Saree saga: Draped for elegance and growth too

By Kajol Singh

Shantaram's eyes were weary. But he couldn’t suppress the proud smile on his face. A masterpiece all the way, he thought to himself giving the nine-yard wrap one last look. A brush of colour, a touch of tradition and an entire year of laborious craftsmanship... the meticulous weaves had finally taken shape. And it had been worth all the days of working round the clock for Shantaram’s family. After tying the knots on warp and weft threads, dyeing, colouring, weaving and finishing, the beautiful double Ikat Patola saree was ready.

It’s not just the Patola saree of Gujarat that is impressive. In fact, the saree in itself is perhaps the most innovative garment in the history of India. What’s more, it’s holding out in the era of slowdown. The brisk business speaks volumes. Sample this: Many leading retail houses in the country admit to 15-20% increase in saree sales over the last year. Even expensive designer sarees are now being bought by a whole lot of 20-somethings. A visible indication of saree sales being untouched by slowdown blues. Industry estimates peg the saree market at a massive $12 billion in India.

Experts say that the demand is steady despite the economic slump. “Sarees like the Patola command a niche market with primarily the NRIs and affluent lot buying them from us. Our sale of sarees have in fact gone up by 20% over the last year,” says S K Chaturvedi, MD of Gujarat State Handloom Handicrafts Development Corporation which was formed in ‘73 for revival of handlooms and handicrafts of Gujarat.

Various other states of India, too, can be credited for making the saree an iconic sensation. Each saree mirrors an effortless story woven around the country’s royal tradition and heritage. With their unique charm and appeal, it is little wonder that sales have still been soaring at a time when spending on other categories have seen a sharp drop.

A peek into the past also offers interesting insights into the story of the saree. It was Maharani Indira Devi of Cooch Behar who made the idea of French chiffon sarees extremely popular in the royal circle. Princess Niloufer from Hyderabad wore fashionable chiffon sarees showing off asymmetrical sequin work. Then synonymous with royalty, the saree’s glory exists even today.

States, including Gujarat, Maharashtra, Tamil Nadu, West Bengal and Orissa, narrate stories of rich heritage spun into this elegant garment. While Gujarat is known more for its reversible double Ikat Patolas, it is the fine silk Kanjeevarams that are synonymous with the South. Likewise its the Paithani which are famous in Maharashtra and Ikat sarees which are dominant in Orissa. The fine silk and opulent embroidery in Banarasi sarees from Uttar Pradesh make them highly sought after, while ‘Kantha work’ and Balucharis are prominent from Bengal. The Uppada silk saree is typically of Andhra Pradesh.

Not surprisingly, each of these sarees are quite expensive. Bright coloured Kanjeevarams are the famous reflections of the art and craft of South India. Made by craftsman in Kanchi and characterised by lively colours, the quality of silk used is extremely fine. Gold zari work can be significantly seen on them, also making for a good investment. The premium range in these is between Rs 10,000-Rs 15,000. But besides the popular Kanjeevaram, there are other sarees in Tamil Nadu too which are equally well-known.

Attracting global fashion houses
Brocades, tissue sarees, Thagadu and Sarboji sarees also form the exclusive range in silk sarees. Tissue sarees, usually worn by the bride are woven in gold thread and are priced mostly upwards of Rs 1 lakh.

Mr Jairam, MD of Rasi Radha Silk Emporium in Chennai, a 110-year old textile firm in Chennai, feels that even though fewer people may be wearing it now, a growth in demand is still being seen. "The saree is not dying as we have seen a steady growth in their demand over the years. We saw a steady growth of 17% till October. The dip in sales post October has been marginal. It is a significant part of the wedding market, hence the sales are not affected as much," he says.

Nalli Group of Companies, a leading player in the textile and retail business, has also been experiencing year-on-year growth in saree sales. "It's more of a perception that the saree is going out of fashion. They have been clocking good sales and growth every year," says Lavanya Nalli, president of the Nalli Group of Companies.

The South, in fact, is known for its wide range in saree wear besides the Kanjeevarams. Also famous is the Mysore Silk saree which is known for extensive and rich zari embroidery on the borders of the saree. From Andhra Pradesh, the pure silk Uppadas display geometric designs and intricacy, requiring a lot of skill and a few months to produce, thus pushing up the cost of these sarees.

