Diamond manufacturing units in the cutting and polishing centres in smaller towns of Gujarat, which were facing a shortage of raw material, will soon receive a steadier flow of rough from large traders in Surat, following an understanding reached between traders and manufacturers. The Gem & Jewellery Export Promotion Council, Gujarat Region helped coordinate the process of finding a mutually beneficial solution.

As part of the agreement, trade associations in centres such as Junagadh, Amreli, Visnagar, Bhavnagar, Banaskantha, Palanpur, Navsari, etc will aggregate the demand from multiple small units in their area and place a bulk order with large traders in Surat each month. This will make it easier for the large traders in Surat, who were finding it difficult, and not cost effective, to handle multiple small orders.

It is estimated that there are over 5,000 units spread across these areas, employing nearly five lakh workers.

GJEPC Gujarat Regional Chairman Dineshbhai Navadia said, “Many centres were not receiving adequate raw materials and were working at about 70% of capacity. Some even faced the risk of closure as a result of inadequate supply, higher rough prices, drop in polished prices and tightening of bank finance.”

Since the associations had been working closely with the Council over the past few years in developing Common Facility Centres (CFC) in their locations, they approached Navadia for help.

After looking into the issue from the point of view of both the suppliers and the manufacturers, the GJEPC helped the two sides evolve a solution. Navadia explained, “Given that the margins in manufacturing are very slender, the suppliers were finding it difficult to deal with multiple small units for job work. They found it more cost-effective to handle bulk orders involving about 5,000 carats.”

A quick calculation showed that each centre was actually handling such volumes, Navadia said. “So we convinced the associations to aggregate all the demands from units in their area into a single order.”

The solution has come at a critical time as there are positive signals from global markets and demand could pick up in 2019, Navadia feels. He emphasised that GJEPC has only helped the two sides evolve a solution and will continue to coordinate and assist them in making it work.