Surat is where the action in diamonds can be found

Dharmanandan Diamonds, established four decades ago, is among the premier players in the established Surat diamond industry with offices in three continents overall. Having seen lots of ups and downs, the company is now well placed to leverage its goodwill and presence to grow rapidly with the opportunities that the city offers. Laljibhai Patel, founder and Chairman, shares with Pankaj Joshi his views on the upcoming Surat Bourse, and how Surat will move ahead in a brief chat.

The interview was in Gujarati, and given below is a loose translation in English.

 Surat as location for a Diamond Bourse: (https://youtu.be/YZIHVg81cg8)

Surat merchants have for long been thinking about the fact that when manufacturing and processing is in Surat why should sale be localised in Mumbai.

If we were to look at the safety angle, Surat is totally safe. Massive investments have been made here in machines and technology. If sales were also to be made in Surat, it would be totally sensible from the safety angle.

Again, if a family has a member in Surat and another is stationed in Mumbai, eventually family life issues may emerge.

So, if there were to be a bourse here, you would have business and manufacturing in one location. Buyers tend to ask for a factory visit when the factory is in Surat. So again it would be much more convenient if the buyer is also in Surat.

Who have contributed to the creation of the  Surat diamond bourse?  (https://youtu.be/_ptEa_NtYNI)

The construction side aspect has been my responsibility, but other people on the committee have also been very active.

It has throughout been a cooperative effort from the industry as a whole, spearheaded by 70 prominent industry figures.

If you ask for the number of people in the industry where we have obtained consensus, that figure would be around 4,200. That is indeed the number of offices booked in the Diamond Bourse.

On the state side, the Gujarat government has allotted the plot to us of 35 acres. The location and size are exactly in line with the industry requirements. That has to be appreciated.

Surat’s advantage as a centre: (https://youtu.be/ngv_y9ZBmy8)

To understand the position of Surat, let us look at global centres like Belgium or Israel. Those places have already had manufacturing centres much earlier than Surat.

But what Surat offers is a competitive labour cost, which would be say 40% of Belgium. That is not all. Since 1965 we have had an industry engaged in cutting and polishing. That is a heritage of skills, experienced workers here have and can pass on. That cannot be replicated by a new centre, even if we think that the cost factor can be set aside.

If we look at China, firstly their costs would surely be lower than Belgium, but we can compete. And we would be much ahead on the skills front. China probably would only be in the one cleaving category, which is absolutely the lower end. There is no multiple cleaving factory in China today.

Even in India, there have been processing centres set up in many locations like say Bengal. But the entire raw material flow will be from Surat only. Therefore, at best some processes from the entire activity change can go outside. Still, Surat businesses will be in control.

Benefits of the Surat Diamond Bourse: (https://youtu.be/K85tpzMo5a0)

The entire trading, of the output that Surat manufactures, is happening in Mumbai. When that will shift here, from the workers onwards to ancillary services of food, lodging, transport and so on, all will be localised in Surat. It is likely that one lakh extra occupations and incomes will develop from this relocation.

Similarly, offices maintained in Mumbai will be rationalised. When offices shift here, the real estate sector will also benefit.

From the industry view point, just the 1-1.5 lakh crore business coming into Gujarat purview will see a massive rise in both State tax as well as return filing services. So there is clearly a case for Gujarat benefiting.

Where does Surat stand right now and where it will go: (https://youtu.be/Mz0IWnXhExg)

Surat right now gives employment to 8 lakh workers in the diamond industry. With the passage of time, another one or two lakh will naturally increase.

On the manufacturing side, the current players are capable enough to invest for their growth. With the bourse coming in, and buyers interacting with sellers in this city, if buyer need a bit of repair or customisation of gems, it will only get easier.

On the capital front, that would be a point for individual companies to consider. Today’s turnover of roughly 1.5 lakh crore can only grow, and therefore so will the investment by the existing players. One can easily estimate 5-10 thousand crore investment each year.

The perspective of lab-grown and natural diamonds (https://youtu.be/M4acjR07bmc)

Lab-grown diamonds have been around for say five years, but have picked up in the last two years. There would be at least 2-3 thousand machines in Surat itself right now. People are putting together more capacities in Surat itself.

The advent of lab-grown diamonds will only benefit Surat, both because of processing jobs and foreign exchange. The raw material for lab-grown diamonds is going to be generated in Surat itself. On the cost front, again there is nothing to worry about.