Vallabhbhai Patel has become the largest player in the diamond industry
Like so many in the industry, Vallabhbhai Patel has a village upbringing and agricultural background. From there, to building a company in India which is the largest worldwide in cutting and polishing of diamonds, has been a journey without parallel. He has been a driving force behind the creation of the Surat Diamond Bourse. His thoughts on these topics, on lab-grown diamonds and other related matters are summarised herein.
Personal background: https://youtu.be/9lq4r-po9q4
In 1971 I started in the diamond trade in Bhavnagar. I took cutting job at a diamond workshop for 7 years. My education background was only fourth standard in school. Being from a farming background I used to go back to my village and do farming with family during the monsoon season.
In 1978 I tried a small business but suffered losses and incurred debts. At that time the support from my father strengthened me, and I could repay my debts very quickly.
Since then, by grace of God, we have had nothing but progress. The entire experience today stands as a lesson.
My group today has my four brothers and six sons of the next generation who are all in the business. Values, honesty and integrity are our cornerstones. Our company has been paying the highest tax in our industry for the past 13 years. For the last four years we have an employee strength of 50000. Our reputation in the market is solid.
My Mumbai stint and the Surat idea: https://youtu.be/4ZcX686jnoE
In 1982 I shifted from Bhavnagar to Bombay with family. My first own residence was at Borivali and a 10 year train commute taught me how people in the the working class live their lives. This experience was the core thought in mind when we, a small group of industry people, in 2015, envisaged the Surat Diamond Bourse. Cost of living and working places in Mumbai, commute and life challenges – all these make Surat a better option any day.
70% of the trade agreed and 30% were skeptical. Even my family at first was not supportive of the shift to Surat. So, I was hesitant to lead this initiative of foundation of the Diamond Bourse. Then my friends from the trade joined the discussion with my family, and my family got convinced. My company was the first to shift to Surat and that was how confidence in the idea emerged. That was when I could get people involved. Committees were formed, land search was organised. The government’s Dream City project seemed like an ideal location, and when we met the CM Anandiben Patel in 2016, we were immediately allocated land. The support from them was tremendous in this regard.
How do we look at the bourses: https://youtu.be/hqj5AlcnAfc
Kiran Gems is the largest company worldwide in the cutting and polishing segment. In India, it is the company with the largest turnover, highest manpower and the biggest taxpayer in its industry. If you talk of any competition, there cannot be any rivalry or animosity with the Bharat Diamond Bourse of Mumbai. The largest global market in the world for diamonds is USA, which has three bourses. After all we are the same industry, the same family, operating in different areas. My responsibility is to tap growth opportunities for the Surat Diamond Bourse. It does not, in any way, involve doing or thinking negative for others.
Competition from China and elsewhere: https://youtu.be/lryGtMwNSfU
There are concrete reasons behind the lack of success that China has had in this field. Manpower first is expensive there. Secondly India has quality control along with cost effectiveness in its systems for a long time now. Our reputations and relationships are excellent because we meet our commitments. Indian companies have been in the field for four decades now, and our spoken word is a legal agreement.
In the past many other countries like Russia, Israel, Belgium and many African nations which are sources of material, have tried to set up processing businesses. Even now the Botswana government is trying to get processors over there. So competition is inevitable, but I am also confident in India will definitely sustain its advantages.
If you track our growth, India started with a mastery in small diamonds. We have slowly developed mastery in big diamonds too over the past decade and left traditional centres like Russia, Israel and USA behind. Now they all specially request for Indian workmen. The same holds true for Botswana.
Focus on lab-grown diamonds: https://youtu.be/IIwlpdH5n1Q
The impact of lab-grown diamonds can be understood by an example. For many years earlier, a pack potato chips used to cost Rs.40 (1 $ was in the range of Rs.40-50 then). With local manufacturing taking off, price now is Rs.10 (when the $ rate is around Rs.80) and it has become a mass consumption item, rather than limited to a small class of people.
Same way – you will see that people who buy and wear diamonds would be 2 percent of the population. With lab-grown diamonds, now the potential is simply 100 percent of the population. This is the effect that we see lab-grown diamonds will have on the market. Their quality, display value, life is all the same as natural diamonds. Beyond this, one big virtue of the growth in lab-grown diamonds is the support to employment. A workforce of 25 lakh worldwide will systematically grow to a crore, just on the basis of lab-grown diamonds. Also they are environment-friendly, because there is no mining and disturbance to nature.
If we talk about my company, we also will get into lab-grown diamonds, and will aspire to be among the leaders, to work in tandem and to contribute to the industry like we have always done.
The last point is that, in the growth of lab-grown diamonds, for supply we will no longer depend on any other nation. Make in India will be fructified, and we have already seen that employment will also rise along with growth of lab-grown diamonds.
Government policies in general: https://youtu.be/k9QaRf7KEkY
The recent increase in gold duty to 10% has not created much reaction from the industry. It is correct that in the past, such duty increases would see rise in smuggling. But with time, the incidence of smuggling and illegal trade has certainly reduced, and deterrence has increased.
If we talk of policies, we can see that mining potential of gold and diamonds in India itself is quite huge. Government support here has to be more. Policies on mining perhaps need to be looked at in a fresh way, somewhat like population control laws.
Growth for the industry: https://youtu.be/sALFdTY5m9A
Regarding free trade agreements – Australia or UAE – we’re anyway accessing those export markets, which will keep happening. A long term view is that exports are growing, and they will continue to grow, because India has many competencies.
If we talk about lab-grown diamonds, there is much scope in the semiconductor and medical industries. China for its part is doing its best to scale up in the lab-grown diamonds space. Overall, in the next five years, there is simply so much potential in this space, that there is no worry.
If we talk of the diamond industry as a whole, our advantages are in place, growth is steady and sustainable. Cyclical ups and downs do not matter.
Beyond business – for the society: https://youtu.be/Mes7FrOkOSQ
Our group, comprising of different people active in the diamond trade as a whole, is focused on healthcare and education. I myself did not access education enough – I am aware that education in India is scarce. It is a base for the formation of a good human being. Educated people have more opportunities and have therefore less reasons for crime.
So even my first action, when I got payment, was building two rooms in my village school, which cost Rs.25,000.
If we look at the group activity as a whole, there is a school started in Bhavnagar which has 11,000 students. Be it Surat, Mumbai, Ahmedabad – we contribute in financial terms as per capacity.
On the healthcare side, this group has established a hospital in Surat which has many facilities.
The importance of this establishment in Surat, compared to places like Mumbai, is that here documentation and paperwork is in Gujarati. That doesn’t happen in the Mumbai hospitals. So this was needed. The Diamond Trade Association has a big hospital done, and another in the planning. A related medical college has also been started.