The sarees of Gujarat are no less magnificent. The reversible double Ikat Patola, one of the most famous sarees of the state, can range anywhere between Rs 80,000-1,50,000! Woven in Patan in Gujarat, it takes over a year of painstaking effort to make one such saree. Besides the Patola, there is also the Bandhini saree which is the tie and dye saree of Gujarat.

Another popular saree mostly worn in weddings is the Gharchola saree which is woven in Khambat while the embellishment is done in Kutch and Jamnagar. Mainly worn in wedding ceremonies, the red and white combination in these sarees is a preferred choice. Adds Mr Chaturvedi, "Gujarat is famous for various types of sarees. In the Patola, the craft and motif is very intricate. The yarn is dyed in such a way that the motifs form beautifully on the saree. It is symbolic of the rich craft of India." Equally enchanting is the hand-woven Paithani saree of Maharashtra which is a distinctive style featuring bird motifs as well as stars, lotus, flowers etc. A Paithani could range anywhere between Rs 3,000-Rs 1 lakh or above depending on the way it is designed. Made of pure silk, these use gold embroidery extensively. However, in recent times even silver threads topped with gold are a common feature, thus bringing down the overall cost of the saree.

But if you thought the saree's popularity was only restricted on home turf, think again. International fashion houses such as the French fashion house Balenciaga included the saree in their creations as early as 1937. And in 2007, Nicolas Ghesquiere, creative director of the fashion house reintroduced the saree in a glamourous avatar showing innovative drapes in his collections. He even had an entire line dedicated in Fall 2009 for the Paris Fashion Week called the Sari Silhouette Collection!

Experts, however, feel that continuous steps need to be taken to ensure a steady sales growth for the saree. Rta Kapoor, author and researcher, for 'Saris of India' volumes & 'Handcrafted Indian Textiles,' has been involved in several initiatives to revive the evergreen wonder. "The saree has to be re-introduced as a contemporary garment that can be woven in many new ways as it is so flexible and can be constantly refashioned. Only then can the looms that are facing a threat from cheap imports be given a new lease of life," says Kapoor.

In fact when it comes to innovation, the varied drape styles of designer sarees has increasingly been attracting the younger generation. Fashion designer Ritu Kumar, whose collection comprises a large variety of sarees in metallic work, says that a lot of innovations are taking place by designers to attract the younger buyers.

"The drapes are very versatile now. The blouses are also more innovative in cholis, halters, strings and backless styles. One can drape the saree depending on the blouse being worn. For evening wear, it is now fast becoming a preferred option by women in their mid 20s," she says. While styles may come and go, this is one clothing item that continues to have its loyal base of customers. An ageless wonder all the way.

Narendra Modi Revels In A Challenge, His Biggest Beckons

By M H Ahssan / INN Bureau

Narendra Modi had named himself the BJP’s prime ministerial candidate long before the party’s Parliamentary Board rubber-stamped his nomination on 13 September. The imprimatur is the culmination of one of the most extraordinary political campaigns in recent times. It is the start of an audacious bid for India’s top job from an entirely self-made politician. 

The odds have never favoured Narendra Modi. He is the first OBC to be named as a candidate for India’s top job by one of India’s national parties. Both the Congress and the BJP have traditionally been led by upper castes. He is also the first person from an under-privileged, working class, economic background — he ran a tea stall as a teenager — to lead a national party. He is the quintessential outsider who has broken through several ceilings.

Modi Aims At History, Gandhis With World's Tallest Statue

By M H Ahssan / INN Live

Gujarat Chief Minister Narendra Modi is building the world's tallest statue at a cost of almost $340 million in honour of one of the country's founding fathers, a project he is using to undermine his chief rivals, the Gandhi-Nehru political dynasty.

The statue of Sardar Vallabhbhai Patel, who was first Prime Minister Jawaharlal Nehru's deputy and his interior minister but often at odds with him, is to be built on a river island in Gujarat, the home state of both Patel and Modi.

Modi, who rules Gujarat as chief minister and is the leading opposition candidate for prime minister in general elections due next year, is to inaugurate the construction of the statue on Thursday, the 138th birth anniversary of Patel.

Modi saddles up for key role at Centre

By M H Ahssan

The man who once served fresh buns and tea at a roadside stall in Ahmedabad is today emerging as the most potent brew to come out of Sangh stables

In the late 1960s, Narendra Modi used to help his brother run a tea-stall at the Gita Mandir bus stand in Ahmedabad, serving fresh buns and hot cups of tea. Among the regular clients were a bunch of Rashtriya Swayamsevak Sangh leaders who used to animatedly discuss political developments for hours at a stretch. Then in his late teens, the Sangh idealogy left a lasting impression on this youngster who was studying political science at that time.

