Mumbai to lose some of its sheen as diamond merchants, dazzled by new bourse, plan move to Surat
“The response that we are getting is tremendous. People are excited. Post Diwali, both small and big offices, would shift. The official inauguration of the bourse is on 17 December,” said Dinesh Navadiya, media convenor, Surat Diamond Bourse.
The diamond tycoon moving his staggering business — estimated to be valued at Rs 17,000 crore, according to industry experts — to a swanky new office in Surat Diamond Bourse has come as a major jolt to Mumbai and Maharashtra amid political turmoil over big-ticket projects being shifted out of Maharashtra to Gujarat.
ThePrint reached the offices of Kiran Gems and Bharat Diamond Bourse via email. This report will be updated if and when a response is received.
As damage control, last week, Industries minister Uday Samant held a meeting with jewelers and office bearers at the Mumbai Diamond Bourse and said the state government was contemplating constructing a “gems and jewellery park” in Navi Mumbai.
“But those who have already made up their minds and bought offices in Surat will go. The rest will stay here,” said Kumar Jain, a Mumbai-based jeweller and national spokesperson of the Indian Bullion and Jewellers Association (IBJA). “In my opinion, though, there won’t be a total shutdown of Mumbai,” he added.
Owner of Umedmal Tilokchand Zaveri jewellers, Jain and his family have been in the jewellery business since 1975. He says he won’t be shifting his business just yet.
Mumbai and Surat are both diamond hubs, but have traditionally performed distinct functions in the industry. Surat has been the manufacturing hub while Mumbai the export base.
Rough diamonds from the mines of Africa, Russia, and Belgium make their way to Surat, where they are cut and polished. According to the Gems and Jewellery Export Promotion Council (GJEPC), Surat cuts and polishes 90 percent of the world’s diamonds, and has been a leader on this front since the 1960s.
Once polished, they are sent to Mumbai.
In the 1970s, when this two-city system was established, Dagina Bazar in Mumbai was where diamond merchants had originally set up offices. Later, these moved to the city’s Opera House area, and in 2010, when the Bandra-Kurla Complex was opened, the Bharat Diamond Bourse was shifted there.
“The main reason for having offices in Mumbai was the presence of an international airport,” one of India’s major diamantaires, who wished to not be named, told ThePrint. “Surat is responsible for manufacturing about 90 percent of the world’s diamonds, of which, about 95 percent gets exported to different parts of the world. Hence the proximity of the export base to an international airport was a must.”
The merchants ThePrint spoke to said there’s a whopping insurance cost attached to the daily shifting of diamonds from Surat to Mumbai.
“We did not have any other option until now but to take the risk and pay heavy insurance costs…. Now, it will be logistically more comfortable since Surat, too, has an international airport,” the diamantaire added.
According to the GJEPC, the overall gross export of ‘cut & polished’ diamonds in September 2023 stood at USD 1,673.56 million (or Rs 13,892.3 crore), and has shown a decline of 21.61 percent compared to USD 2,134.91 million (or Rs 17,107.68 crore) as compared to the same period previous year.
The overall gross exports of cut & polished diamonds at USD 8,702.23 million (Rs 71,739.7 crores) is showing a decline of 28.76 percent (- 25.12 percent in rupee terms) in the first half of this financial year (April to September), as compared to USD 12,215.47 million (Rs 95,805.52 crores) for the same period previous year.
Also read: At least 3 lakh Surat diamond workers sent on ‘vacation’, but reality isn’t as sparkly as it sounds
Surat’s ease of doing business
Speaking to ThePrint on condition of anonymity, another diamond merchant explained that there are two types of communities involved in the diamond business — the Kathiawadis and Palanpuri Jains. “Earlier Mumbai’s Palanpuri Jains controlled the diamond market. But now, the Kathiawadis, who have a base in Surat, have greater control. So, naturally they would want to shift as their families still live in Surat,” the merchant said.
With the growing strain on Mumbai’s infrastructure, having a residential colony close by the bourse in Surat with bigger apartments, will be more comfortable as it will raise the standard of living of those working in the bourse.
“The government has given a lot of benefits there as compared to Maharashtra, and this is what the industry is likely to get in Gujarat — bigger spaces, cheaper properties, inexpensive labour,” said Kumar Jain.
