Decades-old diamond industry in India’s Surat faces an uncertain future

SURAT, INDIA: In a narrow street made even narrower by rows of parked motorbikes, businessmen sitting cross-legged on the pavements or perched on the motorbikes conduct business with their clients. The tools of their trade are basic—velvet-lined trays, tweezers and magnifying glasses. Their wares, however, are anything but.

These men in Surat, a city in the western Indian state of Gujarat, trade in diamonds, carrying the precious stones wrapped in small squares of coloured paper in their shirt pockets. The casual nature of the operation belies its complexity. Both sellers and buyers are seasoned businesspeople who can quickly appraise even the smallest of diamonds. Deals worth thousands of dollars are sealed over cups of tea ordered from street vendors.

There is an unwritten code of honour among these traders, and a slip of paper noting the transaction suffices for credit. No one is a complete stranger here, and reputations are built or broken over time. The most trustworthy buyers have access to generous lines of credit.

The increasing popularity of lab-grown, cheaper diamonds and the banning of diamonds originating from Russia by the European Union and G7 countries have adversely affected the industry. However, the biggest recent threat comes from US President Donald Trump’s 10% tariffs on imports, including diamonds. A proposed 27% tariff on Indian exports to the United States has been delayed for 90 days while the Trump administration negotiates trade deals. Yet even the 10% cut in profits is having an impact.

Four out of five of the world’s diamonds are cut and polished in Surat, where generations have known no other skill or trade. Behind the grimy facades of several market buildings lie luxurious workshops equipped with sophisticated technology to design and cut raw diamonds arriving from Australia, Canada, Russia and parts of Africa.

Only a small percentage of Surat’s output is absorbed by Indian consumers. The remainder is exported to the US, the United Arab Emirates, Hong Kong, Belgium and other countries. The US has no diamond mines, but two of the three main institutes for grading gems are located there, and diamonds cross multiple borders before they are finally sold in their finished form.

The United States accounted for about 30% of India's gem and jewellery exports in 2023–24, with roughly half of that comprising cut and polished diamonds. The future of this trade now depends on Trump’s decision regarding tariffs.

"If the proposed tariffs are implemented, we may lose about half of our export revenue. We won’t be price-competitive anymore," said Jigar Patel, treasurer of the Jewellers Association Ahmedabad, based in Gujarat’s main city.

By RSS/AP