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Are we ready for two bourses?
Diamond Industry in a Dilemma: BDB or SDB?
By: Diamond World News Service
Aug 21 2019 10:59AM
Reference: 22412  

Nearly Rs 3000 crores has been pumped into the much talked about Surat Diamond Bourse (SDB), which will be the world’s single largest complex spread across 66 lakh sq-ft. The bourse, which is said to be completed by 2020, is supposed to be home to 11 towers with 4500 offices of top line diamond companies in diamond business. That’s not all – the bourse will supposedly have deposit vaults, a museum, custom office, diamond club, money transfer desk and housing for all those who are employed and more importantly, it is said to provide over 1.5 lakh jobs. Optimism has been the cornerstone of this industry, which is one of the reasons why nothing shakes this sector quite easily. However, the emergence of SDB has raised quite a few eyebrows, sending them into bewilderment, of whether a second diamond bourse is really necessary given the current scenario. Job cuts are rife. Banks are not showing any signs of supporting the industry. There are cut backs everywhere. Rough prices are becoming dearer while end consumers are not interested in heavy pieces dripping with diamonds anymore. What with all these problems, is it really prudent then to put in so much money on a second bourse, when we have a perfectly functioning one in the country’s financial capital? Vijetha Rangabashyam & Sanjana Parikh analyse

As the project is well underway now and the completion is expected sometime next year, it is certainly trouble in paradise. The possibility that majority of the companies will move to Surat considering their cutting and polishing units are already there was always present, but now it has gotten stronger. Though we don’t know for sure which of the companies and how many of them will make the switch, many of them have already bought offices at SDB. Those who have lobbied for the Mumbai bourse are wondering what this could leave them with.

An Ill Conceived Decision?
Many manufacturers believe that this project should not have happened. The diamond industry has spent billions of dollars to create BDB and now more money has gone into creating SDB and the capital resources could have been channeled into other areas where needed. It could have little impact on the business but considering people moved to Mumbai in search of a better life could be left hanging in midair if the companies decided to make a complete switch. “The property prices from Rs 80,000 has come down to Rs 30,000, imagine the capital loss that people are going through. It will not go on rent. Right now you get Rs 400 per square foot, imagine if the place is half empty, who will rent the space?” asks Shirish Poonglia of Concorde International, who moved to Mumbai from Jaipur 30 years ago. The industry is certainly divided on the creation of another bourse and the common belief is that those who conceived this idea did not think things through. “People who are born and brought up in Mumbai are not really ready to move to Surat. I don’t think they will be able to sacrifice their lifestyle and shift there. Diamond market is gradually decreasing everyday due to liquidity, rough prices etc,” said Senil Shah of Padmavati Exports.

If the bourse in Surat picks up, there will be a complete role reversal, where people from Mumbai may have to travel to Surat on a daily basis or for 2-3 days to conduct business. Even those who have a strong base in Surat could be affected by this as a part of the family lives in Mumbai. “It was not at all necessary and I don’t know why this idea was brought up. Everything was going smoothly here,” says Kerul Parikh of AJ Mehta & Co. The diamond industry in India is filled with lobbyists – the Palanpuri and the Kathiawadi lobbies. BDB is dominated by the Palanpuri folks and some believe that to one up them, the opposing lobby has started the project in Surat. “The entire industry is not supporting it. Because of the ego of 4-5 big houses, the project is coming up and it was not needed at all. Imagine, we don’t have capital to work, we borrow from banks and they are making us put money in infrastructure which is not going to be used. The SDB will lie half empty there and BDB will lie half empty,” added Poonglia.

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