How is the Ukrainian crisis taking away the shine from Surat’s diamond industry?


Located on the banks of Tapti – which follows an east-west route – Surat has been a bustling industrial city for ages. It is a hub for fabric production. And it is also the city that gives shape to more than 90% of the world’s diamonds.

Inside rows of dilapidated factories, rows of workers sit for hours slicing and polishing tiny stones – until they take the perfect shape with 58 facets.



The journey of diamonds that begins in the mines of Russia and Australia ends in these congested Surat lanes of Gujarat – from where they are sent for sale on the shopping streets of Europe, the United States and India. other parts of the world.

Surat is home to over a million workers who come from UP, Bihar and several other states to make a living by polishing diamonds.

But the streets of Surat are no longer as lively as they once were. And workers aren’t getting the amount of work they used to get more than two years ago when the pandemic hit.

The second wave of the pandemic led to an exodus of workers and a subsequent drop in production. Even as things returned to normal, an entirely different challenge emerged for the industry.

The crisis originated in distant Ukraine when Russian President Vladimir Putin decided to send his army there and, in turn, placed Moscow under heavy sanctions from the United States and its allies.

Partly owned by the Russian government, the world’s largest diamond mining company, Alrosa, has also been subject to sanctions. It represents 40% of the world supply of rough diamonds by volume and 30% by value. And Surat’s diamond industry is also heavily dependent on rough diamonds from Alrosa.

Sanctions have now forced polishers and diamond exporters to cut production due to lack of raw materials.

And, at the same time, more than 25% of workers in Surat are on annual summer vacation. The industry will see major job losses in June if it does not receive imports of Russian rough diamonds.

At present, even as production has been hit by the lack of rough diamonds, the industry has sent more than 250,000 workers on 15-day furlough until June.

Quoting one of the leading diamond dealers based in Surat, a report from Business Standard explains what could happen in the future.

The real impact of the sanctions on Alrosa will be felt in June, when production will resume after the summer holidays. This is when the real problem could arise if the shortage of rough diamonds continues. Add to that the fact that there is virtually no inventory in the industry.

The Gems and Jewelry Export Promotion Council called for intervention by the central government, especially the Ministry of Commerce. However, council deputy chairman Vipul Shah said until that happens the industry could face huge job losses in June and July.

It is not known when the war in Ukraine will end. In any case, the sanctions against Russia could last longer than the war itself. So, if no action is taken now, the shortage of Russian rough diamonds is likely to continue for months to come. In the midst of all this, there is a possible solution that the government could offer, although it has its challenges.

There is also an option that the industry can explore on its own.

Shreyans Dholakia, entrepreneur and brand custodian, Shree Ramkrishna Exports Pvt Ltd, says the polishing process for natural and lab-grown diamonds is the same, some players have already switched to lab-grown diamonds during Covid. Those who rely primarily on Russian supplies can do the same now.

However, lab-grown diamonds may not prove to be an immediate alternative if US sanctions against Alrosa continue. As the Business Standard report pointed out, it takes 6-8 months to set up a diamond cultivation lab. And, the actual production begins after almost a year.

Known for polishing 9 out of 10 diamonds in the world, Surat is home to around 6,000 diamond polishing units which employ nearly one million workers and have an annual turnover of $21-24 billion or $1.6 billion. 1.7 trillion rupees. A supply chain disruption will not only affect revenues, but will also leave thousands of workers unemployed. That good health is of great importance.

Christi C. Elwood