Colin Shah, vice-chairman, Gem & Jewellery Export Promotion Council, recently, shared his concerns and shared how the diamond trade in Surat could potentially lose one lakh jobs in the next two quarters due to the increase in duty, lack of ease of doing business and the liquidity crunch.
He said, "A lot of diamonds which used to come to India for recutting are now being shipped to China and Thailand."
On 26th September, the government had increased the import duty on cut and polished diamonds to 7.5 percent from 5 percent. This was done to increase import duty on non-essential items to narrow down the current account deficit (CAD).
While around five lakh people are engaged in diamond trade in the country, currently, (as per industry estimates), nearly one in five people engaged in India’s diamond industry may become jobless in the next six months.
Colin shared that the cutting and polishing units at Surat have already advanced their Diwali break by a fortnight to maintain profitability and the industry does not have adequate finances to sustain the business.
He said, "There is no respite from the liquidity crunch as collateral norms and rating norms have become harder. The ease of doing business, compared to our competing centres, is simply not there."
Not only the increased import duty but falling sales is also negatively impacting the entire industry. Colin mentioned that the flood in Kerala, fewer marriage dates and overall muted market sentiment have affected offtake of diamonds in the country in the first half of 2018-19.
As jobs of lakhs of diamond workers remain at stake, how will the government look to safeguard them and absorb them in other jobs is to look forward to.