The temporary shutdown is aimed at reducing inventory levels as the industry grapples with reduced demand from major markets like China and the United States.
Challenges in Key Markets
The slowdown in the diamond industry has been attributed to changing consumer behaviours in China and the US, two of the largest markets for diamonds. Since the COVID-19 pandemic, China has shifted its focus toward purchasing gold, leading to a significant drop in diamond demand. Meanwhile, the US market has seen a decline in the appetite for natural diamonds, further exacerbating the challenges faced by the industry.
Impact on the Industry
The decision to halt operations in Surat comes as part of a broader strategy to manage inventory and stabilize the market. However, the situation is more dire for smaller cutting and polishing units across Gujarat. Approximately 500 of these smaller units have already closed their doors, resulting in the loss of 70,000 to 75,000 jobs, according to labour union sources. These smaller units primarily supplied their products to larger exporters in Surat and Mumbai, who then shipped them to international markets.
The temporary closure of the Surat factories highlights the ongoing struggles faced by the diamond industry in India. As global demand continues to fluctuate, the industry must navigate a complex landscape, balancing inventory management with the need to maintain employment and support the livelihoods of thousands of workers.
Looking Ahead
The 10-day shutdown in Surat is seen as a necessary step to align supply with the current market demand, but it also underscores the need for the industry to adapt to changing consumer preferences and global economic conditions. With key markets like China and the US showing no immediate signs of recovery, the diamond industry in India may face continued challenges in the months ahead. The focus will likely shift to exploring new markets and diversifying product offerings to mitigate the impact of these disruptions.
As the industry navigates these challenges, the resilience and adaptability of India's diamond sector will be crucial in determining its future trajectory.
