Cult Of The Cut

Consider this: According to official data, India’s software and service exports grew 30 per cent in 2003-04 to touch $12.50 billion. Diamond exports for the same period rose by 21 per cent, to hit $8.62 billion.

But India’s share of the global software market is still less than 1 per cent. While an incredible 11 of every 12 diamonds set in jewellery across the world come from cutting and polishing units in India.

No wonder dozens of units constructed by the Maharashtra Industrial Development Corporation in a Mumbai suburb have been snapped up by diamond jewellery exporters. Never mind that they’d been built with the IT sector in mind. (See box: Gem of a building).

THE FAMILY FACTOR
THE Indian diamond industry cuts and polishes diamonds worth Rs 40,000 crore every year. In minutes, the emperors of these business houses execute deals worth crores of rupees. They live in some of the most expensive homes in India, some are believed to own private jets.

But try hunting for names of the richest Indian diamond merchants and all the World Wide Web can offer are some news reports and some manufacturing houses. Names are hard to come by.

That’s just the way the diamond merchants prefer it. Secluded from the limelight, known only to people in the know.

‘‘Trust. It’s all about trust,’’ says Navin Mehta, chairman of the Diamond Merchants’ Association. Mehta’s words are echoed by almost everyone in the business. And it is to preserve that trust that the bulk of the industry is controlled by a single community—the Gujaratis. Further, the majority of the movers and shakers in the business are Jains from a village called Palanpur.

Business is done only with people known to the merchant or his partner, often with no written records. Employment, too, is given only to acquaintances, or people with personal recommendations. Formal training or the lack thereof makes little difference—learning is on-the-job. Liberalisation has changed little in the way the business works: Ancestors would probably be more clued into the modus operandi than new-age entrepreneurs.

But the onus placed on trust is reflected in all aspects of the business of this very expensive commodity. Security in the units sprinkled across Mumbai and Gujarat is limited to a guard at the office door and a closed circuit television system. Small traders sometimes go without the latter.

If the diamonds have to be sent from one place to the other, it’s done through a specialised indigenous courier service called the angadias. They are Gujaratis too, and can be found at all centres where any diamond work is done.

Their unique feature is that their service charge—typically a percentage of the value of the goods—includes 100 per cent insurance of the goods. No receipt is made out, there are no written records, but traders say their delivery rate is 99 per cent.

THE RICH & NOT FAMOUS
IN the last 100 years, diamond merchants have moved out of their villages in Gujarat to nearby Mumbai, or to Antwerp, Hong Kong and New York. Everywhere, they’ve made themselves at home—with Jain temples, vegetarian Gujarati food and the tendency to live in closed cocoons.

You’ll hear of them vaguely when there’s an ostentatious wedding or when expensive real estate is picked up quietly. In Mumbai’s golden triangle of Napean Sea Road, Malabar Hill and Walkeshwar, some of the most expensive residential properties are owned by diamond merchants.

Tata Housing’s Petit Towers—one of the newest residential buildings near Kemps Corner in South Mumbai—bears witness. The 24-storey building towering over nearby Victorian structures will soon be home to several diamond traders. That the apartments cost Rs 13,000-Rs 17,000 per square foot more than nearby buildings is no deterrent.

‘‘They may not be holding more than 20-25 per cent of land in these areas, but the diamond merchants make some of the biggest deals,’’ explains South Mumbai property consultant Ranvir Mehta.

But why the fetish for South Mumbai? ‘‘They are premium properties, and these people are willing to pay for it,’’ says Anuj Puri, managing director of property consulting firm Chesterton Meghraj.

Weddings—four and five-day affairs—are the only real opportunity to show off. Guest lists range between 1,000 and 3,000 people, comprising Bollywood stars, Belgium-based Palanpuris and Jewish partners from Israel. Depending on the family, even a simple, essentially homely function like the mehndi or sangeet is hosted in five-star hotels like the Taj or the President.

