The lack of infrastructure and lax laws are forcing the Rs 50,000 crore (Rs 500 billion) diamond cutting and polishing industry in Gujarat to shift base to China.
Sector majors such as J B Diamonds has already set up units in China and has started exporting jewelleries and cut diamonds from these units.
"China is gradually emerging as a major force in the diamond cutting and polishing industry and the number of trained diamond cutters and polishers has risen up to 100,000 in just two years. If we do not pay adequate attention to this sector here, there are chances that the Indian diamond cutting and polishing industry may be forced to close down in the next five years," said Pravin Nanavati, former president of the Surat Diamond Association.
"About 20 units have shifted to China in the last one year and many others are following suit. One of the reasons for this is that labour is cheap in that country and labour laws are reasonable. The government there also gives full support to the industry," he said.
Nanavati runs his diamond units from a house located in the thickly crowded Mahidharpura area in Surat, where parking a four-wheeler is a nightmare.
At any time of the day, over 10,000 diamond traders stand on various points in this area to sell cut and polished diamonds having no roof over their heads.
D Rajagopalan, state principal secretary (industries and mines), said, "Once the gem and jewellery park in Surat is ready, thousands of units will be accommodated inside this industrial park which will have all infrastructural advantages. We have also decided to address the labour issues in a more liberal way as through the proposed Industrial Act, diamond unit owners will be free from any labour problems. In another year, the park will start operating."
According to Nanubhai Patel, president of Surat Diamond Association, the biggest advantage of going to China is its disciplined labour force.
"Workers in China are like machines. Diamond units here are impressed by this disciplined labour force," he said.
According to diamond unit owners in Surat and Ahmedabad, problems of handling huge number of migrated labour are increasing day by day.
"In a year we have to register more than one hundred criminal cases with the police as labourers flee with high-value diamonds from workshops. If one worker is asked to quit on such charges, others will create trouble, forcing us to reinduct that mischievous worker," said a merchant in Ahmedabad, requesting anonymity.
Though the diamond industry in India, 95 per cent of which is from Gujarat, has been enjoying the advantages of getting cheap labour, in China the scene is similar, if not better.
"Thousands of importers from the United States, south-east Asia and Europe want to visit our units here before entering into long-term business deals, but we discourage them. The reason is Surat is yet to have an airport, there is no good hotel and travelling within the city is a major problem as there is no proper traffic system," said a unit owner in Ahmedabad and Surat.
This businessman has recently opened an office in Mumbai from where he caters to the needs of business discussion and visits of business partners from abroad.
"These factors are increasing our expenses without any reason as Mumbai is an expensive city. Then there are problems of organised gangs and extortion, and how long the government will remain reluctant to the issues of the diamond industry in Gujarat," he asked.
