Despite various opinions about the migration of major players in the diamond industry from Mumbai to Surat, it is inevitable that this move will impact Maharashtra’s tax revenue collection significantly. To prevent any such eventuality, the Maharashtra government is taking some proactive decisions. However, it needs to be remembered that such a shift was being planned for a long time. Now that the news has hit the headlines that nearly 1000 businesses of diamond trade are likely to shift operations to Surat from Mumbai, the move will mark a paradigm shift in the diamond industry. It will have to be seen if Surat can replace Mumbai as the country’s premier diamond trading hub in the future.
As if to counter the move, the Maharashtra government has announced that the biggest diamond hub in India will be set up in Navi Mumbai by next year. State industries minister Uday Samant gave out some details of the proposal. According to him, the planned hub will be located in the vicinity of the Navi Mumbai airport on a 25-acre plot of land. The move is in response to the persistent tirade against the backdrop of a decision of some top traders to shift their operations from Mumbai to Surat in the near future. The development underscores Maharashtra’s lackluster attitude towards industries in general and of the traditional industrial activities based in the state in particular.
Samant has assured that the detailed project report (DPR) and policy are ready for developing the Navi Mumbai diamond complex. The minister’s assurance has come up after big businesses like Vedanta Foxconn, Airbus Tata and Bulk Drug Park decided to move away from Maharashtra in the past.
The proposed Surat complex, involving an investment of Rs.3400 crore, is set to transform Surat into a global diamond trading hub. Once operational, it will possess potential to attract numerous companies, big and small, as there will be a push for development of ancillary industries. It is claimed that it will reshape India’s economic clout substantially.
The migration attracted public attention when billionaire diamond trader Vallabhbhai Lakhani, Director of Kiran Gems, made an announcement about the historic move of relocating his Rs.17000-crore business from Mumbai to the upcoming Surat Diamond Bourse (SDB). The Surat Diamond Bourse promises to come up as a unique complex as the world’s largest office building will be constructed here. It will become, according to its promoters, a magnet for diamond traders and merchants not only from Maharashtra and Gujarat but also from various parts of the world. This complex will be spread over 67 lakh square feet. Presently accommodating over 4500 diamond businesses, the complex will have interconnected towers, each with 15 floors.
It needs to be understood that Lakhani’s move to Surat can’t be simply termed as a relocation. He has put in elaborate planning. As preparatory planning, he has developed a mini-township in Surat. It will be housing 1200 apartments, which will accommodate 2500 employees and their families. The planning has taken care of basic civic amenities so that the migrating workers will not face any difficulty to settle down.
Although it is still subject to final confirmation, the SDB’s inauguration is planned for December 2023. Already bustling with trading and manufacturing activity, the opening will turn a new page for Surat. Besides boosting the diamond trade, it will also jack up the textile city’s real estate scenario. Surat has been slated to emerge as a global diamond trading hub for a long time. With the commissioning of SBD, Surat will have taken one more step towards transforming itself into a global business destination.
The tussle between Mumbai and Surat has a long history. The seeds of this competition were became manifest when the SDB presented an attractive proposal to the Mumbai diamond traders to come to Gujarat. Reportedly, several Mumbai traders have already bought offices at the SDB and many more are likely to follow suit, expectedly after the inauguration of the complex in the near future. To lure the Mumbai traders, the Surat Diamond Bourse had offered a waiver of the maintenance charges for the initial some months, for instance. The Bharat Diamond Bourse (BDB) at Bandra-Kurla Complex in Mumbai had objected to the offer. It seems this objection did not cut much ice.
BDB’s view was that it would be in mutual interest that both the bourses develop simultaneously as the diamond industry is booming at present. Hence, this is not the time to compete but to help and support each other.
SBD countered with the logic that working out of Surat would be more comfortable for the workforce, which has to travel long hours to reach the place of work in Mumbai. Such saving of time in Surat will reduce stress. Another major concern in Mumbai is that it is not possible to buy a flat for the average worker but in Surat, traders can easily arrange affordable accommodation and can conduct their business more easily. However, only those interested in SBD will shift as there is no forcing anyone.
A large number of diamond merchants, workers and the customers of the trade have opposing views about the shift of the diamond industry from Mumbai to Surat. There are pros and cons. As pointed out, Surat has its advantages, though Mumbai will continue to be the premier destination. In Surat, cheaper costs of accommodation and labour will be supplemented with the support from the state government. On the other hand, Mumbai has a well-entrenched international market, the mass transportation facilities, the customs clearance network and avenues for exports. These will take time to develop in Surat. Considering this, It needs to be seen how many traders actually decide to leave Mumbai if the Maharashtra government takes some urgent steps like reducing relevant taxes and duties, introduces more rebates and marries its policies in tune with the development of the gems and Jewellery exports.
The flight of capital and industry from Maharashtra is a matter of concern for everyone. Unless the government reorients its vision about both, more challenges will become unavoidable.
A Column By
Dilip Chaware – Senior Editor
A media professional for 43 years, with extensive experience of writing on
a variety of subjects; he is also a documentary producer and book author.
