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China's Rough Diamond Deals May Impact Surat Industry

Dec 5, 2012 2:24 AM   By Dilipp S Nag
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RAPAPORT... Surat’s diamond manufacturing sector is facing increased competition from China, ‎putting a dent the Indian city’s status as a leading polishing and cutting hub.  ‎

A report by the Associated Chamber of Commerce and Industry of India (ASSOCHAM) ‎noted that there are grave concerns now that Surat-based diamond manufacturers are ‎relocating to China, a country which is constantly pushing for direct rough diamond supply deals ‎with producer countries. ‎

In November, Hong Kong-based jeweler Chow Tai Fook signed a long-term rough supply ‎deal with Russia-based miner ALROSA to supplement its supply of diamonds from De ‎Beers and Rio Tinto, among others. In addition to local Chinese manufacturing, many ‎foreign manufacturers, including those from Israel and Belgium, have established factories in ‎China. ‎

ASSOCHAM warned that the trend may significantly reduce employment opportunities in ‎Surat and called upon India’s government to take similar steps to secure a greater volume ‎of rough. ‎

‎"We have urged the government to take up the issue on an urgent basis and ensure ‎secure, reliable and adequate long-term supply of raw materials for domestic industries ‎through directly engaging with producer countries via various diplomatic channels of ‎trade agreements and others," said Bhagyesh Soneji (center in photo), the chairperson of ASSOCHAM’s ‎Gujarat Council.‎

Soneji reported that the Surat diamond sector employs about 600,000 ‎people while another 200,000 are employed in cutting and polishing units in the rest of ‎Gujarat state. The majority of the Surat units are small, with more than 90 ‎percent employing  fewer than 100 people and remainder less than 50 people, she added.

ASSOCHAM estimated that about 95 percent of global diamond supply is manufactured in India, of which around 80 percent is carried out in Gujarat. Surat accounts for a 90 percent of diamond processing activities carried out across Gujarat.

The report noted that the contribution of polished diamonds to India's total gem and jewelry exports ‎declined to about 54 percent in fiscal 2012, from approximately 64 percent in 2008. Still, ASSOCHAM forecasts that India’s polished diamond exports will exceed $39 billion by fiscal ‎‎2017, from the current level of around $23 billion, and could grow to $54 billion by ‎fiscal 2021. ‎
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Tags: ASSOCHAM, China, diamond, Diamond City, diamonds, Dilipp S Nag, gem, gems, Gujarat, India, jewellery, Jewelry, Manufactruing, polished, rough, Surat
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