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India: Cutting, polishing

From the African mines to the hands of skilled cutters and polishers in India, the diamond makes yet another crucial stop while on its mine to market journey. But it is here in Surat, India, that the rough stone is made to reveal its brilliance.

Today 11 out of 12 diamonds in the world are polished in Surat, an industrial city in western India.  The cutting and polishing of these diamonds for the global middle class has helped created close to 500,000 jobs in this city, according to a Times of India (Sept. 2006) report.

That is nearly half as many jobs as India's entire information technology industry. Bangalore, the symbol of India's knowledge economy, may be a global buzzword, but the fate of India's rural poor depends more on industrial cities like Surat, the report adds.

Many say the first diamond was discovered 4,000 years ago in the shining sands of an Indian riverbed in the Golconda region (modern day Hyderabad). Later, adventurers made similar discoveries in South Africa's dusty veldt around the 19th century.

Savvy marketing then made diamonds the center point of middle-class courtship and they went on to become the girl’s best friend — a symbol of eternal love. 

But India’s ties with the gemstone have continued down the ages.

The diamond industry's highly skilled workforce has made India one of the major players in the growth of diamond jewelry worldwide and the industry has been a key contributor to the annual growth of India’s gross domestic product (GDP) and jewelry exports are likely to touch $20 billion by 2007.

India spends $10 per carat on the polishing and cutting of diamonds, against South Africa, which spends $40-60 per carat and China which incurs a cost of $17 per carat.

India wants to cash on this competitive edge to maintain its position as the world's largest diamond cutting and polishing centre. 

However, the problem is that most of these diamonds travel to countries like Israel and Antwerp before ultimately reaching India.

The Indian government has been trying to ensure a continuous flow of rough diamonds through companies like De Beers, Rio Tinto Group and those located at Antwerp in Belgium.

Even though there are many companies that are sight holders (clients of De Beers), Indian diamond merchants cannot procure the best stones directly from rough producing nations or even big companies like Alrosa of Russia.

The rough that Indian diamond companies use comes with added margins as it takes a detour via established markets like Antwerp or Tel Aviv before arriving in India. Most of these stones are smaller and of poorer quality and are labor-intensive to cut and polish.

But because of the cheap labor costs, India is the profitable choice for smaller stones.

Many Indian exporters are hoping to change that by actively pursuing their objective of direct procurement of rough diamonds from mining companies in Russia, Canada, Angola and Ghana. This will not only cut costs, but will help India become a diamond trading hub instead of just a manufacturing hub.

Some Indian traders fear they will be left with small stones while the bigger, better stones will be polished in the producing countries like Africa or as the case is at present, in Antwerp and New York.

As the beneficiation process (LINK TO SIDEBAR FROM PETRA’s section) gathers strength in Africa, diamond producing nations are no longer content with just mining the rough diamonds. They want to cut and polish it too, which is what India has been doing for a long time. African cutters may now cut into India’s profits.

Today, cutting and polishing of diamonds takes place in South Africa, Belgium, China, India, Israel, Russia and the United States. Cutting a rough diamond takes great skill. It is an integral step in the 4Cs (LINK TO 4C sidebar) used to measure a diamonds worth.