He quit the tea stall to become a swayamsevak and later a full-time pracharak. Forty years later, Modi is emerging as the most potent brew to come out of the Sangh’s stables, with even stalwarts of India Inc fuelling his political ambition to look beyond the boundaries of Gujarat.

There was shock and surprise in January this year when Anil Ambani and Sunil Bharti Mittal, impressed by the fact that the Vibrant Gujarat investment summit had clocked pledges worth $250 billion in these depressed economic conditions, publicly endorsed this “future Prime Minister”.

Other second-rung Bharatiya Janata Party leaders, who are wary of the growing stature of the Gujarat chief minister, reacted with indignation. Modi was quick to declare that his only focus was to see L K Advani as the next prime minister. But then, many in the BJP see Modi’s emergence at the national level as the writing on the wall, given Advani’s advancing age and the absence of any other mass leader and masterstrategist in their midst, especially after the demise of Pramod Mahajan.

Advani is right in a way. The BJP’s PM-candidate is no longer seen as the face of Hindutva, a plank the BJP was forced to shed in order to gain acceptability among allies in an era of coalition politics. At the same time, the BJP is keen to use Modi’s exceptional oratorial skills, organisational capacity and image as Hindutva’s poster-boy in other states.

That’s an image which came with his dubious handling of the Gujarat riots of 2002 and helped Modi to win two successive assembly elections in Gujarat — both with two-thirds majority. But he would like to be seen now as India Inc. sees him — as a man who has put the development of Gujarat on the fast track and has the potential of replicating it across the country.

While he steps up the ante on Islamic terror, conscious efforts have been made to shed the Hindu ‘hriday samrat’ tag, with a demolition spree against illegal temples in Gandhinagar and the recent appointment of Shabbir Khandwawala as head of Gujarat police.

It only helped his image make-over when Vishwa Hindu Parishad general secretary Ashok Singhal compared him with Mahmud Ghazni over the temple demolition move.
Add to that the huge participation of Muslim countries at the last Vibrant Gujarat meet, which surprised much of the western world which still treats Modi as a pariah.
The party has given Modi charge of the BJP’s election campaign in the entire western region, covering Maharashtra, Goa and the Union Territories. This means Modi will effectively have control of 78 constituencies, including seats which ally Shiv Sena will contest.

Party sources say state units from Uttar Pradesh, Rajasthan, Orissa and others are also desperately seeking election rallies by Modi who is expected to be a bigger crowd-puller than Advani who, in a recent interview, admitted that Modi was perhaps more popular than him.

“This is BJP’s timetested formula of presenting a moderate and hardline face simultaneously. Modi is seeking the same role which Advani used to earlier play for Vajpayee as the star campaigner,” said a senior BJP leader.

Govindacharya, the former BJP leader who was thrown out by the party some years back for calling Atal BihariVajpayee “the BJP’s secular mask”, says: “His (Narednra Modi’s) time will come. It is just a matter of time.”

Well, everyone knows by now the role of the mask in Narendra Modi’s political career.

Ishrat Jehan Case: How Deep Is The Rot In Gujarat Police?

By Akshaya Mishra / Ahmedabad

Politically loaded insinuations and crude guesswork easily overwhelms valid information on the 2002 riots and the spate of police encounter cases between 2002 and 2006. Based on selective, calculated leaks from investigating agencies and unidentified sources elsewhere and interpreted according to political leanings, these have formed an important part of the political narrative in the last one decade. It is par for the course when the state is Gujarat.

Exclusive: Is The ‘Gujarat Model Of Growth’ A Sheer Bluff?

By M H Ahssan / INN Live

So whether the likes of Jagdish Bhagwati, Arvind Panagariya and hundreds of  their parrots like it or not, the Raghuram Rajan committee has called the Narendra Modi bluff. Kerala model is no Gujarat model at all. Kerala model is simply the Kerala model and the best Gujarat model under Modi’s two terms can do is only lag way behind. In fact, at position number 12. 

In fact the Rajan committee didn’t surprise anybody – Kerala, Tamil Nadu and Goa have been working at it for year.

BJP Politics: Has Recent Poll Victory Made Things Difficult For Amit Shah In Gujarat?

By NEWSCOP | INNLIVE

With Anandiben now showing a rare belligerence, the BJP president’s plan to replace the Gujarat CM before the 2017 Assembly poll seems to be in trouble.

