Polls likely to push diamond up

Guess what's going to burn a hole in the pockets of diamond lovers in the US, Europe and Japan this Christmas? Gujarat elections.

Diamond prices are likely to soar 15% this Christmas as around 500,000 workers in Surat's diamond cutting and polishing industry, of which 375,000 hail from Saurashtra, extend their vacations. Usually, these workers go for a 20-day Diwali break.

Due to elections, however, the vacations are likely to be stretched by another 15-20 days. Industry experts believe this will lead to a shortage in supply, eventually affecting the prices of cut and polished stones.

The election triggered production disruption will be exacerbated by 20 per cent increased demand for diamonds from the US, Europe and Japan due to forthcoming festivals - Thanksgiving and Christmas.

The high-voltage Assembly polls may or may not result in any direct benefit to many, but the country's diamond manufacturers are certainly going to gain from this.

India's net annual diamond exports are in the region of $17-18 billion, or around Rs 70,000 crore. Most exports take place during November-December and January.

Experts say the industry sees an increase of around 20 per cent during Thanksgiving and Christmas. India is the world's largest exporter of cut and polished diamonds, 90 per cent of which are manufactured in Gujarat. Out of these, 85 per cent are cut and polished in Surat.

"The workers take a Diwali vacation of around 15 to 20 days during this season. Most of the workers from Surat diamond industry hail from Saurashtra. However, this time the vacation is likely to extend to a month and a half because of the assembly elections. This is likely to disrupt the production, and the stocks will exhaust. By the time stocks exhaust, the demand will go up and manufacturers will see better price realisations. The prices may go up 10 per cent or even more," said Sanjay Kothari, chairman, Gems and Jewellery Export Promotion Council (GJEPC), India.

Confirming this C P Vanani, president, Surat Diamonds Manufacturers Association, said, "There are around five lakh diamond workers in Surat's diamond cutting and polished and out of that 75 per cent hail from Saurashtra. Most of the workers from Saurashtra are from Patel community and they are likely to stay back in their hometowns for voting for the Assembly polls. Prices might go up by 10 to 15 per cent."

Pravin Nanavaty, former president of Surat Diamond Manufacturers' Association joins the chorus. "Coupled with the elections, the shortage of raw material will also be another reason for workers to stay back for more days. The workers' extended vacation will ultimately result in realisation of good prices for the Surat manufacturers as well as exporters."

Diamond exports rise

According to GJEPC figures, India's exports of cut and polished diamonds grew to $8.16 billion during April-October 2007 from $6.30 billion in the same period last year.

The country's net exports of diamonds, including gold jewellery, coloured gemstones and rough diamonds, during the period this year stood at $11.94 billion compared with $9.53 billion during the corresponding period last year.