Surat-based 45-year-old Mahesh Poriya was readying his family to visit his native in Gir Somnath district before Janmasthami in August this year when he received a call from his employer— the owner of a small diamond polishing factory. The owner informed him that the factory had been shut and that he and about 30 others, working in the small unit, cutting and polishing rough diamonds were not required to return to work.

Now, Mr. Poriya helps his wife’s business of stitching sarees’ falls and sewing. “I have three children and dependent parents. We are a family of seven living in a small rented apartment. We pay almost ₹9,000 per month, while school fees for each kid is around ₹25,000 per year. I tried finding a job in other diamond factories, but in vain. I finally decided to join my wife’s business and we both are struggling to make ends meet,” he told The Hindu, explaining how the diamond industry has descended into a major crisis.

Mr. Poriya is not alone. Surat, in Gujarat, is the hub of the global diamond polishing industry and the home State of Prime Minister Narendra Modi. For the past few years, Surat’s diamond industry has been grappling with a severe downturn. This has left thousands of workers and artisans unemployed and their families in despair.

More than 50,000 workers have lost their jobs in the past eight to nine months while more than 70 people have died by suicide in the past year in Surat, unable to cope with job loss and family responsibilities. The sector has lost its sparkle amidst global geopolitical factors such as the Russia-Ukraine war and escalating tensions in West Asia.

Surat-based Diamond Workers’ Union (DWU), a group representing polishers and artisans, has been mobilising resources to support families of workers who lost their jobs. “It’s an acute crisis and unfortunately neither the government nor the industry have done anything substantial to help the workers who are in a financial emergency,” said Bhavesh Tank, the Union’s vice president.

“Job losses have led to workers committing suicides or withdrawing their children from schools because they cannot afford the fees. They are unable to bear the cost of their parent’s medical expenses. So far, despite repeated calls and prayers, the government at the state or the Centre has not extended any help,” Mr. Tank said.

He said job losses are not limited to small and medium scale factories employing between 20 and 200 people, but even large ones employing thousands have let go of people this time. “In a quiet way, some of the top factories have reduced their head counts in a few months.”

“In most factories, wages of workers have been reduced leading to a drop in incomes for families. In Gujarat, diamond factories are located in Ahmedabad, Amareli, Botad, Bhavnagar, Junagadh and other places besides Surat. The factories located outside are in a way, catering to the main centre that’s Surat. The decline in wages and job losses have had a cascading effect,” said Bharat Patel, who runs a small diamond unit in the Saurashtra region.

“In 2021, I used to earn anywhere between ₹45,000 to ₹55,000 per month and now it has come down to ₹25,000 to ₹30,000. This can also go down if the trend continues for a few more months,” said Jagdish Waghani, a 40-year-old diamond polisher in Surat.

As the crisis unfolds, many workers have turned to other jobs like selling snacks on streets or driving cabs or working odd jobs in the markets, while others have returned to agriculture at their native homes in Saurashtra.

Surat processes 90% of the world’s diamonds, employing approximately a million workers across more than 5,000 units located in and around the city. That the crisis has gripped the sector can be gauged from the official figures of India’s diamond exports that have plummeted, with cut and polished stone exports dropping from $23 billion in 2022 to $16 billion in 2023, and a further decline to $12 billion expected by the end of 2024. Also, prices for polished diamonds fell between 5% and 27% in 2023 due to lower global demand and an oversupply in the market.

“The crisis that has engulfed Surat’s diamond sector is unprecedented and nobody has any idea about when the tide will turn,” said a diamond baron, whose turnover runs into several hundred crores per year and has operations in Surat, Mumbai and Antwerp.

A worker in one of the oldest and largest diamond polishing units of Surat checking its dazzle. | Photo Credit: VIJAY SONEJI

According to experts tracking the sector, the Russia-Ukraine and Israel-Gaza wars have severely hit the supply chain of raw stones and cut and polished diamonds. Falling demand in key markets like USA, China and Europe have adversely impacted the industry and bearing the brunt of these global factors are tens of thousands of workers and artisans who work largely in the unorganised sector with hardly any social security benefits or institutional support.

The crisis began with Russia’s invasion of Ukraine and the West’s sanctions on Russia’s mineral-rich economy. Russia is one of the largest suppliers of rough diamonds in Surat. India imports a little over 30% of its rough diamonds from Russian mines, now under Western sanctions due to the war. The imported stones are brought to Surat for cutting and polishing. Then they are exported mostly to Western markets, China and Hong Kong as finished products.

Last December, U.S. President Joe Biden banned rough diamonds from Russia, a move that dealt a blow to Surat where the gemstones from Russia are cut and polished.

In March this year, the European Union and G7 countries tightened their ban on Russian origin stones and on the import of Russian polished diamonds, including those processed in Surat and sold via third countries like Hong Kong or Dubai.

As a result, for every piece of diamond or jewelry exported to the U.S. from India, the exporter must provide a certificate that the rough has not been imported from Russia. In May 2024, the U.S. had indicated that it would reconsider its ban’s strictest elements since it was hurting the industry, but no relaxation has been offered yet.

In Surat, the factory owners privately admit the enormity of the crisis but so far, except the DWU, no one like the Surat Diamond Association or the Gems and Jewellery Export Promotion Council has turned to the state or the Centre seeking help for the workers.

They say India is at the low end of the value chain of the diamond industry. The country is highly dependent on the global market, both for raw materials and for selling the finished products and therefore the G7 countries would upend India, rather than the supplier of raw material, which is Russia.

And the war in Gaza has also contributed in aggravating the crisis because the gemstones form a sizeable chunk of India’s trade with Israel.

The DWU has demanded a special welfare package for the workers and support to educate their children.

On Monday, dozens of small diamond traders in Surat were literally in tears after defaults by a diamond merchant based in Hong Kong, who operates through an office in Mumbai. The merchant failed to honour payments amounting to more than ₹55 crore.

Confirming the distressing situation, Dinesh Navadia, former Surat Diamond Association president, highlighted both Surat and Mumbai-based diamond traders are reeling under severe financial pressure due to the broader economic downturn.