Surat diamond firm announces 10-day shutdown amid global demand slump

As many as 50,000 workers granted paid leave, with partial salary deductions

• Eastern Eye
• 07 August, 2024

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By: Eastern Eye

A MAJOR diamond manufacturing firm based in Surat announced on Tuesday (6) a 10-day “vacation” for its 50,000 employees from August 17 to 27, citing a decline in demand for polished diamonds in international markets due to the ongoing recession.

Kiran Gems, which claims to be the “world’s largest manufacturer of natural diamonds,” stated that the decision was made to adjust production in response to the economic downturn affecting the diamond industry globally.

“We have announced a 10-day vacation for our 50,000 employees. Though we will deduct some amount, all employees will be paid a salary for this period. We are forced to announce this vacation because of the recession. I am tired of this recession now,” Kiran Gems chairman Vallabhbhai Lakhani told PTI.

He underlined the short supply of rough diamonds and the lack of sufficient demand for polished diamonds exported by the company.

“Other players are also affected by this fall in demand but they are silent. We declared this proactively because we want people to know reality. This vacation for employees will help rationalise our production. No one knows the exact reasons behind this recession,” said Lakhani.

Jagdish Khunt, president of the Surat Diamond Association, echoed Lakhani’s views saying recession has hit the local diamond industry, which processes nearly 90 per cent of the world’s diamonds.

“This is the first time Kiran Gems has declared such a vacation (for employees). Though no other firm has taken such a step so far, it is the reality that recession has brought down the sale of polished diamonds,” said Khunt.

Since 95 per cent of polished diamonds are exported, global factors always affect the sale of the precious stones, he said highlighting the Russia-Ukraine war and Israel-Palestine conflict as some of the factors.

“The Russia-Ukraine war and Israel’s action in Gaza are some of the factors which might have affected the demand globally. In 2022, our diamond industry’s turnover was nearly ₹2,25,000 core (£2.11 billion), which has come down to nearly ₹1,50,000 crore (£1.41bn) today. So, we have been negative for the last two years,” said Khunt.

Approximately, 4,000 large and small diamond polishing and processing units in Surat provide direct employment to nearly 10 lakh people, he said. (PTI)