A major shockwave has reverberated through the heart of India’s diamond industry as Kiran Gems, the world’s largest manufacturer of natural diamonds, announced a 10-day ‘vacation’ for its 50,000 employees. This unprecedented move, effective from August 17 to 27, is a direct response to the plummeting demand for polished diamonds in global markets due to a deepening recession.
Chairman of Kiran Gems, Vallabhbhai Lakhani, expressed his frustration with the ongoing economic downturn, stating, “We are forced to announce this vacation because of the recession. I am tired of this recession now.” He attributed the decision to a combination of factors including a shortage of rough diamonds and a stark decline in demand for the company’s exported polished diamonds.
While Kiran Gems has taken the most drastic step so far, the entire Surat diamond industry is grappling with the consequences of the recession. Jagdish Khunt, president of the Surat Diamond Association, confirmed that the industry, which processes nearly 90% of the world’s diamonds, is facing a significant downturn. The association has not witnessed such a drastic measure from any other company yet but acknowledged the industry-wide challenges.
The global economic landscape, marked by events like the Russia-Ukraine war and the Israel-Palestine conflict, has exacerbated the situation. The diamond industry’s turnover has plummeted from Rs 2,25,000 crore in 2022 to approximately Rs 1,50,000 crore today, highlighting two years of decline.
The impact of this crisis is far-reaching. Surat’s diamond industry, comprising around 4,000 large and small units, employs nearly 10 lakh people directly. The ‘vacation’ announced by Kiran Gems is a stark reminder of the challenges faced by this vital sector, and its ripple effects are likely to be felt across the entire diamond value chain.
As the industry grapples with this unprecedented downturn, the hope is for a swift global economic recovery to restore demand and stability to the diamond sector.
