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India diamond industry facing threat from China


The INR80,000-crore worth diamond industry of Surat is under threat from China, reports The Times of India.

There has been a huge flow of capital investment from diamond companies in Israel and Belgium to Shanghai and surrounding places, as well as the provinces of Guangdong and Shandong, making the ever-looming threat from China more prominent than before.

Latest figures from the Shanghai Diamond Exchange (SDE) and the Diamond Administration of China (DAC) indicate that diamond cutting and polishing in China has gone up from six hundred million USD in 2007 to USD2 billion in 2011.

The number of skilled diamond workers has also risen from just 7,000 in 2007 to over 60,000 in 2011. The Surat diamond industry is faced with several challenges, an acute shortage of skilled manpower being one of them.

“Salaries in other industries are rising faster than in the diamond industry, and so it is difficult to employ new-generation diamond polishers. If this labour problem continues, China could be a real threat to us," stated Dinesh Navadia, president, of the Surat Diamond Association (SDA).

Investors all over the world are finding it easier to set up diamond processing units in China as compared to other places. Nick Weinstock, a Belgian national who set up a diamond processing unit in Panyu's Shawan jewellery industrial park stated: "The first is labour costs. The second is that the local government is very supportive, and has introduced a raft of measures to encourage investment."

Hong Kong-based diamond trader Vijay Sheth, who is planning to establish a factory in Guangdong, stated: "Unlike many diamond companies in Belgium and Israel, Indian companies are also setting up their manufacturing facilities in China because the government offers more tax perks than India."

Diamond trade in China has increased toUSD4.71 billion USD in the year 2011, denoting a rise of 63 percent as compared to 2010. Diamond imports during the same period have increased to USD2 billion, which indicates a rise of 56 percent.

Sanjay Kothari, vice chairman, Gems and Jewellery Export Promotiion Council (GJEPC) stated: "The coming five years are very crucial for the diamond manufacturing sector in India, especially in Surat. The Chinese diamond industry is growing at a much faster pace, and thus, we have strongly represented to the Central government to introduce presumptive taxation system - prevailing in Belgium, Israel and China."