Amidst the exhilaration over the Bharatiya Janata Party’s landslide victory in Assam, the party leadership has begun to absorb an uncomfortable truth. BJP president Amit Shah’s strategy may have sizzled in Assam, but his plan to replace Anandiben Patel as chief minister before the 2017 Assembly elections in his home turf of Gujarat may be thwarted by a renewed vigour acquired by the chief minister following a by-election victory in the state.

Presently, A Complete 'Invisible' Government Is Ruling India

By Rajinder Puri | Delhi  

Two simultaneous developments are intriguing. After prevaricating for two months over submission of the supplementary charge sheet on the Ishrat Jahan fake encounter case the CBI eventually submitted it to the court. It did not name either as accused, or as a suspect deserving questioning,  Amit Shah, former Minister of State Home affairs and closest aide of Chief Minister  Narendra Modi. 

The Home portfolio during the relevant period was held by  Modi. Simultaneously there were reports that the central government will take up the allegations of unwarranted surveillance of a lady by the Gujarat police on instructions of  Amit Shah who was propitiating an unnamed “Saheb”.

View Point: Has Modi Polarised The Media?

By Rajdeep Serdesai (Guest Writer)

If elections were to be held in the social media, Narendra Modi would almost certainly be ‘crowned’ prime minister. Modi has more than 17 lakh followers on Twitter, more than any other politician of national significance (Shashi Tharoor has marginally more, but he is nowhere close to being a national leader yet). The vast tribe of Internet Hindus and a well-oiled PR machine have ensured Modi’s status on any web platforms is unchallenged.

Commentary: Modi: Neither Monster, Nor Messiah!

By Rajinder Puri / Delhi

Within a couple of days by the end of the BJP national executive meeting in Goa starting on June 7, 2013  Narendra Modi may be declared as chairman of the party’s election campaign committee or perhaps even as the party’s prime ministerial candidate. In either event it will be perceived with near certainty that he will become eventually the BJP prime ministerial candidate. This prospect fills his supporters with glee and his detractors with alarm. One section thinks that his ascent to the post will bring deliverance. The other section believes it denotes disaster. Who is right? Seldom has an individual polarized public opinion thus.

Commentary: Why BJP Is Playing With Article 370!

By Rajinder Puri / Delhi

If there is one issue which emotionally unites LK Advani and Narendra Modi, and indeed the bulk of the BJP leadership, it is Article 370 imposed in the state of Jammu & Kashmir. Recently both leaders commented against this Article on Shyama Prasad Mukherjee’s death anniversary. Advani spoke in Jammu while Modi spoke in Punjab from where he launched his 2014 poll campaign.

The BJP rationale to oppose this Article is clear enough. It refuses to recognize differential treatment to Indian citizens and the conferment of special status to the one state of J&K.

NaMo, A Model Of Ruthlessly Ambitious 'King Aurangzeb'

By Zamir Kamil | Delhi

Who could imagine that Aurangzeb and Narendra Modi would have some things in common? But life surprises. To begin with, both are Gujaratis at least by birth. Aurangzeb was born in the town of Dahod, 200 km from Ahmedabad. Modi's birthplace is Vadnagar, 100-odd km away. Aurangzeb loved the town of his birth and three years before his death, instructed his son, the governor of Gujarat, to take special care of it.

New York Times Edit And The Unfounded 'Modi' Paranoia

By Dhiraj Nayyar (Guest Writer)

The Editorial Board of the venerable New York Times does not want Narendra Modi to become India’s Prime Minister. The paper is, of course, entitled to its view. One only wishes its argument was more sophisticated, and the evidence more compelling. 

The simplistic argument is this: “India is a country with multiple religions, more than a dozen major languages and numerous ethnic groups and tribes. Mr. Modi cannot hope to lead it effectively if he inspires fear and antipathy among many of its people.” The New York Times has a one-dimensional view of Modi. 

Sardar Sarovar Project: NaMo Narmada, Who Gains, What?

By Himanshu Upadhyaya (Guest Writer)

As elections draw closer, state rhetoric over the Sardar Sarovar dam heightening project is slowly reaching a crescendo as evident from various media reports, but who will finally benefit from the moves on the ground?

Even as The Indian Express reports on the steadily rising water storage in the Sardar Sarovar Dam over the river near Kevadiya in Gujarat, farmers who have been waiting for the last three decades for Narmada waters to irrigate their farms intensify the stir.

