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India

How A Freewheeling Indian Market Became The Hub Of The Global Diamond Trade

Step inside the diamond market in Surat, where billions worth of the precious stone circulate every month. There are serious concerns about both security and origins.

Workers at the Surat diamond factory
Workers at the Surat diamond factory
Maria Grazia Coggiola

SURAT - At 6 p.m. in Madharpura, one of the diamond bazaars in this thriving city in southwestern India, it’s so jam-packed that it’s hard to walk between the parked motorbikes, vendors selling nuts and small temples from which incense emerges.

Ramesh, 55, sitting on the saddle of his Honda motorbike, uses a magnifying glass to examine a shimmering mini pile that sits on a blue card. In a quick movement, he folds up the packet and stuffs it into a huge pocket underneath his shirt. He then writes a few figures on a torn-off piece of paper and hands it to the supplier. A nod of approval, and the deal is done.

Ramesh is one of some 10,000 dealers in Surat, the second-biggest city in the prosperous state of Gujarat where Mahatma Gandhi was born and raised, on India's western coast. This chaotic city is not only home to five million inhabitants, but is also where 90% of the world’s diamonds are chosen, cut, and polished.

These dusty streets are where $73 million worth of diamonds pass daily -- an impenetrable web of brokers, import-export outfits, workshops, and couriers. The turnover of Surat’s diamond industry is about $14 billion annually, employing nearly half a million people working for some 4,000 businesses, large and small. It accounts for 8% of Indian exports, mainly heading to the U.S., Hong Kong and the United Arab Emirates.

Thanks to the low cost of labor and brokerage services, India has now become the world’s center for rough diamonds, overtaking Antwerp in Belgium which had traditionally always been the unofficial headquarters to the global diamond industry.

There are plenty of advantages that a prosperous industry like this brings, yet there’s also the tricky question of security. The mega heist at Brussels airport on February 19, when $50 million worth of diamonds were stolen, “would never happen here,” declares Rohit Mehta, ex-president of the Surat Diamond Association (SDA), and current head of the Chamber of Commerce of South Gujarat. “The market is very spread out and there are never huge amounts of merchandise in just one place. From the outside it might seem vulnerable, but in reality everyone knows each other and for a thief it would be very difficult to get away with it here.”

The brokers call each other “brother,” adding the Hindi word after each other’s name: “Babu bhai”, “Ganesh bhai”, “Lallu bhai.” They keep the merchandise in special vests with pockets that they wear underneath their t-shirts, sitting all day on their bikes with “swollen” bellies of invisible bags of cash.

The real work, however, takes place in small rooms where there are four or five workers sitting on the ground, each one specialized in one of the complex procedures that changes black coal into sparkling gems. Almost all of those who we spoke to assure that in Surat, there hasn’t ever been even a single stone unaccounted for.

Security measures

Nearby, in the small police station in Madharpura, several officers are watching a Bollywood film. Yet if you fine-comb the local news, you can see that recently the boss of a workshop was stabbed, and that last year some of the intermediaries were robbed by fake clients in a hotel. However, this is mere trifle if you consider the huge amounts of money and diamonds concentrated in just a few square kilometers.

For the police, the main worry seems to be the threat of terrorism that, from time to time, rears its head in India. The last serious hit was in Mumbai in 2011, in the jewelry neighborhood of the Opera House, where the cut diamonds from Gujarat were being moved to.

“We've installed 140 CCTV cameras and soon we’ll put in another 500,” says deputy police commissioner S.M. Katara, adding that the diamond companies are paying for the extra security.

While some of the family-run workshops often don’t even have a door, the six-floor building of Sanghavi Export International Ltd -- one of Surat's largest worldwide exporters -- has a complex security system similar to a bank's, with all visitors photographed before entry.

“The heist in Brussels was the work of a professional gang which, luckily, doesn’t exist here in Gujarat where the diamond business is in the hands of a restricted community of people,” says Aagam Sanghavi from his office. Sanghavi’s family also owns the Indian Diamond Institute, a training school that turns out more than a thousand students a year.

Still, according to a recent investigation by a weekly Indian paper, there’s also the illegal business of “blood diamonds” -- diamonds mined in conflict zones, often in Africa, and sold to finance an insurgency or warlord. They are sold with a discount of up to 30% and mixed with the “clean” ones that are properly certified by the Kimberley Process.

“In this market, you see everything, from blood diamonds to dirty money to tax evasion,” says Dr. Pradip Marin, who has a church-funded clinic near to the Mini Bazaar. He tells us about the danger that the workers have of losing their sight, spending hours bending over tables to examine the gems: “By the age of 40, they all already have cataracts,” he says. “A while ago, they brought me a boy who was stabbed by his boss because they thought he had been stealing.”

With a hint of bitterness he concludes: “The workers earn their bosses a ton of money, then the bosses donate it to the temple.”

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