to shut down several of its processing units, leaving thousands of diamond workers jobless. At the end of last year, nearing Diwali, the festival of lights, diamond workers in Surat were granted a wage hike of 30%. Bhavnagar unit owners, however, refused the hike. This has brought on the current agitation.The diamond industry in India processes nine out of 10 rough diamonds available in the world. Barring the recession, the gem and jewellery industry has been registering a remarkable average growth rate of more than 30% annually. Chairman of the Gems and Jewellery Export Promotion Council, Basant Mehta, said the industry had not really witnessed a rebound in February 2010, ``The figure looks impressive because of the small volumes (low-base effect) of 2009,’’ he said. He pointed out, however, that there has been good demand, mainly for diamonds and diamond-studded gold jewellery, from new markets like China and Russia. Moreover, segments like coloured gemstones, cut and polished diamonds and gold jewellery registered robust growth between 37% and 90%, he said.India is said to have the largest population of young people who aspire for diamond jewelry. Both India and China have been witnessing double-digit growth in diamond consumption, but while India has shown a growth of 16%-18%, the number for China hovers around 14%-15%.