economic crisis buzzwords
economic crisis buzzwords
The tale of Indian diamonds
The tale of Indian diamonds
India
The Panna belt in Madhya Pradesh is the main diamond producing area in india. Recoverable reserves of about 1 Mcts have been estimated. An additional 265 000 carats have been classified as”submarginal reserves”. Here the National Mineral Development Corporation (NMDC) of India operates the country’s only diamond mine, Majhgawan in Panna. The mine produced 25,000 ct of good quality diamonds in 2003. The Dharwar craton has been the target for India’s diamondfierous kimberlite potential, with De Beers applying for several reconnaissance licenses for the Karnataka State as well as a 30 000 km2 area in Orissa, 30 000 km2 in Chhattisgarh and a 10 000 km2in Western Maharashtra.
Indians were the first to discover and produce diamonds since India happens to be the homeland of all historical diamonds. It was the only country known for diamonds to the entire world till another source was found in Borneo in 1728 and subsequently in Brazil and South Africa. Ancient Indian scriptures and other books like Artha Sastra, Brihat Samhita and travel accounts of Marco Polo and Tavernier have projected a glorious picture of the ancient Indian diamond Industry. India was a dreamland for merchants, sailors and kings. In popular belief India remained as the “Country of Diamonds” and was subjected to invasion, wars and plunder.
Dr. Valentine Ball in his “Manual of Geology of India” divided all Indian diamond occurrences into three groups. Of these the “Southern Group” in South India drained by the Pennar, Krishna and lower part of Godavari rivers. The “Eastern Group” lies in the valley of the Mahanadi river and its tributaries, the Mand and the Ebe with outliers in Chotanagpur (Jharkhand) and in the Chanda district of Central Provinces, the principal localities being Sambalpur, Hirakud, Sonpur, Sumelpur (Jharkhand), and Wairagarh. Lastly, the “Central Group” lies in the Bundhelkhand of the Central Provinces stretching from Panna Eastwards to Rewa and NorthEastwards towards Allahabad.
The diamond supply chain is controlled by a limited number of powerful businesses, and is also highly concentrated in a small number of locations around the world
India is the largest diamond cutting and polishing centre in the world—the industry enjoys 60 per cent value share, 82 per cent carat share and 95 per cent share of the world market in terms of number of pieces. In other words, nearly 9 out of 10 diamonds sold worldwide are cut and polished in India. India exported cut and polished diamonds worth US$ 14.18 billion in 2007-08.
From the African mines to the hands of skilled cutters and polishers in India, the diamond makes yet another crucial stop while on its mine-to-market journey. It is in Surat, (India) that the rough stone is made to reveal its brilliance.
Whether you live in the United States or Japan, if you buy a diamond ring today, there is a good chance the stone was crafted in India.
An estimated 92 percent of the world’s diamonds are cut and polished in Surat, an industrial city in western India. The cutting and polishing of these diamonds for the global market have helped create close to 500,000 jobs in the city, according to a recent Times of India report.
That is nearly half as many jobs as India’s entire information technology industry. Bangalore, the symbol of India’s knowledge economy, may be a global buzzword, but the fate of India’s rural poor depends more on industrial cities like Surat.
Many say the first diamond was discovered 4,000 years ago in the shining sands of an Indian riverbed in the Golconda region (modern-day Hyderabad). Adventurers made similar discoveries in South Africa’s dusty veldt in the 19th century.
Savvy marketing then turned diamonds a crucial symbol of middle-class courtship, a “girl’s best friend” and symbol of eternal love.
India’s ties with the gemstone have continued down through the ages.
Today, India dominates the polishing business, although the country produces no raw diamonds of its own.
It is the highly skilled yet cheap workforce that has made India one of the major players in the industry, contributing to the country’s rapid economic growth. Jewelry exports are projected to hit $20 billion next year.
India spends $10 per carat on the polishing and cutting of diamonds, against China’s $17 and South Africa’s $40 to $60. India wants to cash in on this competitive edge to maintain its position as the world’s largest diamond-cutting and -polishing center.