Exclusive: Indian Mujahideen - The Terror And The Threat

By Newscop / INN Bureau 

The Indian Mujahideen are both a grave threat and a complex puzzle for this country. As recently as June-end, the Gujarat Police released the interrogation report of one of IM’s key operatives, Danish Riyaz, 29, a software engineer from Ranchi. The Crime Branch had arrested him on 22 June at Vadodara railway station aboard the Secunderabad-Rajkot Express after a tip-off. He was accused of sheltering Abdul Subhan Qureshi in Ranchi, allegedly a mastermind of the Delhi and Ahmedabad blasts of 2008. 

Indian bombs shake diamond trade

India's diamond industry, already rattled by the weakening global economy, has had its confidence further damaged by the discovery in the past few weeks of more than 20 bombs in Surat, the center of the world's diamond cutting and polishing business. The outlook has also been marred by violent protests for higher pay in the sector.

Since 29 July, when the first live bomb was discovered, 25 bombs have been found and defused in Surat, in Gujarat state. While the bombs were recovered before they could cause any damage, their discovery in areas like Varachha, home to most of the town's diamond processing units triggered panic. At least six bombs were found in Varachha's Mini Diamond Bazaar.

More than 800,000 workers cut and polish rough diamonds in Surat, earning India US$11 billion in exports last year. Around 92% of the world's diamond roughs are cut and polished in the town.

The bombs were part of a wider campaign apparently aimed at damaging India's economy. More than 50 people were killed when 25 bombs ripped through Ahmedabad and Bangalore a few days before the Surat bombs were discovered. Ahmedabad is a prosperous commercial hub, while Bangalore is India's IT capital. Analysts believe that the bombs in Surat were aimed at striking terror at the heart of India's - indeed of the world's - diamond trade.
"Surat is a huge city, but considering all the bombs were planted in areas where the diamond industry is based, I think there is a message in that," Pravinbhai Nanavati, vice president of the Southern Gujarat Chambers of Commerce and Industry, told the BBC. "The bombs [in Surat] were planted by those who wanted to hurt India economically," he observed, underlining the fact that "stopping production for one day in the diamond industry means a loss of US$28 million".

The threat of terrorism comes at a bad time for India's diamond industry. In early July, workers in cutting and polishing units in Surat and Bhavnagar went on a strike to press for higher wages. With hundreds of thousands of workers out on the streets, workshops were forced to down shutters. The Surat Diamond Traders Association recommended a 20% salary hike to defuse the crisis.

With the strike over and concern at the discovery of bombs having eased, workshops are again humming with activity. But beneath the calm worries remain.

July saw a "roughly 35% downturn in business because of recession," Kamlesh Jhaveri, director of the Mumbai-headquartered London Star Diamond Company, told Asia Times Online. The US imports around $40 billion worth diamonds from India - in 2006-07 it accounted for 60% of diamonds exported from India - and the slowing US economy has hit the Indian diamond industry hard.

To add to these woes, the Diamond Trading Corporation, which controls 80% of the global trade in rough diamonds, last month announced a 5% increase in the price of roughs. The price of roughs had increased 8.5% earlier this year amid strong demand for diamonds in India, China and the Middle East and reduced supply.

The supply of roughs, already on the wane in recent years has tightened further with several Indian sightholders being cut out by De Beers under its global rough diamond distribution plan.

Although cutting and polishing of diamonds gives the stones their sparkle, the process yields thin margins as the cost of the raw material accounts for 85-95% of the selling price. With the cost of diamond roughs surging these margins have shrunk further. Thousands of factories in Surat, Bhavnagar and other towns in Gujarat are said to have shut down over the past year.

Competition to Surat has also grown, with diamond mining countries in Africa demanding that cutting and processing units be set up there. Analysts have also warned of looming competition from China's cutting and polishing business.

Media reports have said that the recent threat of terrorism to Surat and the wage hike for workers will add to the industry's growing woes. These reports have pointed out that foreign buyers who would have started streaming into Surat now for purchase of diamonds ahead of the Christmas season have put off plans fearing terrorist attacks. The wage hike will meanwhile add to costs and cut into margins, they argue.

Disagreeing with these reports, Jhaveri points out that Surat is a manufacturing hub and few foreign buyers go there for their purchases, anyway. As for the impact of higher wages on operating costs, it is likely to be lower than that being reported. The recommendations for a wage increase are just that - they are recommendations and aren't binding in nature. "With monitoring of implementation of these recommendations weak, it is unlikely that workers in small units will get more than a 15% hike," Jhaveri told Asia Times Online.

