Indians have displaced Jews for the diamond crown of the world.
Once small farmers in the villages of Gujarat, they now harvest diamonds.
Almost 80 percent of the world's polished diamonds pass through the hands of Indian merchants, some of whom are among the biggest players in the multibillion-dollar diamond business. These merchants of dreams create the sparkling diamond rings, solitaire earrings and wedding bands that initiate couples into wedded bliss; they are the ones who craft the jeweled baubles that celebrate every joyous occasion.
For Indian diamond merchants, many of whom are the descendents of farmers from Palanpur and Kathiawar in Gujarat, the whole world has become their beat. The diamond-paved city of Antwerp is a second home to them, as is the bustling diamond district of New York. Hong Kong, China, Vietnam, Russia, Sri Lanka and Canada are all extensions of their factories and workplaces and their glittering crafts are found in retail emporia around the world.
Today, India's total export of gem and jewelry to the United States alone stands at $6.2 billion, and Indian goods account for over two-thirds of the total volume of retail jewelry sold in the United States. In fact, the Indian company Rosy Blue is one of the largest customers for rough diamonds from the diamond giant De Beers, which controls 60 percent of the world's supply. At least six Indian companies make up the top ten De Beers clients.
The Lakhi family, probably the only Sindhi family among the big players, started out modestly in Jaipur as traders in precious stones and then moved into manufacturing. Today the five brothers have expanded the family business to several companies, and Prakash Lakhi heads Vishinda in New York. The Lakhi Group is one of the largest exporter of diamonds from India and has perhaps the world's largest diamond polishing factory in Surat, with over 6,000 workers under one roof.
While estimating that India produces 50 percent of the world's polished diamond consumption by value and 80 percent by weight, the article notes that the Indian industry alone imported some 129.3 million carats of rough diamonds last year: "India has become financially probably the strongest manufacturing sector and its largest companies are among the fastest growing conglomerates in the world."
Diamonds were discovered in India in the 4th century BC and except for a minor supply of diamonds in Borneo, India was the world's only source until the 1730s. The diamond mines of Golconda were legendary, but gradually rich deposits were discovered in many other countries. Today the Majhgawan pipe near Panna is India's only diamond producing source, and now the hot spots for mining have shifted to Australia, Sierra Leone, South Africa and Canada.
Ever the innovators, Indians have taken on a new role: banking on skilled hands and eyes and enterprise, they have become the most prolific diamond polishers in the world!
"The largest exporter of polished diamonds is India and Israel is second," says Basant Johari, the president of Indian Diamond and Colorstone Association in New York. "India exports by value about 50 percent of the world's production, and by quantity over 80 percent in carats. If you look at the number of stones, India produces ten stones out of every 11 stones." Apart from the skill, Johari explains, there is a very big difference in the price structure of labor in India, as compared to Israel or the United States.
In India, the rough diamonds come from either De Beers or traders who buy in the open market in Antwerp, and to a certain extent even from New York and other places in the world, including the Argyle Mines in Australia. So, not surprisingly, Indians have become entrenched in Antwerp, which is the hub of the diamond trade with four diamond exchanges.
When this writer conducted a long interview with Mehta in Antwerp via his cell phone on a Sunday, he constantly and politely terminated other calls, but he did attend to one pressing matter. It was the demands of his little granddaughter, insisting he untie a balloon. The lines from Europe to America crackled, as things came to a halt while he patiently attended to this important task.
And that somehow sums up one of the big hidden strengths of India's diamond merchants: their strong family ties. Whether in manufacturing, buying or selling, Indian diamond merchants have a strong family support system and many willing hands.
In fact, the majority of the businesses are family-owned, and certain names like Mehta, Shah, Jhaveri and Patel dominate in the diamond industry. Many of them hail from Palanpur, a small town in Gujarat, and Palanpuris initially controlled the diamond trade in India. In the late 70s and early 80s, they accounted for 85-90 percent of the Indian trade.
Jivraj Bhai Surani, founder of JB Diamonds Group, is one of the prominent Kathiawari diamond dealers. The business started back in 1963, with the family actually doing the polishing. Surani, who is a past president of the Surat Diamond Association and co-convener of the Gujarat Gem and Jewelry Export Promotion, lives in Surat, but for him, as for most of the diamond merchants, New York is just a flight away.
