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.