Surat Diamond Bourse: Kiran Gems Sparks Mumbai-Surat Rivalry

Surat : In a significant development that intensifies the ongoing battle for supremacy in the diamond industry, Kiran Gems, the world’s largest diamond manufacturing company owned by Vallabhbhai Lakhani, alias Vallabhbhai Patel, has declared a 1% brokerage on all natural diamond purchases at its new facility at Surat Diamond Bourse. This announcement comes as the company prepares to shift its headquarters from Mumbai’s Bharat Diamond Bourse (BDB) to SDB, the world’s largest office building dedicated to the diamond trade.

The move is seen as a strategic shift that could potentially deal a heavy blow to Mumbai’s diamond trade, where the prevailing brokerage rates range from 0.15% to 0.25%. Kiran Gems, a major player in the industry specializing in small-sized diamonds, boasts an annual turnover of Rs 17,000 crore and a workforce exceeding 45,000 diamond workers.

Vallabh Lakhani is the brainchild of the Rs 3,200 crore SDB project in Surat. About 983 offices are likely to start trading operations from November 21 and the SDB will be inaugurated by Prime Minister Narendra Modi on December 17.

According to a trade advisory released by Kiran Gems, the company will implement the 1% brokerage offer on all natural diamond purchases by diamond brokers, with an additional 1.5% to 2% benefit on non-certified diamond purchases based on viewing and non-viewing basis for business partners. This attractive offer is scheduled to take effect from November 22 at Kiran Gems’ facility in SDB.

The company has stated that the offer of 1% brokerage on transactions will be applicable to the brokers who remain present in person at the Kiran Gems facility at SDB premises after November 22.

The announcement has triggered a fierce competition for diamond brokers, with the lure of higher brokerage rates attracting them to shift their trading activities from BDB to SDB. Industry insiders suggest that Kiran Gems aims to position Surat as the world’s largest diamond manufacturing and trading hub through such promotional strategies.

In contrast, the Gems and Jewellery Export Promotion Council (GJEPC) and BDB recently unveiled plans for the establishment of India’s largest jewelry cluster in Navi Mumbai, with an estimated cost of Rs 40,000 crore. This diamond jewelry cluster is anticipated to bring about significant changes in the dynamics of the diamond industry, generating substantial employment opportunities.

Vallabh Lakhani, the chairman of Kiran Gems, gained attention recently for completing a massive housing project for his employees and relocating the company’s base from Mumbai to Surat. The housing project comprises about 1,200 apartments for the diamond company staff in Jiav village, conveniently located just a 10-minute drive from the SDB project.

Industry sources emphasize the historic nature of Kiran Gems’ 1% brokerage offer, noting that such an incentive has never been witnessed in the diamond industry before. Analysts predict that the announcement will have a considerable impact, enticing a significant number of diamond brokers from Mumbai to Surat for trading in polished diamonds from Kiran Gems.

A diamond industry analyst commented on the situation, stating, “The promotional overtures from a leading diamond enterprise are poised to incite a fierce competition within the refined diamond commerce.” He highlighted the potential adverse effects on smaller players and second-tier firms, emphasizing the likelihood of a domino effect as others in the industry may feel compelled to emulate such discounting strategies.

This unfolding scenario occurs against the backdrop of adversity for the diamond sector, currently facing its most challenging period since the onset of the COVID-19 pandemic. The rivalry between Mumbai and Surat’s diamond industries appears to be reaching new heights with unprecedented and unforeseeable promotional offerings.

Despite repeated calls, Vallabhbhai Lakhani did not responded to The Blunt Times.