Flooding in Surat May Lead to Indian Goods Shortage

Massive floods in Surat, the diamond- cutting capital of India, could lead to a shortage of certain goods this holiday season, Indian traders told JCK. Affected goods could include melee, stones weighing less than 0.20 cts., and “stars.”

In mid-August, monsoon rains struck Surat and surrounding areas, causing a local dam to overflow and as much as 25 feet of water to submerge the city of almost 3 million people. In a scene reminiscent of New Orleans after Hurricane Katrina, many residents took to their roofs to escape the waters. It’s believed that more than 200 people died.

“It is very bad,” says Bakul Mehta, chairman of the Gem & Jewellery Export Promotion Council, the Indian industry group. “I was just there, and to see what people must have gone through … it was terrible.”

An estimated 50 percent of India’s diamond production is manufactured in Surat. The flooding stopped production for about three weeks. The situation was exacerbated by cutters returning to their native villages in fear of the plague, which struck in Surat in 1994.

As a result, some Indian goods might be in short supply this holiday season—though traders stressed that depends on two factors: the strength of U.S. demand, and how quickly cutters return to their wheels.

“It is a slow market at the moment, but the impact won’t be felt right away,” says Pravin Panya, who heads the Gem and Jewellery National Relief Foundation, which is coordinating the local industry’s relief effort. “Right now, there are goods in the pipeline.”

“A lot of people have gone home, but we are making every effort to get them back to work,” Mehta noted. “To recover a lost month of production is very difficult.”

While some of Surat’s production may be taken up by other Indian cities, that could be problematic—Surat was known for better-quality goods with fine makes.

Traders say the loss of life among cutters was relatively small, since most knew about the dangers beforehand. In addition, most diamonds were stowed away in safes.

The biggest hit may be in ruined equipment. Many Surat factories had state-of-the-art gadgetry like Sarin machines, and salvaging them may not be possible.

Still, most are counting on the resiliency of the Indian market to get it through this difficult time.

“Indian factories come up fast,” notes Vasant Mehta, a senior member of GJEPC and vice president of the International Diamond Manufacturers Association. “You blink your eyes and the goods are there.”