What could happen, however, especially if terrorism concerns were to deepen, is that workers could chose to move out of Surat to smaller towns in Gujarat that would be less likely to be targeted by terrorists. Smaller processing units might also shift to smaller towns to cut operating costs.

Contrary to media reports that point to processing units and workers shifting to Africa or China, Jhaveri says the move, if any, will be within Gujarat.

The cost of cutting and polishing a karat of stone in Africa works out to $70-$75 compared with a maximum of $20-$25 in India, Jhaveri said.

"It might not make much of difference to Israeli or Antwerp diamantaires, who have factories in Africa as they are looking at similar costs back home. But for Indian diamantaires, who have the cheap labor option that Surat and other towns in Gujarat provide, shifting processing units to Africa doesn't make economic sense," he said. Around five Indian companies have factories in South Africa and Botswana.

As for the China threat, labor cost there is also higher than that in India. China is focussing on bigger and better-quality diamonds. At the same time, processing units in China are not concentrated and so lack the benefits of infrastructure offered in India.

The China threat to India's diamond processing business has been grossly exaggerated to help India's processors can wring concessions from the government in New Delhi, said one industry insider, who wished to remain anonymous.

Nor will the displacement of Surat and other towns in Gujarat in the cutting and polishing business, "ever happen", said Jhaveri. The advantages these towns and their workers possess are unparalleled.

Gujarat in general and Surat in particular has repeatedly shown resilience in the face of adversity such as natural and man-made disasters. The entrepreneurial spirit of its people has made it a favorite investment destination, despite the blows it suffers.

The town was repeatedly raided and looted by the Maratha king Sivaji in the 17th century, fire destroyed the city in 1837 and more recently it has suffered communal riots (1992, 2002), an outbreak of a plague epidemic (1994) and floods (2006). The floods in Surat cost the diamond polishing units $60 million, yet the city has quickly bounced back, registering an 11.8% growth rate this year.
Surat might be shaken after the discovery of bombs but its spirit has certainly not been shattered.

Indian bombs shake diamond trade

India's diamond industry, already rattled by the weakening global economy, has had its confidence further damaged by the discovery in the past few weeks of more than 20 bombs in Surat, the center of the world's diamond cutting and polishing business. The outlook has also been marred by violent protests for higher pay in the sector.

Since 29 July, when the first live bomb was discovered, 25 bombs have been found and defused in Surat, in Gujarat state. While the bombs were recovered before they could cause any damage, their discovery in areas like Varachha, home to most of the town's diamond processing units triggered panic. At least six bombs were found in Varachha's Mini Diamond Bazaar.

More than 800,000 workers cut and polish rough diamonds in Surat, earning India US$11 billion in exports last year. Around 92% of the world's diamond roughs are cut and polished in the town.

The bombs were part of a wider campaign apparently aimed at damaging India's economy. More than 50 people were killed when 25 bombs ripped through Ahmedabad and Bangalore a few days before the Surat bombs were discovered. Ahmedabad is a prosperous commercial hub, while Bangalore is India's IT capital. Analysts believe that the bombs in Surat were aimed at striking terror at the heart of India's - indeed of the world's - diamond trade.
"Surat is a huge city, but considering all the bombs were planted in areas where the diamond industry is based, I think there is a message in that," Pravinbhai Nanavati, vice president of the Southern Gujarat Chambers of Commerce and Industry, told the BBC. "The bombs [in Surat] were planted by those who wanted to hurt India economically," he observed, underlining the fact that "stopping production for one day in the diamond industry means a loss of US$28 million".

The threat of terrorism comes at a bad time for India's diamond industry. In early July, workers in cutting and polishing units in Surat and Bhavnagar went on a strike to press for higher wages. With hundreds of thousands of workers out on the streets, workshops were forced to down shutters. The Surat Diamond Traders Association recommended a 20% salary hike to defuse the crisis.

With the strike over and concern at the discovery of bombs having eased, workshops are again humming with activity. But beneath the calm worries remain.

July saw a "roughly 35% downturn in business because of recession," Kamlesh Jhaveri, director of the Mumbai-headquartered London Star Diamond Company, told Asia Times Online. The US imports around $40 billion worth diamonds from India - in 2006-07 it accounted for 60% of diamonds exported from India - and the slowing US economy has hit the Indian diamond industry hard.

