The diamond polishing capital of the world, Surat, located in western India, is facing a severe crisis that has left countless workers jobless and struggling to make ends meet. One such worker, Nikunj Tank, a dedicated diamond polisher for seven years, tragically took his own life in August after losing his job. His family has revealed that Tank’s despair stemmed from the relentless downturn in the industry, which ultimately left him without the means to support his loved ones.

A Desperate Situation

Nikunj Tank was the sole breadwinner for his family, which included his parents, wife, and young daughter. When the polishing unit where he worked was forced to close due to financial difficulties in May, he found himself unemployed and without any savings to fall back on. His father, Jayanti Tank, a retired worker, expressed the family’s heartbreak, stating, “He couldn’t find a job and unable to bear the loss, he took the extreme step.”

Sadly, Tank’s story is not an isolated incident. The diamond industry in Surat has faced significant challenges over the past few years, leading to widespread job losses and mounting despair among workers. The industry, which processes 90% of the world’s diamonds, is critical not only for Surat but also for the Indian economy as a whole.

The Diamond Industry’s Decline

Surat is home to over 5,000 diamond polishing units and employs more than 800,000 workers in this sector. However, the recent downturn has been staggering. India’s exports of cut and polished diamonds fell sharply from $23 billion in 2022 to $16 billion in 2023, with projections indicating a further drop to $12 billion in 2024. The price of polished diamonds has also plummeted by as much as 27% due to lower demand and oversupply.

Mahesh Virani, owner of Star Gems, highlighted the root of the problem, stating that “oversupply occurred because polishing units continued production despite limited demand to keep operations running, ultimately increasing their losses.” The financial squeeze has pushed many small and medium-sized polishing units to their breaking point, resulting in layoffs for thousands of workers.

Rising Unemployment and Mental Health Concerns

According to the Diamond Workers’ Union, which represents polishers, more than 30,000 workers have lost their jobs in just the past six months. The union further reported that 65 workers have died by suicide in Gujarat over the past year and a half, attributing many of these tragedies to the economic pressures stemming from the downturn in the diamond industry.

The economic landscape for diamond polishers has become increasingly grim, with a declining demand for polished diamonds exacerbated by geopolitical tensions and economic fluctuations. Factors such as the COVID-19 pandemic, the Russia-Ukraine conflict, and the ongoing crises in Gaza have all had detrimental effects on the industry. Vallabh Lakhani, chairman of Kiran Gems, remarked that “the business of polished diamonds has gone down by more than 25-30% due to global recession.”

External Factors Impacting the Industry

India’s diamond industry heavily relies on the import of rough diamonds, with approximately 30% sourced from Russian mines. These mines are now subject to Western sanctions, complicating the supply chain. In March, the European Union and G7 countries imposed new bans on importing Russian unpolished diamonds, including those processed in India.

India’s External Affairs Minister, S. Jaishankar, raised concerns about these sanctions, stating that such measures hurt those lower in the supply chain more than Russia itself. He emphasized that producers typically find alternative routes, leaving workers in India to bear the brunt of these geopolitical issues.

Traders in Surat have echoed these sentiments, noting that India operates at the lower end of the diamond value chain and is highly dependent on global markets for both raw materials and final sales. Kirti Shah, an exporter, pointed out that the country’s economic woes are exacerbated by downturns in key export markets, including the G7 nations, the UAE, and Belgium.

The Shift Towards Lab-Grown Diamonds

Another significant factor impacting the diamond industry is the rising demand for lab-grown diamonds, which are seen as a more affordable and ethical alternative to natural diamonds. The market for lab-grown diamonds has experienced a shift, with prices dropping from $300 to just $78 per carat due to overproduction. This shift further complicates the landscape for traditional diamond polishers in Surat.

The crisis has prompted action from both labor unions and local lawmakers. Kumar Kanani, a lawmaker from the governing Bharatiya Janata Party (BJP) in Gujarat, acknowledged the challenges facing the industry and stated that the police were investigating the recent suicide cases linked to job losses. He assured families that the government was prepared to provide assistance to polishers, traders, and businesses.

Limited Government Support

Despite assurances from officials, many families affected by the crisis report receiving little support from the government. At least nine families of workers who took their lives recently expressed their disappointment with the lack of assistance. The Diamond Workers’ Union has even set up a helpline to provide support, receiving over 1,600 distress calls from polishers seeking jobs or financial aid.

The majority of job losses have occurred in small and medium-sized polishing units, which are typically less resilient in the face of economic downturns. Larger companies are also feeling the pressure. Recently, Kiran Gems, one of the industry’s major players, asked its 50,000 employees to take a 10-day vacation due to the slowdown.

The Broader Economic Impact

The ongoing crisis in the diamond industry has significant implications for the wider Indian economy. The loss of jobs not only affects the families of those directly employed but also has ripple effects on local businesses and the overall economic health of the region. As workers struggle to find new employment, consumer spending may decline, further exacerbating the economic challenges facing Surat and beyond.

Moreover, the situation raises broader questions about the sustainability of the diamond industry in the face of shifting consumer preferences and geopolitical challenges. While some traders express hope for a recovery akin to that following the 2008 Great Recession, others remain skeptical.

Dilip Sojitra, a broker in Surat, noted that many are sitting idle, with little to no sales or purchases occurring. The upcoming festival season, including Diwali and Christmas, is seen by some as a potential catalyst for renewed business momentum. “This too shall pass,” Sojitra said optimistically, highlighting the resilience that has characterized the industry in the past.

The tragic story of Nikunj Tank serves as a poignant reminder of the human cost associated with economic downturns. The struggles faced by workers in Surat’s diamond industry underscore the urgent need for comprehensive support systems and strategies to address the challenges posed by both market fluctuations and global events. As the industry navigates this turbulent period, it is imperative that both government and community efforts focus on providing meaningful assistance to those affected, ensuring that workers are not left to suffer in silence as they confront these daunting challenges.

(Adapted from BBC.com)