Weddings are, of course, a sacred cow in the Indian ethos where no expense is spared, but generally diamond merchants have kept a very low profile even as they've become a major force in the industry. Simple lifestyles, family togetherness and a vegetarian diet are their credo. Currently, Indian-origin companies control 55-60 percent of the Antwerp trade, but not all of the polishing is done in India. Indian merchants are diversifying their operations to far-flung places in South East Asia, Russia and Armenia, thus expanding their base, as the diamond industry seeks out low cost areas for manufacturing.
"Indians had the flexibility and the ability, and because of their geographic situation and big families, they could put people all around the world. Their business grew much more as compared to the other communities," says Mehta.
This commonality of business interests has motivated the two communities - who are both very strong on family values, hard work and religion - to learn to co-exist in the business. Jewish and Indian business organizations often honor each other's community leaders or invite them to sit on their boards of directors. Indian merchants often donate to Jewish causes, and after the Gujarat quake took place, Jewish dealers also chipped in.
According to the Wall Street Journal, the polishing costs in India are 80 percent lower than in Antwerp, and until recently the Jewish merchants polished and cut the diamonds locally. Indians also had another point in their favor, for as the Journal notes, they "also proved canny at polishing and cutting the lower-quality rough diamonds that Jewish traders typically overlooked, squeezing higher profit margins than thei Jewish competitors and pumping the profits back into their businesses."
Amal Jhaveri, a past president of IDCA and president of sales and marketing at Sugem in New York, says: "We are competitors, but we are all working together in many different ways. We are all born businessmen, so we're going to do business; but there is enough place in this business for everyone."
When the IDCA was formed 17 years ago, there were just 65 member companies, but today it has over 300 member companies that participate in shows in New York, Las Vegas, Tuscan (Arizona) and Orlando.
As Indians have streamed into the diamond business, they have become a sizable presence on 47th street, the nerve center of New York's bustling diamond district, stretching between 5th and 6th Avenues. In recent years, as more players have entered, the district has spilled into neighboring streets and avenues too. Amidst the hustle and bustle of retail jewelry shops on the street level and in the vaulted offices above them, are probably an ocean of diamonds.
Security has been beefed up dramatically in these buildings, especially after 9/11, but tenants can remember bygone times, when there were muggings and break-ins. Traveling salesmen, laden with gems, still have the occasional hold-up in Atlanta or Puerto Rico, but the business has become fortified. Jewelers rarely carry the gems on their person, sending them ahead by special couriers who cater to the diamond trade.
Sometimes, outside factors help too. Parikh explains that since the U.S. Government eliminated duty on Indian jewelry, the industry has expanded. "It's a combination of many things which are giving a push to this business." Indian diamond merchants are trading in everything from large stones to colored stones, from semi-precious to smaller goods; they are even doing the actual setting and manufacturing here for clients, and have even branched out into gold for the U.S. consumer.
Of the entire American consumer market, the bridal business is the biggest and includes wedding bands, engagement rings as well as jewelry for anniversaries. Larger stones of a carat to three carat still come largely from Israel and Antwerp, and the proportion of Indians selling such stones, though growing, is still small.
Rosy Blue is a blueprint for how a business can grow from modest beginnings. This family business started in the 1960s in India and branched out to Antwerp in the 1970s. The brothers then started expanding their manufacturing to Sri Lanka, with local partners. Today they have factories in China, Thailand, Vietnam, Russia, Armenia, Israel, and Sri Lanka.
They have a manufacturing base of various products and distribution is well established with operations that are over 25 years old. Explains Mehta, "These are very mature operations focusing on local competition, rather than just worrying about being better than your fellow Indians. That policy has helped us very well so that one thinks global and acts local."
Rather than just relying on family, the company has encouraged outside talent. "We started making that change in the late 70s because one realizes that you cannot always produce capable children. We've been very lucky so far; sometimes it actually makes sense to have professionals as they bring new insights. Today all our operations are very competitive in their own areas and their own regions."