Surat, widely considered as the diamond capital of the world, may lose its crown to China which is on its way to become a major manufacturer of cut and polished diamonds, warned a recent report by industry body Assocham.
The report titled ' Indian Gems and Jewellery Sector-2012' said that,"There are grave concerns of Surat based diamond processing units relocating to China which is constantly pushing for direct deals with African governments thereby locking up the supply of rough diamonds and severely denting employment scenario in Surat."
Jay Ruparel, co-chairperson of Assocham Gujarat Council said, "China has started having arrangements with African suppliers, and if supply of rough diamonds in constrained, then despite demand, there would be a loss of business to Surat-based units."
He added that Gujarat-based diamond units are mostly small and medium enterprises, and cannot go up to the scale of setting up shop in China.
Assocham Gujarat Council chairperson Bhagyesh Soneji alleged that China is investing in infrastructure projects in various African countries, and is in the lookout to forge direct supply deals for rough diamonds with African suppliers. "China is trying to establish control over the raw material", she said.
Surat houses nearly 4,000 diamond cutting and polishing units and employs more than 600,000 people.
"The report brings in front of us a warning signal that it is time for the government to start taking actions to ensure there is no loss of business to the country's diamond industry", Soneji said.
She added that Assocham has urged the government to take up the issue on an urgent basis and ensure secure, reliable and adequate long term supply of raw materials for domestic industries through directly engaging with producer countries via various diplomatic channels of trade agreements and others.
India can establish a barter trade system with African countries, she felt.
Gems and jewellery currently accounts for nearly 16 per cent of India's exports, she informed. Cut and polished diamonds accounted for around 54.46 per cent of gems and jewellery exports in 2011-12. Major export markets for gems and jewellery exports are the US, United Arab Emirates, and Hong Kong.