The business landscape of India’s diamond city Surat is on the verge of a giant leap, led by the giant Surat Diamond Exchange and a new international airport. Surat, which already has an unusually vibrant commercial activity, is gearing up to scale greater heights globally with its diamond prowess.
On December 17, Indian Prime Minister Narendra Modi inaugurated the Surat Airport in Gujarat, which officially received the status of an “international airport”. This development marks the third international airport in Gujarat after Ahmedabad and Rajkot and holds huge potential for the development of India’s famous diamond industry.
diamond industry in india
India is the world’s largest exporter of diamonds, largely due to its near-monopoly in the trade of cut and polished diamonds. More than 90% of the world’s diamonds are processed in India.
In fiscal year 2022, India’s cut diamond exports were worth US$24.43 billion, with the main destinations being the United States, Europe and the United Arab Emirates. The share of lab-grown diamonds in these exports is also growing as members of the industry diversify through the use of advanced technologies.
India is far ahead of other exporting countries in buying, cutting and polishing diamonds. Home to hundreds of thousands of highly skilled craftsmen, they are the envy of the global diamond industry. The diamond processing industry directly employs more than 1 million people and indirectly supports another 5 million people.
The war in Ukraine, G7 sanctions on Russian rough diamonds and additional inflationary pressures have temporarily affected the industry, but its international relevance remains vital. This is why investors and traders are bullish on the Surat Diamond Exchange. Revenues from the cutting and polishing market alone are expected to reach $25.25 billion by 2030.
A Diamond Dealer’s Dream
India has made a significant mark in the global diamond industry, a feat largely attributed to the cutting and polishing industry cultivated in Surat. The next step for the region is to gain status as a global center for the diamond trade. This is Surat, the city of dreams, home to the Surat Diamond Exchange, the largest office building in the world. Coupled with direct international flights to Surat, this commercial complex will bring buyers and sellers under one roof in Surat.
Surat Airport’s elevation to international status is expected to ease import and export procedures for its booming diamond industry. The move is expected to not only stimulate economic growth but also attract foreign investment and strengthen diplomatic ties.
As the famous diamond city of India, Surat plays a vital role in 90% of the world’s diamond processing through its 6,000 units dedicated to cutting and polishing rough diamonds.
So far, Mumbai’s Bharat Diamond Bourse (BDB) handles most of the trading. A considerable portion of the diamonds from Surat also land here and are exported to various parts of the world. The complex covers an area of 20 acres and can accommodate approximately 2,500 diamond traders, large and small. The upcoming office space in Surat is spread over 35.54 acres and will accommodate around 4,500 offices, a significant increase over BDB. This marks a strategic move to enhance India’s position in the global diamond business.
India takes its rightful place
Although India maintains an edge in diamond processing thanks to low labor costs, skilled workmanship and several other factors, it faces competition from large trading hubs in Belgium, China, Israel and other countries.
In India, the diamond processing industry adds huge value and requires sourcing diamonds from international exchanges such as Belgium or Israel. These diamonds are then processed in India and then exported to these international exchanges for sale to end customers.
Historically, major diamond exporting countries such as Israel and Belgium have benefited from the developed world-class diamond trading centers – the Israel Diamond Exchange (IDE) and the Antwerp World Diamond Center (AWDC). The centers were established in 1937 and 1973 respectively and attract thousands of visitors each year. Recognizing the importance of a dedicated diamond trading center, China opened the Shanghai Diamond Exchange in 2000 to enhance diamond trade.
The development of a vibrant diamond trading hub in India will bring buyers and sellers closer together on a unified platform. This centralization can streamline the diamond trading process, making it more efficient and cost-effective for all relevant stakeholders, and increase the value of India’s diamond exports to where they deserve to be.
Indian diamond traders and artisans have also demonstrated impeccable command of the cutting and polishing of small diamonds below one carat. With knowledge passed down from generation to generation, Indian artisans are the aces in this industry. The industry is driven by close-knit families and communities mainly from Gujarat. The business acumen of these families is very keen, and it is said that Indians control 3/4 or about 75% of the diamond trade in Antwerp, Belgium. Antwerp is the leading diamond trading center and most of the world’s largest diamonds are shipped here. These Indian traders were supported by Indian brothers who processed diamonds for them.
India does not have a large diamond mining operation and sources its diamonds from major diamond producers in Russia, Canada and Africa. However, the diamond industry here has not lost its technological hacks as more and more people are embracing lab-grown diamonds and its advent has disrupted much of the market. India’s share of lab-grown diamonds will reach $1.5 billion by 2023 and is expanding.
The Indian government recognizes the huge boost that the diamond trading community brings to the country’s economy and has provided tremendous support to the industry. The Surat mega project, backed by investments from the vibrant state of Gujarat, international airport operations and the Prime Minister’s personal drive for the industry, will drive a dynamic industry that is ready to take on new roles and challenges. Whether there will be further tax cuts remains to be seen, but what is certain is that India’s diamond industry will improve with the recent infrastructure boom.
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