The most famous Palanpuri wedding remains that of Bharat Shah’s nephew and niece in Antwerp, in 2002. Over 5,000 guests attended the lavish event hosted at a specially built replica of Jaipur’s Amber Palace. The tab? $10 million. The much-talked-about Mittal wedding at the Versailles is estimated to have cost six times that—and generated many times the media coverage.

STARS IN THEIR EYES
AT the other end of the food chain is Ashraf Ahmed*, who came to Mumbai six years ago with stars in his eyes—reflections not of Bollywood’s strobelights, but from the sparkle of diamonds he only dreams of buying.

A friend from his native village in Jharkhand told Ahmed (22) about his job in a Mumbai diamond factory. ‘‘I came with him,’’ smiles Ahmed shyly, looking up from his work.

Seated on a bench, dressed only in a vest and faded jeans, Ahmed doesn’t care about the oppressive heat in the room. He can’t afford to. The full power of his concentration is focused on the machine before him, and the diamond in his hand.

The bright light from the two tubelights hanging overhead show that the rock is no bigger than a fine sugar crystal. Workers say its weight is equal to that of a strand of human hair. Holding it in place with a six-inch instrument, Ahmed places it on a small spinning machine which shapes the diamond. Ahmed’s job is to give the tiny stone the 24 faces it needs to sparkle like a diamond.

What if it slips out of his grip? ‘‘We’ll have to find it,’’ is the matter-of-fact reply. That can be daunting, given that the floor is neither carpeted nor tiled. Instead, it bears the dirt carried in by the bare feet of the 500-odd labourers at the factory in Dahisar, a western suburb of Mumbai.

From 10 am to 8 pm, they work on one of five processes that finally transform a piece of rock called a ‘rough’ into a diamond. They take home Rs 200-250 per day, depending on the number of pieces they have handled. Few get salaries.

‘‘Around 7,000-8,000 labourers cut and polish diamonds worth Rs 7 crore here daily,’’ says Harish Sojitra, one of the owners of the unit where Ahmed works. Sojitra is also secretary of the Borivali Diamond Manufacturers (Owners) Association, representing 343 factories just from Borivali to Dahisar. The units range from tiny 500-sq ft rooms to 4,000-sq ft galas.

The rough is imported from diamond mining centres Russia, Angola, Botswana, Namibia, or distribution centre Antwerp, Belgium. They are then cut and polished in Gujarat and Mumbai, and exported to the US, Japan, Belgium and Hong Kong, to be set in jewellery.

India exports 60 per cent of the total value of cut and polished diamonds in the world and around 95 per cent of the total number of diamonds in the world. In other words, 11 of every 12 diamonds set in jewellery around the globe have India connections.

While Mumbai is the stronghold of traders who import rough and export polished diamonds, Gujarat is the main hub of diamond cutting. (See box: The downside of dazzle) Around 10 lakh workers across Bhavnagar, Ahmedabad, Bhuj and Surat and parts of Mumbai keep the industry shining.

HOW THE WHEELS TURN
FOR Surat-based Ramesh Bhatia, Mumbai is like a second home. Twice a month, Bhatia visits Malad, a north-western Mumbai suburb. By 10 am, he can be found on a narrow road near Malad railway station. Flanked by motorcycles and scooters, the kilometre-long road is packed with sweaty people.

Two days a month, the 50-year-old Bhatia comes to Mumbai to look for best deals for his product. His plain brown sandals and hennaed hair don’t give any hints that he is a diamond trader. He carries no documents or briefcases, just ‘‘goods’’ neatly folded in a piece of white paper and tucked away in the upper pocket of his fading brown safari suit.

By evening, he will have walked up and down the street and conducted business to the tune of several lakh rupees. Bhatia is a small operator, buying small quantities of diamonds and selling at a small margin.

‘‘Many of these diamonds are actually ‘switched’ from factories,’’ informs 36-year-old Ramesh Shah*, a former diamond merchant. Shah says workers are known to substitute one diamond with another diamond of a lower value. The ones of higher grade are then sold in trading centres like Malad and Opera House, though factory owners deny this happens on a large scale.

