Diamond industry in Surat has come under the grip of global economic slowdown owing to drastic fall in orders from European countries and the United States. Global meltdown has pushed the industry in the brink of 'recession' as 98 per cent manufactured diamonds are exported to the US and European countries, diamond industry officials said.
"We have not received orders this time as we used to during Christmas. This unprecedented slack in demand has forced us to shut our units and go for 40 days vacation," chairman of Gems and Jewellery Export Council and president of Gujarat Hira (diamond) Bourse, Chandrakant Sanghavi, said.
The US and the European countries are the two largest markets for cut and polished diamonds from India.
According to Sanghavi, the demand for diamonds peaks during Christmas as people in the US and European countries buy jewellery during this season. However, this time even existing orders have been cancelled owing to recession in the economies.
"US accounts for around 60 per cent of total export of manufactured diamonds. However, due to slowdown in the market there, demand was reduced to almost half last year and the decline continues further," former president of Surat Diamond Association, Pravin Nanavaty, said.
He added that there is no sign of recovery or improvement in the market as US economy continues to remain in turmoil and there is no alternative to the US market.
A diamond trader Chunibhai Gajera said that situation in the coming months may be worst than what it is today.
"We fear that there is going to be delay in payments from the US after Christmas because of severe fall in retail demand. So, delay in payments would lead us to further trouble," Gajera said.
He said that all units of Laxmi Diamonds, which is owned by Gajera, are presently shut for 40 days vacation.
Laxmi Diamonds' annual turnover is over Rs 2,000 crore (Rs 20 billion).
Gajera added that recovery is possible now in 2010 only as 2009 will continue to be tough for the industry.
"Impact of global turmoil in economy is very severe on diamond industry because it is mostly an export-based industry and depends entirely on US and European countries," said Nanu Vanani, former President of Diamond Association.