Covid-19 impact: Surat diamond industry seeks stimulus to pay minimum wages

With the lockdown getting extended till May 3, the Surat diamond industry, which has seen zero exports or domestic sales, has sought financial assistance from the government to pay wages.

“While wages for March have been paid in full, there is no revenue during the lockdown which has now extended till May 3. Certain sections of workers have not gone back to their native states and need to be paid at least minimum wages. We have made a representation to the government seeking financial assistance,” said Dinesh Navadia, regional chairman of Gems and Jewellery Export Promotion Council (GJEPC).

With exports coming to a standstill and half of its migrant workforce having reverse migrated to their home states, the Surat diamond industry is in no mood to resume cutting and polishing operations.
Nine of 10 rough diamonds in the world are cut and polished in Surat, but currently, units are more or less lying idle. About 220,000-250,000 migrant workers have gone back home and the rest have stayed back since they have families.

Diamantaires like Kirti Shah said his member units have paid workers their wages but it is currently not feasible to resume operations.

“There are many unit owners who hardly have enough to survive themselves. At such a time, paying wages to workers is seemingly impossible unless the government extends support,” said Shah.

Similarly, Bharat Diamond Bourse (BDB) in Mumbai, which is also shut during the lockdown, is also weighing its options.

According to Anoop Mehta, director of Mohit Diamonds and president of BDB, export demand in diamond is almost nil, making production as well as shipment not viable. 

“Hong Kong is open and moving slowly but we don’t know what kind of appetite clients have there. At the same time, the UK and other European countries as well as the US are in lockdown. There has to be a demand for us to export,” he said.

On the other hand, mines at major companies like DeBeers are also shut during lockdown, thereby impacting near-term supply of rough diamonds. For instance, DeBeers’ main mine in Botswana is shut due to the lockdown while its April sight – an event where sight-holders from around the world gather for trading of rough diamonds – has been postponed.
“However, DeBeers has made it clear that it will be flexible in supporting clients and is considering all points of view after the lockdown such as demand, liquidity and backlogs. It has told clients to pick up only what they need at the sights once the lockdown ends,” added Mehta. In the interim, DeBeers may make certain adjustments in supply and pricing before global demand as well as mine operations resume normalcy.

On its part, the GJEPC has noted that after the outbreak of coronavirus (Covid-19), the declining rate of gems and jewellery exports doubled to -11.32 per cent during December 2019-February 2020 as compared to -5.53 per cent registered during April-November 2019. 

It is projected that gems and jewellery exports would bear a loss of $2.57 billion by the end of March 2020 due to the Covid-19 crisis.

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