THE ROAD AHEAD
FROM Jews in Israel to Belgians in Antwerp, and finally to the Palanpuris, the diamond trade has seen its share of powershifts in the last 100 years. Lately, China—with its cheap skilled labour—has emerged as a powerful contender for the next diamond hub. ‘‘Many Indians are also setting up factories in China,’’ says Sojitra, attributing it to cheap labour and lack of government red-tape.

Mining centres, too, are trying to promote diamond cutting factories within their countries, due to the industry’s capacity to absorb huge quantities of labour at little investment. ‘‘Countries like Russia are offering subsidies to businessmen to set up diamond cutting units near the mines itself,’’ says Mehta.

While on the one hand Indian diamond cutters are striving to stay competitive, others are slowly diversifying into the jewellery business. ‘‘Jewellery is where the money is, so more and more merchants are moving into it,’’ says Sanjay Kothari, chairman of the Gems and Jewellery Export Promotion Council.

Though India contributes less than four per cent of the world’s $60 billion diamond jewellery market, Kothari says that is changing fast. ‘‘Jewellery is the way of the future,’’ he says.

with inputs by Rajshri Mehta
*name changed

The downside of dazzle
In Surat sweatshops, the rough acquire the edge

MELVYN THOMAS

SURAT: VARACHHA and Katargam, in eastern Surat, are to the bauble business what the south and south-east Asian sweatshops are to Fendi and Gucci. At any given time, more than 10 lakh skilled workers are tucked into the hundreds of manufacturing units—ghantis as they are known in local parlance—that line the localities.

‘‘The workers are the backbone of the industry,’’ acknowledges Surat Diamond Association president Nanu Vanani. In Gujarat, around 95 per cent of them are from Saurashtra. Legend has it that a small group of Saurashtrians travelled to Burma in the 15th century and picked up diamond cutting and polishing skills. They came back to Gujarat to trained their family members and friends in the trade.

The supply line of workers has remained alive over the years, thanks to the repeated droughts in Saurashtra as also hordes of migrants from all over the country, particularly Orissa. Contracted to work 12-hour days, workers’ wages are decided by individual output. On an average, polishers and cutters earn Rs 5,000 a month, while assorters get Rs upwards of 10,000 in fixed wages.

Diamond assorters—the first stop for all diamonds bought by a unit—categorise stones into Round Brilliant, Emerald, Oval, Marquise, Pear, Princess, Radiant, Heart, Baguette etc, which are then marked for the cut in laser machines and readied for polishing.

‘‘Of any lot of diamonds, 40 per cent make the grade, while the rest is rejected,’’ says Vinay Patel, managing director of Varachha’s Adorn Diamonds. ‘‘The risk factor in that 40 per cent, too, is high. A great deal depends on the worker’s skills.’’

And also on the angadias. Since all the big manufacturing units have export offices in Mumbai, the 35-odd angadia firms in Surat take charge of the consignment—money and diamonds—overnight and drop it off in the metropolis the next day, industry sources say. Defaults are unheard of.

Gem of a building

THESE two buildings were to have given a boost to Maharashtra’s Information Technology sector. But, as it turns out, IT’s loss has become the gems and jewellery trade’s gain.

If you had any doubt about the exponentially rising potential of this sector, consider this: Exporters of diamond jewellery have snapped up 60 of the 72 units constructed by the Maharashtra Industrial Development Corporation in MIDC in these two buildings. This is in addition to the 80 units they already hold at the existing export zone at Seepz.

These buildings, known as Seepz++, are located conveniently close to the Chhatrapati Shivaji International Airport, Andheri (East).

‘‘But that’s not enough,’’ Sanjay Kothari, chairman of the Gems and Jewellery Promotion Council says. ‘‘The government has to give us more space and grant many more tax concessions if we are to really tap this growing market.’’ Kothari has promised a turnover of around Rs 100 crore by year-end.

Constructed at a cost of Rs 56 crore, the one-storey state-of-the-art complex spread over 50,000 sq m was recently inaugurated by Chief Minister Sushilkumar Shinde. Five hundred people are currently employed in the centrally airconditioned and heavily guarded complex.

More are expected to walk in now.