Re fall hurts Surat diamond industry

Besides the rupee freefall causing jitters at the country’s stock markets, export-dependent industries such as the diamond units are rapidly going without work. So there is no surprise to hear a prayer for faster recovery of the rupee from India’s diamond city of Surat where the shining carbon is the lifeblood.

For Rajeshbhai, one of several workers in the city’s diamond units, the feeling is all too familiar. The falling rupee may have put him out of work now, but thousands like him were left jobless in the global meltdown of 2008.

In what seems like the repeat of five years ago, more than a thousand units have closed down in Surat, rendering workers jobless. More than 2.5 lakh workers are believed to have lost their jobs.

Diamond merchant Dhirubhai Gajera admitted that the falling rupee has sent the cost of rough diamond through the roof.

“Usually small merchants buy diamonds in dollar rates with a window period of 120 days to pay back the money,” he said. The rupee’s sharp fall has made it expensive for merchants in the current context. 

“The problem is that they cannot hold the products for long as small unit owners do not have that kind of liquidity,” he said.

The economic woes of United States, a significant market for finished diamonds, have only compounded the problems of the units here.

“Earlier about 60 per cent of the diamonds used to be bought by the US but they are not even buying half of that volume,” Gajera added.

Surat Diamond Association President Dinesh Navadia said lack of support from banks and financial institutions is also hurting the industry.

“With no support forthcoming, several small units are closing down,” he said.