Surat: Diamond industry
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Diamond industry
‘Chitthi’ system
The Times of India, June 16, 2015
Surat diamantaires to discard ‘chitthi’ system
Melvyn Reggie Thomas
It's 5pm and Naresh Thummar, owner of a diamond polishing unit in Katargam, has struck a deal in the trading hub of Mahidharpura to sell his polished gems for Rs 3 crore. The trader hands him a small paper chit mentioning the size, carat, colour, purity, and, most importantly, the date by which Thummar will get his payment.
The paper chits, which are otherwise thrown into dustbins, have been an important trade instrument in the Rs 90,000 crore diamond industry for over six decades now. But, this 'chitthi system' that is based on mutual trust is set to be banished now.
Following an increase in defaults and cheating cases, the small and medium diamond unit owners are readying to embrace a more reliable system of 'jhangad', a kind of promissory note to arm fraud victims with stronger evidence for legal action. Since September 2014, defaults at least to the tune of Rs 500 crore have been reported in Surat.
Vallabh Borda, a diamantaire in Katargam, has stopped dealing through chithis after losing Rs 50 lakh to a trader. This trader duped 24 diamantaires of Rs 50 crore in January. "I prefer jhangad now. I face a lot of difficulties as many traders in the markets still follow the chit system. I don't want to lose money, especially when the market condition is not good these days," said Borda.
Dinesh Navadia, president of Surat Diamond Association (SDA), said, "We have already launched a campaign to persuade traders and manufacturers to adopt this fool-proof system. Some have switched over but many are expected to adopt in the next few months." Navadia said that all the units will adopt the new system over the next one year.
Arvind Pokia, a diamond unit owner in Varachha, said, "I have sought the help of SDA to guide me on using the jhangad system. My turnover is just Rs 150 crore and I can't afford to lose my diamonds and money to fly-by-night operators."
So precious are the paper chits that diamond unit owners keep them in 15 iron vaults in Varachha and Mahidharpura markets along with the gems. These markets witness diamond trade of nearly Rs 400 crore daily - all done through the chitthis.
"In the 1960s, the diamond industry evolved due to closely knit families of diamond polishers, traders and importers. As most of them knew each other, they traded only through chitthis. The tradition still continues," said Navadia.
None of the technological advances in the last six decades have replaced this system of payment that works on sheer faith.
Mahidharpura
Yagnesh Mehta, Oct 9, 2022: The Times of India
Change is the only constant, but not in Surat’s oldest diamond market at Mahidharpura. The bazaar that trades in the hardest substance in the world clings hard to its heritage. Brokers clad in white kurta-pyjamas and worn-out chappals walk in the narrow lanes of this bustling market with diamonds in their pockets. Deals worth crores are struck on the street in minutes over ‘cutting chai’, especially between 2pm and 6pm.
Old-World Charm
Surat’s journey to becoming the global headquarters of diamond-polishing started at Mahidharpura. Over the market’s 60-plus years, ‘Diamond City’ has expanded from 10 sq km to 470 sq km, and ultraluxury skyscrapers have dramatically transformed its skyline. But its main trade remains rooted in tradition. It flourishes in the otla – Gujarati for verandah – of old residential buildings that double as ‘conversation space’. Every day, about 5,000 diamond traders and brokers operate from the wooden desks in these otlas; each desk rents for Rs 2,000 a month.
Trading Hub, Learning Ground
Today, Surat polishes nine of every 11 diamonds in the world and drives around $25billion of India’s diamond exports. Many young men join the Mahidharpura market to gain first-hand experience of diamond trading. Many others enroll at institutes in the city that offer short-term courses in diamond grading, gem identification, and jewellery retailing.
“Though Mahidharpura operates in the traditional manner, it teaches you all the tricks of the trade,” said 30-year-old Paresh Gajera, who became a diamond trader like his father. “My 25-yearold cousin recently set up a jewellery unit after trading in diamonds at this market for a few years. ”
Market Built On Trust
The traders do not maintain bill books or computer spreadsheets. Chitthis (chits) and trust are the medium of transaction. Despite the highvalue trade, you won’t see cops and private security around. Although the multistorey air-conditioned offices that traders rent have irongrilles on their doors and windows, no security issue has been reported here in years. After the day’s work, the traders and brokers store their diamond pouches and cash in vaults operated by private firms at the market.
In the past, traders had the last word on a diamond’s weight and quality but now certifications from reputed laboratories like Gemological Institute of America (GIA) and International Gemological Institute (IGI) are considered.
However, trust remains the bedrock of business. Traders allow brokers to keep the diamonds with them, withoutpayment, for showing to prospective buyers.
“You can strike deals worth crores on the street here – such is the support system the market offers. A trader does not require a plush office to conduct business. It is trust alone that steers the trade,” said Dinesh Navadiya, ex-regional chairman, Gem & Jewellery Export Promotion Council.
Pravin Kevadiya, a diamond broker who started out at the market around 30 years ago, has expanded his business to Belgium and Dubai. Having studied till Class 10, he now runs a firm with an annual turnover of Rs 2 crore. “I used to pay Rs 12,000 as rent every year to conduct business at an otla in Mahidharpura Bazaar.
Although I have my own office now, I still visit the market frequently. You must never forget your roots,” said Kevadiya.
