US sanctions on Russian diamond producers make ‘life miserable’ for Surat polishers
US sanctions imposed on Russian diamond producer Alrosa, after the Russo-Ukrainian war, led to a crisis in the diamond industry in Surat where polishing units had to reduce their working hours, leading to a sharp drop in wages polishers. , some of whom have taken out loans to manage their households.
At least 30% of the diamonds cut in Surat come from Alrosa, resulting in a shortage of rough diamond resources. Furthermore, diamond factory owners The Indian Express spoke to said that the United States, which is a huge market for diamonds, has made it mandatory for diamond manufacturers to certify that rough diamonds are not from Russia.
Surat has more than 4,000 small and large diamond polishing units employing almost five lakh workers, who used to work ten hours a day or seven days a week, and now work eight hours, five days a week, since the sanctions were imposed a month ago. Diamond workers are paid based on the rough diamonds they polish in a day.
A diamond factory owner from Surat, Bhupat Virani, who employs about 1,000 diamond polishers in his factory, said: “Globally, Surat city is also known as a diamond cutting and polishing center. of diamonds, because out of 10 polished diamonds found in the world, eight are cut and polished here. Rough diamonds enter Surat and Mumbai through different routes. The majority of them are done through the registered view holders of DTC (Diamond Trading Corporation). No less than 10% of diamond merchants source their supplies directly from Alrosa, Dubai or Africa, while the remaining 90% depend on these merchants. Polished diamonds are embedded in jewelry and then exported to USA, UK, Gulf countries, etc., while some diamond factories also export loose polished diamonds to USA, UK, Hong Kong and others.
Chairman of the Gujarat Gemstone and Jewelery Export Promotion Council (GJEPC), Dinesh Navadia, said: “Over 30-35% of the rough diamonds imported from Alrosa come directly to the Indian market in Surat and Mumbai to be cut and polished. Also, Alrosa exports rough diamonds to other countries of the world which eventually come to Surat for polishing through different routes. This created a raw material vacuum within the industry. DTC in Antwerp also buys diamonds from mines around the world and sells rough diamonds to their Indian view holders and others. Due to a supply shortage, many factory owners cut production and reduced the working hours of diamond polishers and retained two days of vacation per week.
The industry had barely recovered from Covid and achieved a 29.85% growth in cut and polished diamond exports in 2021-22. However, its growth is likely to be negatively impacted again.
The Surat unit of the Diamond Workers Union Gujarat had sent a memorandum on May 4 to the Chief Minister of Gujarat, Bhupendra Patel, requesting financial assistance to be given to diamond workers. In the memorandum, the association had stated that there were more than 20 lakh diamond workers working in the operating diamond factories in Surat, Navsari, Ahmedabad, Bhavnagar, Botad and Bhavnagar in Gujarat.
The memorandum had stated: “Units with more than 20 workers should register their factories and obtain a license in accordance with the standards of the Factories Act. 1948. The majority of factory owners did not register under the Factories Act. Workers working in the units enjoy benefits covered by the rules of the Factories Act. Diamond polishers are excluded from government benefits because their factories are not registered.
They also demanded that business taxes levied by civic organizations in Ahmedabad and Surat be scrapped and that the salaries of diamond polishers during the lockdown period be paid. The union has demanded a “financial package of Rs 1,000 crore for diamond polishers”.
“The government should form a Ratnakalakar Kalyan Board of Trustees, for the sake of diamond polishers and their families, as well as for the families of diamond polishers who committed suicide due to financial crises,” the memorandum said. at the office of the Chief Minister.
Russia began the invasion of Ukraine from February 24, 2022, and the United States imposed sanctions on several products exported from Russia around mid-April.
A diamond factory owner from Surat, which has 300 employees, says there were many traders in rough diamonds who, “taking advantage of the situation, raised the prices of rough diamonds”.
“Those who are in good financial health can survive. Rough diamonds from the Russian company Alrosa were mainly used by owners of small and medium-sized factories in Surat because their caratage was lower. In the face of such a difficult time, we and others maintained two days of vacation at factories and reduced the working hours of diamond polishers.
This factory owner said: “Due to the sanctions, companies involved in exports of diamond jewelry and exporters of polished diamonds from India, mainly in Surat and Mumbai, must mention in the invoices that the diamonds do not come from Russian mines. Payment in the diamond trade worldwide is in dollars. Those who cheat can be easily tracked and identified.
Diamond polisher Deep Limbachiya (32), a resident of Varachha and originally from Bhavnagar, has been polishing and cutting diamonds for a living for ten years. He has worked for five years in a factory with 500 employees. Limbachiya said, “We cut low-carat, small-sized diamonds that come from Russian mines. Diamonds from African, Canadian and Australian mines are of different color, shape, size and clarity. Due to the shortage of supplies, the owners of the factory have, from the last week of April, reduced working hours and maintained two days of vacation on Saturday and Sunday.
He added: “Our salaries depend on the number of diamonds we are working on, so with less time, we do not receive a sufficient number of diamonds, which has a direct impact on our salary. My average salary is between Rs 18,000 and Rs 20,000 per month. With short working hours and two days vacation, I get between Rs 13,000 and Rs 15,000 per month and out of this amount we have to pay the house rent, lighting bills, maintenance costs of the apartment and bear the expenses for the education of my children.
He added, “I took a loan of Rs 10,000 on May 1 and assured him that I will repay it with interest after a few months. We are concerned about the education of my daughters. Among them, one has presented for his class 4 exams and another for his class 3 exams. I have not yet paid the fees for the next academic session. We cannot ask for money from my parents who are farmers in my native region because they are also facing financial problems. Due to the war, the lives of diamond polishers have become miserable. We have also complained about reduced working hours and two days off to the union and they are also fighting with the factory owners.
Surat Chairman of the Diamond Workers Union (a state-wide diamond polishing body), Bhavesh Tank, said: “The majority of diamond factories are not covered by the Factory Act, from so that diamond polishers do not enjoy any benefits. These diamond factory owners earn a lot when the markets boom and meanwhile they take care of the polishers by giving them snacks and tea twice a day at the workplace just to make the polishers work longer. Now, in such critical condition, they are not helping polishers who are facing financial constraints.
According to provisional statistical data from GJEPC, an organization set up by the Indian Ministry of Commerce and Industry to promote gemstones and jewellery, there was a rise of 29.85% (36.81% in Indian rupees) in cut and polished diamond exports during the period from April 2021 to March 2022 amounting to US$24,236.57 million (Rs 1,80,618.06 crore) compared to US$18,664.88 million US dollars (Rs 1,32,017.80 crore) for the same period of April 2019 to March 2020.
Apart from this, the figures further show a growth of 45.35% in imports of rough diamonds between April 2021 and March 2022 amounting to Rs 18,933.15 million US dollars (Rs 1,41,235.17 crore) (1 662.46 lakh carat) against 13,026 million US Dollars (Rs 92,168.81 crore) (1,514.70 lakh carat) between April 2019 and March 2020.
Surat Diamond and Jewelery Manufacturer Association President Nilesh Bodki says nearly 30% of international orders for diamond jewelry have been canceled and the price of polished diamonds has “increased by 15% in the local market” .
“Some players are taking advantage of the current situation and have raised polished prices for financial gain. diamond used in jewelry is not of Russian origin, unlike countries such as China, Hong Kong and the Gulf countries, which do not impose this condition.