Recession & Aftermath :

According to RBI, diamond industry in Gujarat accounts for 72 per cent of the world's processed diamonds and 80 per cent of India's diamond exports. However, with the onset of the global recession in September 2008, the Surat diamond industry was badly hit and an estimated 1250 manufacturing units shut shop. There was uncertainty everywhere. According to Govind Dholakia, Chairman, Shree Ramkrishna Export, “During the recession there was panic in the industry. Many people were sceptical about running their businesses on regular lines and incurring losses of up to 20, 25 or even 30 per cent. Playing a wait and watch game, they reduced their production. With that their business disintegrated.”

A year later, things have changed. Talking about the current economic scenario, Sanjay Shah, Vice Chairman, Gold Star India Pvt. Ltd. is very candid when he says “We have seen a lot of activities happening in India. Business has not picked up as expected. People are going out of their way in buying rough and paying unrealistic prices. In addition, they are also producing diamonds like crazy. I think it is not the right thing to do as the world is still not completely through with the recession. If this trend continues, we may see another downfall for our industry.”

Chandrakant R Sanghavi, Chairman of Sanghavi Exports International Pvt. Ltd. and the Gem & Jewellery Export Promotion Council (Gujarat Region) says, “Currently manufacturers have been doing fairly well. However, there is no certainty that businesses will do well in the long run. We have to wait and watch.”

However, some are positive about the diamond industry making a comeback to normalcy in the near future. Rohit Mehta, President, Surat Diamond Association avers, “During the peak time of recession, the Surat diamond industry was working at 40 per cent capacity with limited hours and manpower. But between June and August 2009, around 25 per cent of the closed units have reopened. It is a good sign. As of now, we are seeing a 55 per cent revival of industry. With the increasing demand for diamonds pouring in, I am expecting at least 75 percent of the diamond industry to revive after Diwali.”

Speaking on behalf of his fellow workers, Deepak Chikalia, a planner at C. Mahendra says, “Last Diwali, there was a depression in the industry. We were all thinking whether we will have work? Throughout our lives we have been working in the diamond industry. So what were we to do? By God’s grace the market has picked up in a short period. We are happy now and hope that the market will grow.”

Labour Exodus :

The diamond industry is one of the most labour-intensive industries in India. The industry employs more than an approximate 700,000 workers and an estimated 2.5 million people are indirectly associated with this sector.

During recession, while many big companies did not retrench their employees, the closure of many other manufacturing units – small, medium or big – rendered so many artisans jobless. Besides diamond workers left their jobs to take up agriculture in their native Saurashtra or turn to other industries such as embroidery, etc. However, today most of them are expected to return to the diamond industry after Diwali. This is confirmed by Suken Shah, Director, C. Mahendra Exports Ltd-. who says, “Many of the workers are returning after Diwali. We have been getting a lot of phone calls from the workers expressing their desire to come back to work here.”

While there is an urgent requirement for highly skilled workforce in the diamond industry, it would take around four to six months before the workers would return to their former profession. Rohitbhai says, “Anyone associated with the diamond industry normally would be uncomfortable working in any other industry. However, the workers employed elsewhere would like to complete their current job commitments before coming back, which is good. So by the end of this year, we expect a return of 90 per cent plus workforce.” But there are other reasons as well. Sanjay Shah says, “The artisans are waiting and watching the industry. They do not want to come back to the industry just for two or three months. They would like to have jobs that provide security in the long run. ”

Better Remuneration :

For those who remained in the industry, it became imperative to work at half or nearly one-fourth their normal wages during the three months of peak recession. However, with diamond business picking up now, workers are getting their normal pay package if not better than before the recession period.

Currently there is a shortage of workforce everywhere. Sukenbhai quotes, “If you went to each and every diamond factory in Surat, you would find notice boards offering employment prominently displayed.” This shortage could help workers generate a better income than before.

But are manufacturers ready to pay? Today the prices of rough are less than the price of polished diamonds. As the manufacturer would be earning a little more margin than before, he could afford to pay more for labour depending on his labour capacity and strength.

Talking of his remuneration

• Deepakbhai says, “Prior to the recession, I was getting Rs. 25,000. During the recession my salary was cut by 30 per cent. However, now it is okay.”

  Besides better salaries, artisans have also benefitted in terms of additional training. Most of the companies have offered the workers training in other departments as well in order to keep the workers engaged. This has also helped the workers in increasing their productivity and claim better pay.

  Post recession, there has been a demand for high valued diamonds from .3 pointers and up. In addition there has been a shift in production from quantity to quality. So this influences the worker’s salary which is given per piece based on his expertise to produce high quality diamonds.

  Decrease in Terms of Credit :

  One of the repercussions that came to light when evaluating the impact of recession on the diamond industry was the high terms of credit. The average credit period normally ranged from 180 to 270 days. During the economic slowdown, there was a situation when people had no money to repay even after a year. Now there is a change in terms of credit.

  Now people have understood that even if the credit is good, it is for a limited period of time. If the credit oversteps its period, then it can become dangerous and lead to a dampening effect on the whole industry. People have realised that if they do not receive the payment then there is no meaning of having hoards of stock in one’s cupboard. Now people have resorted to the mode of zero terms payments. Pay for the goods and take the stock. Chandrakant Sanghavi explained, “The terms of payment have been reduced only for solitaire diamonds. However, for stars and melees it is yet to happen.”