To add to these woes, the Diamond Trading Corporation, which controls 80% of the global trade in rough diamonds, last month announced a 5% increase in the price of roughs. The price of roughs had increased 8.5% earlier this year amid strong demand for diamonds in India, China and the Middle East and reduced supply.

The supply of roughs, already on the wane in recent years has tightened further with several Indian sightholders being cut out by De Beers under its global rough diamond distribution plan.

Although cutting and polishing of diamonds gives the stones their sparkle, the process yields thin margins as the cost of the raw material accounts for 85-95% of the selling price. With the cost of diamond roughs surging these margins have shrunk further. Thousands of factories in Surat, Bhavnagar and other towns in Gujarat are said to have shut down over the past year.

Competition to Surat has also grown, with diamond mining countries in Africa demanding that cutting and processing units be set up there. Analysts have also warned of looming competition from China's cutting and polishing business.

Media reports have said that the recent threat of terrorism to Surat and the wage hike for workers will add to the industry's growing woes. These reports have pointed out that foreign buyers who would have started streaming into Surat now for purchase of diamonds ahead of the Christmas season have put off plans fearing terrorist attacks. The wage hike will meanwhile add to costs and cut into margins, they argue.

Disagreeing with these reports, Jhaveri points out that Surat is a manufacturing hub and few foreign buyers go there for their purchases, anyway. As for the impact of higher wages on operating costs, it is likely to be lower than that being reported. The recommendations for a wage increase are just that - they are recommendations and aren't binding in nature. "With monitoring of implementation of these recommendations weak, it is unlikely that workers in small units will get more than a 15% hike," Jhaveri told Asia Times Online.

What could happen, however, especially if terrorism concerns were to deepen, is that workers could chose to move out of Surat to smaller towns in Gujarat that would be less likely to be targeted by terrorists. Smaller processing units might also shift to smaller towns to cut operating costs.

Contrary to media reports that point to processing units and workers shifting to Africa or China, Jhaveri says the move, if any, will be within Gujarat.

The cost of cutting and polishing a karat of stone in Africa works out to $70-$75 compared with a maximum of $20-$25 in India, Jhaveri said.

"It might not make much of difference to Israeli or Antwerp diamantaires, who have factories in Africa as they are looking at similar costs back home. But for Indian diamantaires, who have the cheap labor option that Surat and other towns in Gujarat provide, shifting processing units to Africa doesn't make economic sense," he said. Around five Indian companies have factories in South Africa and Botswana.

As for the China threat, labor cost there is also higher than that in India. China is focussing on bigger and better-quality diamonds. At the same time, processing units in China are not concentrated and so lack the benefits of infrastructure offered in India.

The China threat to India's diamond processing business has been grossly exaggerated to help India's processors can wring concessions from the government in New Delhi, said one industry insider, who wished to remain anonymous.

Nor will the displacement of Surat and other towns in Gujarat in the cutting and polishing business, "ever happen", said Jhaveri. The advantages these towns and their workers possess are unparalleled.

Gujarat in general and Surat in particular has repeatedly shown resilience in the face of adversity such as natural and man-made disasters. The entrepreneurial spirit of its people has made it a favorite investment destination, despite the blows it suffers.

The town was repeatedly raided and looted by the Maratha king Sivaji in the 17th century, fire destroyed the city in 1837 and more recently it has suffered communal riots (1992, 2002), an outbreak of a plague epidemic (1994) and floods (2006). The floods in Surat cost the diamond polishing units $60 million, yet the city has quickly bounced back, registering an 11.8% growth rate this year.
Surat might be shaken after the discovery of bombs but its spirit has certainly not been shattered.

Indian bombs shake diamond trade

India's diamond industry, already rattled by the weakening global economy, has had its confidence further damaged by the discovery in the past few weeks of more than 20 bombs in Surat, the center of the world's diamond cutting and polishing business. The outlook has also been marred by violent protests for higher pay in the sector.

Since 29 July, when the first live bomb was discovered, 25 bombs have been found and defused in Surat, in Gujarat state. While the bombs were recovered before they could cause any damage, their discovery in areas like Varachha, home to most of the town's diamond processing units triggered panic. At least six bombs were found in Varachha's Mini Diamond Bazaar.

More than 800,000 workers cut and polish rough diamonds in Surat, earning India US$11 billion in exports last year. Around 92% of the world's diamond roughs are cut and polished in the town.

