A combination of a shortage of skilled manpower as well as the rising strength of the cutting and polishing sector in China is threatening India’s lucrative diamond hub of Surat, according to the Times of India.
The latest figures released by the Shanghai Diamond Exchange and the Diamond Administration of China show that China’s diamond cutting and polishing industry last year recorded $2 billion worth of business, a significant jump from $600 million in 2007. The Times of India reported that the number of skilled diamond workers in China has jumped from 7,000 in 2007 to over 60,000 last year.
This does not bode well for Surat, where the local diamond cutting industry, which employs 500,000 workers, has had trouble maintaining a labor force. Diamond companies have preferred to set up shop in China, where labor costs are lower and the government has stepped up with tax incentives that have attracted business owners.
China and India are nearly on par when it comes to labor costs. According to the Times of India, it costs $17 per carat to cut and polish diamonds in China, while the cost in India is just $13 per carat. China, which is second behind India in processing small diamonds, imports $1 billion worth of rough diamonds every year.