However, most of these diamonds currently pass through diamond-selling centers in Israel, Belgium and elsewhere before ultimately reaching India.
The Indian government has been trying to ensure a continuous flow of rough diamonds through companies like De Beers and Rio Tinto Group.
Even though there are many companies that are clients of De Beers, Indian diamond merchants cannot procure the best stones directly from rough-producing nations or even big companies like Alrosa of Russia.
Many Indian exporters are hoping to change that by actively pursuing their objective of direct procurement of rough diamonds from mining companies in Russia, Canada, Angola and Ghana. This will not only cut costs, but will help India become a diamond trading hub instead of just a manufacturing hub.
Some Indian traders fear they will be left with small stones while the bigger, better stones will be polished in the producing countries of Africa, or as is the case now, in Antwerp, Belgium, and New York.
At the same time, diamond-producing nations are no longer content with just mining the rough diamonds. They want to cut and polish them, too. African cutters may now cut into India’s profits.
Diamond industry in Surat has come under the grip of global economic slowdown owing to drastic fall in orders from the US and European countries.Global meltdown has pushed the industry in the brink of “recession” as 98% manufactured diamonds are exported to the US and European countries, a diamond industry representative said.
The Surat diamond industry is worth 800,000 million rupees and accounts for more than half of the total diamond exports from India.It employs more than 700,000 workers from across the country.Over 2.5 million people are indirectly associated with the trade.The traders say that the diamonds processed in Surat are sent to various parts of the world including the Middle East from where manufactured jewellery is then sold across the globe.The United States, one of the largest markets for diamonds and other gemstones, would import 60 per cent of diamonds manufactured in Surat. But these imports have come down by half due to deep economic crisis that America is currently reeling under“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.
Even more badly affected is the huge labor force, for which diamond polishing had provided a steady livelihood.
Vanani says that nearly 50 percent of the work force has been laid off. Estimates of the number of diamond cutters and polishers in the city vary between 400,000 to 600,000. only 200,000 workers are left in the city. The others have migrated back to their villages to work on the farms, or are trying to find work in small units outside Surat.
Global diamond industry may start recovering from the second half of 2009 as positive signals have begun to emerge from main consuming markets, especially the US. As other global markets show signs of bottoming, it is likely that prices of polished diamonds will firm up and perhaps a gradual recovery will ensue. The recovery is reasonably likely to begin in the second half of 2009, according to latest online survey conducted by International Diamond Exchange (IDEX). Global polished diamond prices dipped by 10.8% in April 2009 compared to the same month a year ago. It was the fourth month that year-on-year prices dipped for polished diamonds.
About the Author
Why doesn’t anyone talk about outsourcing anymore given the U.S. economic crisis in 2008/2009?
I remember the issue of outsourcing/offshoring being discussed lightly before/during the 2004 presidential campaign, and yet now-adays, even given the severe economic crisis in the U.S. in 2008/2009, no one seems to even mention outsourcing/offshoring anymore, why is that? even as millions of jobs disappear, it seems the media doesn’t even mention the word anymore, yet it would be obvious that outsourcing/offshoring has greatly contributed to the current economic crisis, why does the media and subsequently everybody drop buzzwords/issues and never talk about them again, even when they are a major contributor to the current situation?
The US consumer will not admit it but their failure to “buy Made in the USA’ is the main force behind outsourcing and job loss to other countries.
In the US the consumer buys cheap foreign made goods over the more expensive US made goods, this trend in the market place aids foreign economy’s and hurts the US economy. US companies to lower their labor cost and become more competitive in a globalized market. Seek that aid in the cheaper foreign workforce.
A good example is the auto industry, walk down to a busy traffic corner, and count all the foreign cars on the US highways, that is what caused the loss of the US auto industry. Even if you buy a Japanese car that is made in the US the profit of that sale goes to the Japanese economy not the US economy.
Why do you think the world has been critical of President Obama efforts to have US consumers to buy American?
We are the biggest user economy in the world. If we concentrate on improving the US economy,we cut the world out of our market!
Fixing our economy is our first obligation and responsibility to our children !
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