Editor’s Note
The Nirav Modi scandal has raised serious concerns about the future of India’s diamond industry, with traders fearing reputational damage, a potential exodus of business, and tighter credit conditions.
The Nirav Modi scandal has dealt a major blow to India’s diamond trade. Diamond traders in the country believe this incident has tarnished the nation’s image in the international diamond market. It is possible that a significant portion of the diamond cutting and polishing business could move out of the country.
Traders fear that the work of diamond cutting and polishing could shift to Israel and Belgium. After this scam, obtaining loans from banks will also become much more difficult for traders. Currently, India leads the world in the diamond trade. It is said that out of every 15 rough diamonds that are polished, 14 come from India. Surat is the hub of this business, from where 85 percent of the cut and polished diamonds are exported.
He said, “We are trying to present our position before the ministry. We will speak to the ministry in the next 15 days. Hopefully, by then there will be more clarity in the Nirav Modi-Mehul Choksi case, which will simplify things.”
In the 80s and 90s, Israel was the largest producer of polished diamonds. The city of Ramat Gan in Israel was considered its hub. After 1990, the scenario changed and India established its dominance in this business.
The city of Antwerp in Belgium is also extremely famous for the diamond trade. Twenty-nine percent of the rough diamonds that come to India for cutting and polishing originate from this city.
However, the market is more worried about bank loans than its international image. Senior diamond traders say that after this incident, banks will increase their collateral requirements, which will impact business. They said, “Currently it is 30 percent, but it is possible that it may now be increased to 50 percent.”
He said, “The gap to get a loan has widened. In this matter, the government should come forward and help us. We demand that the government establish separate bank branches exclusively for the diamond trade.” Nirav Modi and Mehul Choksi, who committed a Rs 11,400 crore scam, are still at large from the central investigative agencies.