Surat, a city in western India, is making waves in the diamond industry with the opening of the world's largest office complex. The Surat Diamond Bourse, covering an impressive 6.7 million square feet, officially surpassed the Pentagon in size when it was completed in July at a cost of $384 million. This grand inauguration will be carried out by Prime Minister Narendra Modi, signaling a significant political victory as he seeks support for a third term in upcoming elections. The Surat Diamond Bourse aims to centralize the diamond industry under one roof, further solidifying Surat's position as the global diamond capital.
While Mumbai has traditionally held the title of India's diamond export center, Surat, affectionately known as "Diamond City," has taken the lead in the processing of rough diamonds. Roughly 90% of the world's diamonds are cut and polished in Surat before being sold to buyers in various countries, including the US and China. The new bourse provides a secured and centralized space for dealers from around the world to conduct their diamond business with confidence, according to Eli Izhakoff, the honorary president of the World Federation of Diamond Bourses.
Situated within the Diamond Research and Mercantile City, a business district modeled after Modi's flagship project Gujarat International Finance Tec-City (Gift City), the Surat Diamond Bourse boasts nine 15-story towers and approximately 4,700 offices. Although currently only around 130 offices are in use, the complex is poised to attract a multitude of businesses. The Surat Diamond Bourse eclipses the size of the Israel Diamond Exchange, which covers 80,000 square meters but also offers additional services such as insurers, banks, and entertainment facilities.
Surat's rise to prominence in the diamond industry is a testament to its historical trade links and strategic location along the Arabian Sea coast. While it lost its position as a trade hub to Bombay in the 17th and 18th centuries, Surat's diamond industry gained traction following the discovery of large diamond deposits in Australia and India's economic reforms in the 1990s. Despite Mumbai remaining the trading hub due to better global connectivity, Surat solidified its status as a diamond manufacturing hub, with migrants flocking to the city in search of work as polishers.
Surat faced a major setback in 1994 when an outbreak of pneumonic plague led to the exodus of workers and a decline in the diamond industry. However, the city underwent significant governance and infrastructure improvements, and today it is renowned as one of the cleanest cities in India. The bustling Mahidharpura, Surat's largest bazaar, showcases traders diligently inspecting and trading precious stones under bright lamps. The Surat Diamond Bourse seeks to bring together these businesses and streamline the industry's operations.
However, the establishment of the Surat Diamond Bourse does come with its own set of challenges. Traders, who currently operate with low overhead costs in the existing bazaar, may be hesitant to relocate to new, seemingly luxurious offices. Mumbai's Bharat Diamond Bourse faced similar challenges initially, but circumstances such as terrorist attacks and the closure of customs services accelerated the migration of businesses to new offices. Additionally, some Mumbai-based diamond businesses may resist the move due to concerns regarding the lack of nearby amenities and entertainment options in Surat. Furthermore, Surat's limited international connectivity may present obstacles for businesses that rely on international trade.
Geopolitics further complicates the diamond industry. Many diamonds processed in Surat originate from Siberia, and the industry has felt the impact of the US and G7 nations imposing sanctions and bans on Russian diamond imports due to geopolitical tensions. A recovery in consumer spending, particularly in the US and China, will play a crucial role in revitalizing diamond sales. Despite these challenges, Nagjibhai Sakariya, president of the Surat Diamond Bourse, remains optimistic, stating that the industry is resilient and accustomed to cyclical slowdowns.
The opening of the Surat Diamond Bourse marks a milestone in Surat's quest to become the unrivaled diamond capital of the world. This ambitious project signifies India's determination to dominate the diamond industry and solidify its position on the global stage.