Jails
Yagnesh Mehta, August 23, 2023: The Times of India
Surat : In the dim environs of a Gujarat jail, 25,000-odd tiny pieces of rough-cut gemstones get their sparkle every month in the hands of prisoners polishing them into shape and shining a new light on their lives as diamonds in the rough.
Lajpore Central Jail in diamond city Surat, which is known to polish 95% of the world’s showroom stock of the most coveted precious stone, currently has a team of 107 prisoners skilfully chipping away at small-size diamonds in the prison’s polishing unit daily. Their combined output of finished natural diamonds earns each of them up to Rs 20,000 a month, depending on the skills they bring to the polishing table.
“Ours is possibly the only jail in the world where cutting and polishing of natural diamonds takes place. The unit has been working smoothly without any com plaints,” said SP JN Desai, who heads the prison.
The majority of the 3,000 prisoners lodged in Lajpore jail are engaged in some kind of employment requiring skills, including making furniture and sculpting.
Vipul Mer, a 33-year-old serving a life term, works as a manager in the diamond polishing unit. “I was a diamond artisan before landing in jail a decade ago. Despite being in jail, I’m able to support my family.” Of one’s total earnings, a prisoner is allowed to retain Rs 2,100 a month as personal expenses in jail. The remaining amount is sent to their families.
“I learnt diamond polishing after being brought to jail 11 months ago,” said Satyam Pal (23), who earns around Rs 8,000 a month.
Surat Diamond Bourse
As in 2023
Kamal Saiyed, July 23, 2023: The Indian Express
What is the diamond bourse?
The Surat Diamond Bourse (SDB) has been planned to expand and shift the diamond trading business from Mumbai to Surat, the hub of cutting and polishing diamonds.
Surat’s diamond trading market is located at present in Mahidharpra Hira bazaar and Varachha Hira Bazaar, where traders make transactions standing on the streets with almost no security measures. A major part of the diamond trading, however, happens in Mumbai at Bandra Kurla Complex (BKC), which has the amenities for international buyers.
Sources in the diamond industry say Mumbai has a space crunch and office real estate is pricey. Besides, a major chunk of the diamond traded in Mumbai is manufactured in Surat, from where local angadias carry them to Mumbai on trains, taking over 4.5 hours.
Biggest office space in the world
The SDB has been built on an area of 66 lakh square feet at DREAM (Diamond Research and Mercantile) city. According to a document by Delhi-based Morphogenesis, which designed the bourse, it is bigger than the biggest office space in the world, The Pentagon in the United States.
Morphogenesis has also designed the BSE tower in GIFT City, Gandhinagar, and the Zydus Corporate Park in Ahmedabad.
Diamond businesses under one roof
The Surat Diamond Bourse will have over 4,200 offices ranging from 300 square feet to 7,5000 square feet each. The bourse has nine towers, each with ground plus 15 floors.
All diamond-related activities and infrastructure, such as sale of rough diamonds and polished diamonds, diamond manufacturing machineries, software used in diamond planning, diamond certificate firms, lab-grown diamonds, etc. will be available in the bourse.
Apart from this, 27 retail outlets of diamond jewellery will also be opened, for international and national buyers.
Over 4,000 CCTV cameras have been installed at different locations inside and outside the SDB, given the high-security product. A member of the SDB management committee said bio-metric details of employees will be taken, after which they can access the complex with a “wave of their hand”.
Will benefit local businessmen
Sources in the diamond industry said that many diamond merchants of Mumbai have already booked their offices in SDB. However, Surat poses a connectivity issue, unlike Mumbai which has a busy international airport. Surat city has one international flight running between Surat to Sharjah. Traders also cited the absence of seven-star hotels and the prohibition law as some of the reasons inhibiting businessmen from shifting entirely to Surat.
Sevantibhai Shah, who owns Venus Jewels of Surat, said, “The big companies, who already have offices in the Bharat Diamond bourse at BKC, will open offices in Surat too. They will run the business from both the places. But the small players of Surat, who cannot do business in Mumbai, will now get a chance to open their offices in Surat.”
The governing body
The SDB core committee has seven members with Vallabhbhai Lakhani, owner of Kiran Gems, the biggest diamond firm of Surat, as its chairman. Others include Arvind Dhanera, owner of Dhanera diamonds; Govind Dholakia of Shree Ram Krishna Exports; Sevantibhai Shah of Venus Jewels; Diyalbhai Vaghani of Kapu Gems; Lalji Patel of Dharmanandan diamonds; and Mathurbhai Savani, owner of Savani Brothers diamond firm. All of them are major diamond players. Lalji Patel is the diamantaire who bought Prime Minister Narendra Modi’s monogrammed suit.
A general committee member of the Surat Diamond Bourse, Dinesh Navadia, said, “All the 4,200 offices have been sold. The SDB will give direct employment to over 1 lakh people.”
Sources in the SDB said that the committee had purchased land from the state government at Rs 627 crore and appointed Morphogenesis to design the project. The construction contract was given to PSP Projects, an Ahmedabad-based firm. The construction started in December 2017 and was finished in just five years, despite the two pandemic years. The total project cost is Rs 3,200 crore.
The thematic landscaping is based on the ‘panch tatva’ theme, comprising the five elements of nature (air, water, fire, earth, and sky), said a Core Committee member.
The foundation stone of the SDB was laid by then Chief Minister of Gujarat and now governor of Uttar Pradesh Anandiben Patel in February 2015.
See also
Surat: Diamond industry
