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The City of Diamond Dreams

Updated: Feb 3

 

Step aside Gaborone, Surat has reclaimed its status as the premier global diamond center. India’s Prime Minister Narendra Modi inaugurated the Surat Diamond Bourse (SDB) on Sunday after opening a new international terminal at the city’s airport that same day.

 

Aptly named Dream City, this 6.6 million square-foot development promises to be a game changer for Surat and for India’s diamond industry. The lingering question is how it will impact Mumbai as a trading center.

 

Traditionally, Surat was the main diamond manufacturing hub where an estimated nine out of 11 diamonds on the global market were processed. The goods were typically transferred to Mumbai for sales and export. The idea of SDB is to centralize all that activity and transform Surat into a trading and distribution center too. Why send the goods to Mumbai when one can export them directly from Surat?

 

The answer until now was that Mumbai historically stood as the country’s main business hub, had the necessary infrastructure and ancillary support, and was convenient for international buyers to fly in and out. Meanwhile, Surat was a tedious extra three-hour train ride away, and lacked the framework required for a comfortable and efficient stay.

 

Besides, the industry had already invested in Mumbai with the opening of the Bharat Diamond Bourse (BDB) in 2010, shifting that city’s main trading activity closer to the airport and away from the chaotic south city center.

 

For now, BDB is considered the world’s largest diamond trading bourse, housing more than 4,000 members across some 2 million square feet of office space, according to its website. That is being dwarfed by SDB in terms of physical size, but will the members relocate?

 

SDB is being driven by key companies who rank among the largest diamond manufacturers in the world. They have generational connections to Surat and the state of Gujarat and are determined to facilitate the city’s continued growth. For some time already it has been tapped as one of India’s fastest growing cities.

 

Kiran Gems is the first company slated to move into SDB, shifting its marketing and sales operations from Mumbai. Others will likely follow in the coming year, but it will take some time for the bulk of companies to make the move necessary to fill SDB’s more than 4,700 offices.


Accessibility is important, which is why the parallel opening of the airport terminal is significant. Regular flights to Dubai are likely the most vital route from a trade perspective.

 

There are skeptics about the viability of the development. India now has two massive diamond complexes at a time when the concept of a bourse is struggling for significance, more people are working from home, and the global trade is consolidating. It is questionable whether BDB and SDB can coexist on the scale that they’re both built.

 

It doesn’t seem that they will complement each other in a way that the total will be greater than the sum of its parts. In the long term, the Indian trade will likely be split physically according to affiliations, as it arguably is already culturally.

 

For the rest of us, that’s neither good nor bad. It just marks a change in the way the diamond business will be conducted in the country. It will take time for international buyers to move beyond Mumbai unless it’s absolutely necessary. But they will ultimately go where the goods are and with time, that will likely be Surat considering its manufacturing capacity. In that context, the opening of SDB is a major development for the trade.


Images: The Surat Diamond Bourse complex (Avi Krawitz)

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