Surat, located in Gujarat, is renowned as India's Diamond City due to its pivotal role in processing a vast majority of the world's diamonds. Approximately 90% of the diamonds purchased globally are cut and polished in Surat. The city boasts over 6,000 units dedicated to handling rough diamonds sourced worldwide.
The diamond industry significantly contributes to Surat's economy, employing more than a million craftsmen and workers. The annual revenue from this sector is estimated to be around ₹1.6 trillion or more. In the financial year 2022-23, India's gem and jewellery exports reached approximately ₹1.76 trillion, with cut and polished diamonds accounting for about 65% of this value.
Geopolitics also plays a crucial role in the diamond industry. India relies on Russia for nearly 35% of its rough diamonds. However, the ongoing geopolitical tensions have led to restrictions on diamonds produced or processed in Russia, resulting in a lower availability of these cheaper rough diamonds, which impacts Indian players in the market.
Currently, the diamond industry in Surat is facing a severe crisis. Various factors have contributed to this situation, leading to job losses and diminished earnings for workers. Reports of suicides among industry workers have underscored the gravity of the issue. The slowdown in demand, particularly from the US, Europe, and China, along with intensified competition from lab-grown diamonds, has exacerbated the crisis.
The rising popularity of lab-grown diamonds is significantly affecting the natural diamond market. These diamonds, produced through scientific methods, are becoming favored due to their affordability and comparable quality to natural diamonds. With India producing around three million lab-grown diamonds annually, the distinction between lab-grown and natural diamonds is increasingly challenging.
Several elements contribute to the current crisis in the diamond industry. A decline in consumer demand in key markets such as the US and Europe, rising interest rates, and a slowdown in China's economy have led to weakened consumer sentiment. Moreover, the global demand for diamonds has dropped by nearly 30% over the last three months, further challenging the industry's future prospects.
Q1. Why is Surat referred to as the Diamond City of India?
Answer: Surat is known as the Diamond City because it processes about 90% of the world's diamonds, with over 6,000 units dedicated to cutting and polishing them.
Q2. What is the economic significance of Surat's diamond industry?
Answer: The diamond industry in Surat employs over a million people and generates around ₹1.6 trillion annually, making it a vital part of India's economy.
Q3. How are geopolitical issues affecting the diamond market?
Answer: Geopolitical tensions, especially with Russia, have led to restrictions on diamond imports, reducing the availability of cheaper rough diamonds for Indian processing.
Q4. What challenges does the diamond industry face currently?
Answer: The industry faces challenges such as job losses, reduced earnings, and declining demand due to economic slowdowns in major markets like the US and Europe.
Q5. How do lab-grown diamonds influence natural diamond sales?
Answer: Lab-grown diamonds are gaining popularity due to their lower prices and quality akin to natural diamonds, affecting demand for natural stones in the market.
Question 1: What percentage of diamonds purchased globally are processed in Surat?
A) 50%
B) 70%
C) 90%
D) 100%
Correct Answer: C
Question 2: What is the estimated annual revenue of Surat's diamond industry?
A) ₹1 trillion
B) ₹1.6 trillion
C) ₹2 trillion
D) ₹3 trillion
Correct Answer: B
Question 3: Which country supplies nearly 35% of India’s rough diamonds?
A) Brazil
B) South Africa
C) Russia
D) Australia
Correct Answer: C
Question 4: What impact do lab-grown diamonds have on the natural diamond market?
A) Increase in prices
B) Decrease in demand
C) Increase in production costs
D) No impact
Correct Answer: B
Question 5: What has been the recent trend in global diamond demand?
A) Increased by 10%
B) Decreased by 30%
C) Remained stable
D) Increased by 50%
Correct Answer: B
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