The rentals in Mumbai versus Surat also differ significantly with office rental space in Surat available at Rs 200 per sq ft, as compared to Mumbai, where they can go up to Rs 700 per sq ft. Similarly, electricity is cheaper in Surat, GST would be different.
Plus, it will also have its own customs clearance house.
“Ease of doing business is smoother in Surat, and my expenses will go down significantly,” said Priyank Hirpara, director, AP Gems, who is considering shifting.
“My family is also there, plus most of my staff is from Surat. I am definitely interested in moving but will also first wait and see how it is working out for others. In my opinion, the first six months will not be easy,” Jain said.
Gujarat’s infra push
Spread out over 66 lakh square feet of built-up space and flush with investments to the tune of Rs 3,000 crore, this glitzy “diamond city” will comprise nine 16-floor towers that are expected to house nearly 4,400 merchants and employ about 1.5 lakh people.
Surat Diamond Bourse’s Navadiya said that companies are buying plots and building residential complexes inside the bourse area for their employees and these will be exclusively for the diamond companies and their employees.
Another major factor behind the move is the under-construction Mumbai-Ahmedabad bullet train project. A controversial yet ambitious pet project of Prime Minister Narendra Modi, the bullet train is progressing rapidly after the Eknath Shinde-led government came to power in Maharashtra. The high-speed rail corridor will reduce the travel time between the two cities to just three hours.
“We are eagerly waiting for the bullet train. The starting point in BKC is right opposite the bourse and the Surat station is also very close to the Surat bourse. It is planned properly,” said the first diamantaire quoted above. “Had it not been for the MVA (Maha Vikas Aghadi) government, the bullet train would have even started by now.”
The diamond merchants estimate that post Diwali, about 10-15 percent offices currently in the Bharat Diamond Bourse will shift to Gujarat, and within two to three years, about 70 percent of the businesses will shift to Surat. There will be gradual tapering off, they said.
By 21 November, 1,000 offices would have shifted, said Navadiya. The total capacity of the bourse is 4,500 offices with “100 percent pre-booking already done,” he added.
A makeover for Surat
With the diamond bourse shifting to Surat, the city is also getting a facelift.
“Now, people from across the world will come to our city, and we are making sure our infrastructure and resources are up to date,” said Sandip Desai, a local BJP MLA, to ThePrint.
“This will make our city world famous and the image of Surat will improve. Central government, state government and the city corporation are working hard towards this,” said Desai.
He also said that currently 10 projects are being undertaken, including renovating the Surat international airport, and those related to water fronts, an under-construction metro network, bullet trains, and tourism.
“Surat’s future’s looking bright. In the coming days, it will become a city on par with international standards,” Desai said.
There are, however, those who plan on staying put in Mumbai.
Like Jeetu Jain of U.T. Zaveri and sons. He says his family is all based in Mumbai and shifting would mean “the entire family gets disrupted”.
“It is good for those who are from Surat. But not for me who has generations staying in Mumbai,” he said.
But he agrees that those shifting will have better control over the business. “When elephants move out of the place, the smaller animals move along. This will eventually happen to Mumbai as well in some years,” he said.
The politics
Since the Shinde government came to power in Maharashtra in alliance with the BJP after toppling the Uddhav Thackeray-led MVA government, many big-ticket projects that were in talks to start a business in Maharashtra have shifted to Gujarat.
From the Gujarat International Finance Tec-City (GIFT City) and Vedanta-Foxconn, to the Tata Airbus project and now the diamond bourse, Maharashtra’s loss has been Gujarat’s gain.
The opposition has targeted the state government in the past over their inability to retain these projects.
A top source in Shiv Sena (UBT) told ThePrint that, “They (the BJP) are trying to finish off the importance of Mumbai and Maharashtra. The precise reason why the bullet train project was initiated is to shift this diamond market to Surat.”
Maharashtra Congress chief Nana Patole also claimed Prime Minister Narendra Modi visited the state to get some industries to Gujarat and alleged the BJP-led state government was looting Maharashtra on the “Delhi’s” (an apparent reference to the Centre) instructions.
Speaking to ThePrint on condition of anonymity, a senior Maharashtra BJP leader said, “Mumbai and Surat both have different functions. And if the bourse is coming up at Surat, it doesn’t mean Mumbai is shutting down. Besides, as the industries minister said, there will be a gems and jewellery park coming up in Maharashtra soon.”
(Edited by Zinnia Ray Chaudhuri)
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