How Ukraine war killed hope in India's 'Diamond City'

When Russia invaded Ukraine in February 2022, residents of Surat, India could not have imagined that a war thousands of miles away would lead to a suicide problem in their community. 

Surat — a city in the western state of Gujarat — is the hub of India's diamond industry, which employs over 600,000 people.

Workers in Surat are responsible for cutting and polishing 80% of the world's diamonds, according to industry statistics.

Surat's diamond industry was already facing many problems — floods in Africa, falling demand from the West, stuttering exports to China — when the war began in February 2022.

What followed was a massive wave of Western sanctions against Russia, which also included Russian diamonds, and Surat was suddenly facing a deep financial crisis.

How is the war in Ukraine causing the financial crisis in Surat? 

Russia's invasion prompted the European Union and G7 to ban imports of Russian diamonds via third countries, severely limiting access to key raw material used by India's diamond industry.

When the ban came into effect on March 2022, it cut off nearly a third of India's diamond revenue.

At least 63 diamond polishers have committed suicide in Surat in the past 16 months. Several left suicide notes blaming financial distress, according to local media reports. Many thousands of others have lost their jobs or are facing staggering salary cuts.

"Over 30% of India's raw material supply came from Russia's Alrosa mine," said Dinesh Navadiya, regional chairman of the Gem and Jewelry Export Promotion Council (GJEPC) which was formed under the Ministry of Commerce and Industry. "That lost business still hasn't recovered," he told DW. 

Jagdish Khunt, president of Surat's diamond traders association, has a similarly bleak perspective.

"From the first bombardment of the Russia-Ukraine war, things have only worsened for us," he said.

India's sellers have too many diamonds

India's export of cut and polished diamonds fell 27.6% in the financial year 2023-24, with significant cuts from its top three customers — the United States, China and the United Arab Emirates.

As a result, companies have been sitting on stock that is about three times larger than what they usually have, Navadiya said.

"Credit lines have started drying up and business owners are often forced to sell some stock at fraction of the rates, just to remain operational," he said. 

Diamond polishers cry out for help

Ramesh Zilariya, head of the Gujarat diamond workers union, spends a considerable part of his time answering calls to a suicide helpline number they launched on July 15. 

"We have received over 1,600 calls for help since we launched his number."

One such call still haunts him.

"It was a diamond polisher standing at the edge of the road," Zilariya said. The man had been unemployed for four months, couldn't pay rent or even his child's school fees and was 500,000 rupees (€5,392, $5,958) in debt. His debtors had grown aggressive.

"He said he's tired and wants to commit suicide," Zilariya said, whose office rescued the man.

"He cried in our office the entire day. Eventually we found a house on rent for his family, paid the deposit and first month's rent, his children's school fees and found jobs for the husband and wife outside the diamond industry," he said. 

However, not everyone can be helped financially, he said.

"We try to find jobs for the rest but all they know is diamond polishing."

Companies cut hours, drop salaries

Manoj, a 45-year-old diamond polisher from Surat, was also let go in May after three decades of work.

He eventually found a job delivering parcels for courier companies. His salary is low and the employer is not reimbursing him for fuel expenses. 

The sole earner in a family of six, he is now two months behind rent, has not been able to pay his older child's school fees and has mortgaged his wife's mangalsutra (a gold wedding chain held sacred by Hindu women), earrings and a gold ring.

"I cannot express how we're making ends meet," he told DW.

Neither the government nor the diamond workers union have full data on how many people lost their jobs, since parts of the diamond industry, like many others in India, operate informally.

"We tried to do a survey by sending out Google forms but most of them don't know how to operate such technology," Zilariya said. 

The union chief estimated that at least 50,000 polishers had lost their jobs in the last six months and hundreds of thousands over the last 18 months. 

Those fortunate enough to still have a job are facing severe salary cuts. 

GJEPC's Navadiya said that many companies have shifted to a four-day work week to save money. They have also cut down work hours per day.

"They want to ensure more people have some work to do but it has resulted in a 30-40% cut in salaries. Someone who was earning 40,000 rupees is now only earning 23,000 per month," Navadiya said. 

Diamond workers want revival of old Modi-era program

The Gujarat diamond workers union has sent multiple letters to the Gujarat state government, calling for an economic aid package, with the latest such letter going out in late July.

They demanded the revival of the "Ratandeep Yojana" — a training program designed to upgrade skills of diamond workers which Narendra Modi launched in Gujarat during the 2008-09 economic crisis. Modi, who is now India's prime minister, had at the time served as the chief minister of the western state.

The union also demanded financial aid for families of artisans who have lost their lives to suicide. 

"We have been writing to them since last year, they have not even responded," said Zilariya. 

In April, India's minister of external affairs, S Jaishankar, expressed concern for the repercussions of G7's ban on Russian diamonds at an event in Surat.

"Their intention is to hurt Russia. But it doesn't work that way. The producer usually finds a way. More than Russia, such steps tend to hurt those lower in the supply chain," he was quoted as saying by the local media.

In May, Reuters news agency reported that the US was reevaluating the strictest elements of the ban on Russian diamonds after opposition from jewelers in India, Africa and even New York.

Edited by: Darko Janjevic

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