Diamond industry: Surat
This is a collection of articles archived for the excellence of their content. |
Contents |
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.
