On The Ground At Surat Diamond Bourse: How It's Shaping The Sparkle Of India’s Diamond Trade

Infrastructure in Gujarat’s cities, be it Ahmedabad, Gandhinagar, or Surat, has always been admirable. It reflects a thoughtful combination of aesthetics and functionality to serve residential, commercial, and industrial needs, thus fostering the state’s economic growth.

Following this trend is the recently opened Surat Diamond Bourse (SDB). It has been developed to support Surat’s billion-dollar diamond industry and to make a significant mark on the global diamond trade.

On 17 December 2023, the SDB was inaugurated by Prime Minister Narendra Modi. Built to be the largest office complex in the world, it aims to provide a concentrated diamond hub, having all resources for rough and polished diamonds, certification laboratories, retail outlets, and more.

The bourse spans 66 lakh square feet, featuring 4,717 offices ranging from 28 square metres (sq m) to over 10,500 sq m. It can accommodate 67,000 diamond professionals under one roof.

Although a major advancement for the diamond industry, the diamond bourse has been in the news for the challenges faced in convincing traders to relocate and to have the bourse established as the central hub for diamond trade.

Breaking this stalemate, recent developments saw around 250 diamond merchants from Surat and Mumbai open their trading offices there on 7 July, on the occasion of Ashadi Beej.

The shift marks a new phase of progress for the diamond trading industry, surpassing the current trading practices in the city, while also supporting the Centre’s efforts to grow the diamond market.

This is also in line with the vision outlined in Bharatiya Janata Party's (BJP's) 2024 manifesto for establishing India as the largest producer of lab-grown diamonds.

Diamond Trading On Surat Streets

The narrow lanes of Mahidharpura, Surat’s biggest diamond bazaar, dramatically transitions from stillness to bustle by noon, as hundreds of pedestrians and motorcyclists start streaming in.

Within 30 minutes, the vicinity around a single junction in Mahidharpura becomes packed; traders spill out on to the streets while engaging in dealings of precious diamonds.

An entirely male-dominated market, these traders are easily identifiable — by the diamond glasses hanging around their necks, most of them taking out precious stones wrapped in white papers, which are tucked onto the insides of their undershirts.

“This crowd includes manufacturers, dealers, brokers, and buyers from other markets, all of whom are crucial for this diamond trade,” says Girdhar bhai, who runs a manufacturing unit in Katargam and has been dealing in polished diamond products for the last 17 years.  

Seated at his designated gaddi (a seat) in a shared hall, he tells Swarajya, “This is the oldest diamond market of Surat, which began in 1960s. Diamonds from here reach every corner of the world. We have clients in Hong Kong, the US, Russia, Australia.”

He continues, “I am a manufacturer. I check on my labour to start the polishing work in our karkhana (facility) in the morning, and then I reach here by noon, when trading begins.”

“Traders here have taken spaces, as per their capacity. Some sit in cabins, some with tables in open halls, and others on gaddis like this,” adds Kishore bhai Bawariya.

“This industry operates on trusted networks. When a buyer puts a demand of specific quality of diamonds, the bigger traders release the information to the brokers. The brokers share it with the manufacturers. Then later, after fixing on the prices, the business is done. This is a generational business, all brokers, traders tightly know each other and the trading happens only through this chain,” he tells Swarajya.

On the opening of the Surat Diamond Bourse, Kishore bhai says, “The bourse is going to bring growth in business. But not much has happened there till now. As you see, so many people are involved. It will take some time to begin proper operations. Sabko jaana to hai vaha. Vo dhanda badaane ke liye hi to bana hai. (Everyone will have to go there. It has been made to increase our business.)"

Diamond Bourse Not Shining Yet

For over six decades, the diamond polishing and trading industry in Surat has worked in the way it does in Mahidharpura. It involves nearly 800,000 individuals and contributes nearly Rs 3 lakh crore to India’s gems and jewellery industry.

“Many people are not shifting because they are waiting for others to shift. Like I said, everybody’s work is interconnected here for years. Assume that everyone is waiting for each other. If one goes, all will go," Kishore bhai adds.

However, the reasons for not moving also includes overhead costs, as well as logistical and cultural concerns.

The diamond industry includes mostly the Kathiyawadi community, which is involved in manufacturing. The community is largely settled in nearby Varachha, Kapodara, and Katargam areas.

“All our homes are near this market for years. It is easy for us to commute. The diamond bourse is another 15 kilometres (km) from here. Travelling there will be a problem till the time the metro is not operational. How will one get there with diamonds by riding a motorcycle? It is not worth to go this far for a small business. If there's no business one day, we will have to bear the loss," adds Girdhar bhai.

