The Economic Times daily newspaper is available online now.

    Will India’s diamond cutting operations shift to Israel, Belgium?

    Synopsis

    India is the world’s largest cutting and polishing centre of rough diamonds, and it is said that 14 out of every 15 rough diamonds in the world are polished here.

    diamond-
    Surat is the hub for cutting, polishing and processing rough diamonds and 85% of the diamonds are exported.
    KOLKATA: The diamond trade fears that part of the diamond cutting and polishing business may shift to Belgium and Israel in the wake of the multi-crore Nirav Modi scam that has tarnished the image of the industry among the international community. They also fear that that getting credit line from banks will become tougher which will impact their businesses.

    India is the world’s largest cutting and polishing centre of rough diamonds, and it is said that 14 out of every 15 rough diamonds in the world are polished here. Surat is the hub for cutting, polishing and processing rough diamonds and 85% of the diamonds are exported.

    “The image of the industry has suffered a setback after the scam surfaced. Few players may now shift their businesses to Belgium and Israel though we will try to see that it does not happen. We are trying to have an interaction with the finance ministry where we will put forward the current situation of the trade. We will meet the ministry in the next fortnight. By that time, we will get some clear idea about the Nirav Modi-Mehul Choksi issue,” said Praveen Shankar Pandya, past chairman, Gem & Jewellery Export Promotion Council.

    In the ’80s and ’90s, Israel was the world’s major producer of polished diamonds, and Ramat Gan in Israel was the hub for cutting and polishing of diamonds. But after 1990, India put up a stiff competition, and production of small diamonds, the bread and butter of diamond trade, shifted from Israel.

    1


    Antwerp in Belgium is a major diamond hub of the world, and around 29% of rough diamonds that come to India for cutting and polishing come through Antwerp. “Some of the diamond cutting and polishing activity may shift to Antwerp as it is the global hub for diamond,” said Vipul Shah, a diamond exporter.

    Primary deposits of rough diamonds are located in Botswana, Russia, Canada, South Africa, Australia and Tanzania whereas secondary deposits are located in Namibia, Angola, Congo, West Africa and South America.

    However, what’s disturbing the trade is the availability of credit line from banks. Senior diamond traders said banks are likely to increase collateral security while giving credit line to the trade. “It is now around 30%, which may be increased to 50%,” they said.

    Dinesh Navadiya, past president of Surat Diamond Association, said that securing bank loans for small diamond businesses may become very tough. The banks have not been very keen to give loans to small diamond units, and with the Nirav Modi scam, credit line will dry down. The government should come up with designated branches that will deal with diamond trade only.”


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in