Further, as the market has developed its own culture over decades, including organic trading even on the streets, the new building provides only closed offices, which, for many, introduces a new nature of trading and working. It is also expensive compared to the low overhead costs in the existing shared spaces.

A young trader from Mumbai, who has moved to Surat to expand their business' manufacturing, tells Swarajya, “The people here have a laidback routine. Many people don’t want to travel, do not want to change their way of working. Most of these old traders will also retire, rather than moving to the new buildings."

"Instead, for their next generation, this infrastructure is important, but I believe it will take at least two years for this market to fully adapt to the working culture at the diamond bourse. Till then, I will also have to work from this market to be in sync,” he adds.

Like Mahidharpura, the mini bazaar in Varaccha, a 15-minute drive from this market, presents a similar culture and set of opinions, where the smaller traders and brokers have issues of distance, cost, closed offices, and restricted circulation, which do not align to their current way of trading.

Jainam, a solitaire diamond trader in his early 30s, adds, “The diamond industry is among the most exclusive, dealing with luxurious products where transactions worth crores occur within minutes each day. Despite this, look at the working conditions here. There is no security. Any unwanted element could cause significant damage here in this chaotic environment.”

“We are still sitting in these cabins, yet it is difficult for foreign buyers, export clients to access and navigate in these markets. The bourse will provide much better accessibility for more exports. Currently, we have to go to the clients or meet them in Mumbai, but the new office will allow clients to visit directly and do business,” he adds.

SDB, And The New Wave Of Lab-Grown Diamonds

As per reports, Gujarat alone contributes to 80 per cent of India's diamond exports, with Surat overseeing 90 per cent of the state's diamond cutting and polishing activities.

Additionally, despite all the polishing occurring in Surat, the majority of export trading takes place in Mumbai.

"This is due to the available infrastructure in Mumbai compared to the lack thereof in Surat over the years,” says Mayank Choraria, whose family was one of the first to invest and own an office at SDB.

“Most traders in Surat have to set up offices in Mumbai for exports, bearing the city’s expensive cost of property, living, and managing staff. SDB is a step for Surat to have its own infrastructure for similar trading. Adding to this, now the airport has also begun international operations, with customs and cargo infrastructure being established, to allow a single hub for traders to start large-scale exports from Surat,” he adds.

As the city aims for expansion of natural diamond markets, there is also a new wave of homegrown industry for lab diamonds.

While the concept draws mixed reviews within the market, many leaders are advocating for the shift, with the Centre’s interest in this industry and as a means to reduce India's dependency on foreign suppliers.

Lab-grown diamonds possess identical physical and chemical attributes to natural diamonds and are evaluated based on the same criteria of cut, clarity, colour, and carat.

Data indicates a threefold increase in the value of lab-grown diamond exports from India between 2019 and 2022, with a 25 per cent rise in export volumes between April and October 2023 compared to the same period the previous year.

The production of lab-grown diamonds surged during the time when sanctions disrupted the supply of rough diamonds from Russia. It provided a lifeline for Surat’s artisans and the industry at a time of crisis.

Abhay Shah, a third-generation diamantaire, tells Swarajya, “Lab grown diamond works on two growth process — ­chemical vapour deposition (CVD) and high pressure and high temperature (HPHT). With its shorter production time frame and reduced environmental impacts compared to mined diamonds, we see this market to only grow in the coming years.”

“The company made a complete pivot to lab diamonds three years ago after operating in the natural diamond market for 22 years,” adds Shrenik Shah, Abhay’s father.  

He adds, “This shift has opened up a completely new market of customers for us. The aim was to reach a larger customer base across the globe, which the rare and limited mined diamond market could not do.”

The opening of the diamond bourse is also well timed, as it will offer the advanced features necessary for expanding business and trading with international markets with this product.

Most of the diamond merchants who have switched to lab grown diamonds are looking at a transformative leap in the country’s diamond economy with the SDB now.

This market is useful not only to jewellers, but also in medical and drilling industries. When Prime Minister Narendra Modi visited the White House this summer, he gifted first lady Jill Biden a 7.5-carat diamond grown by a Surat-based firm.

Industry experts in Surat believe that although increased production of lab diamonds will make it a competitive market, by leveraging its polishing skills, India can establish itself as a dominant player in this industry globally.

With an in-house production of raw materials, the market can completely remove dependency from China.

Abhay adds, “The government’s push for local production of lab diamonds will allow to form a domestic hub, from raw materials to polishing within the country. While for trading, the SDB is already in place. At present, we have to source raw diamond from China; however, the local manufacturers are also reaching the same quality. To further this, these manufacturers should be provided subsidies for machinery and technology expansion to increase the local production.”

With natural diamond mines being limited in production capacity, the industry's growth has a saturation. Lab-grown diamonds, however, address these challenges and add to the industry the benefits of cost, time, and customisation opportunities.