The bombs were part of a wider campaign apparently aimed at damaging India's economy. More than 50 people were killed when 25 bombs ripped through Ahmedabad and Bangalore a few days before the Surat bombs were discovered. Ahmedabad is a prosperous commercial hub, while Bangalore is India's IT capital. Analysts believe that the bombs in Surat were aimed at striking terror at the heart of India's - indeed of the world's - diamond trade.
"Surat is a huge city, but considering all the bombs were planted in areas where the diamond industry is based, I think there is a message in that," Pravinbhai Nanavati, vice president of the Southern Gujarat Chambers of Commerce and Industry, told the BBC. "The bombs [in Surat] were planted by those who wanted to hurt India economically," he observed, underlining the fact that "stopping production for one day in the diamond industry means a loss of US$28 million".

The threat of terrorism comes at a bad time for India's diamond industry. In early July, workers in cutting and polishing units in Surat and Bhavnagar went on a strike to press for higher wages. With hundreds of thousands of workers out on the streets, workshops were forced to down shutters. The Surat Diamond Traders Association recommended a 20% salary hike to defuse the crisis.

With the strike over and concern at the discovery of bombs having eased, workshops are again humming with activity. But beneath the calm worries remain.

July saw a "roughly 35% downturn in business because of recession," Kamlesh Jhaveri, director of the Mumbai-headquartered London Star Diamond Company, told Asia Times Online. The US imports around $40 billion worth diamonds from India - in 2006-07 it accounted for 60% of diamonds exported from India - and the slowing US economy has hit the Indian diamond industry hard.

To add to these woes, the Diamond Trading Corporation, which controls 80% of the global trade in rough diamonds, last month announced a 5% increase in the price of roughs. The price of roughs had increased 8.5% earlier this year amid strong demand for diamonds in India, China and the Middle East and reduced supply.

The supply of roughs, already on the wane in recent years has tightened further with several Indian sightholders being cut out by De Beers under its global rough diamond distribution plan.

Although cutting and polishing of diamonds gives the stones their sparkle, the process yields thin margins as the cost of the raw material accounts for 85-95% of the selling price. With the cost of diamond roughs surging these margins have shrunk further. Thousands of factories in Surat, Bhavnagar and other towns in Gujarat are said to have shut down over the past year.

Competition to Surat has also grown, with diamond mining countries in Africa demanding that cutting and processing units be set up there. Analysts have also warned of looming competition from China's cutting and polishing business.

Media reports have said that the recent threat of terrorism to Surat and the wage hike for workers will add to the industry's growing woes. These reports have pointed out that foreign buyers who would have started streaming into Surat now for purchase of diamonds ahead of the Christmas season have put off plans fearing terrorist attacks. The wage hike will meanwhile add to costs and cut into margins, they argue.

Disagreeing with these reports, Jhaveri points out that Surat is a manufacturing hub and few foreign buyers go there for their purchases, anyway. As for the impact of higher wages on operating costs, it is likely to be lower than that being reported. The recommendations for a wage increase are just that - they are recommendations and aren't binding in nature. "With monitoring of implementation of these recommendations weak, it is unlikely that workers in small units will get more than a 15% hike," Jhaveri told Asia Times Online.

What could happen, however, especially if terrorism concerns were to deepen, is that workers could chose to move out of Surat to smaller towns in Gujarat that would be less likely to be targeted by terrorists. Smaller processing units might also shift to smaller towns to cut operating costs.

Contrary to media reports that point to processing units and workers shifting to Africa or China, Jhaveri says the move, if any, will be within Gujarat.

The cost of cutting and polishing a karat of stone in Africa works out to $70-$75 compared with a maximum of $20-$25 in India, Jhaveri said.

"It might not make much of difference to Israeli or Antwerp diamantaires, who have factories in Africa as they are looking at similar costs back home. But for Indian diamantaires, who have the cheap labor option that Surat and other towns in Gujarat provide, shifting processing units to Africa doesn't make economic sense," he said. Around five Indian companies have factories in South Africa and Botswana.

As for the China threat, labor cost there is also higher than that in India. China is focussing on bigger and better-quality diamonds. At the same time, processing units in China are not concentrated and so lack the benefits of infrastructure offered in India.

The China threat to India's diamond processing business has been grossly exaggerated to help India's processors can wring concessions from the government in New Delhi, said one industry insider, who wished to remain anonymous.

Nor will the displacement of Surat and other towns in Gujarat in the cutting and polishing business, "ever happen", said Jhaveri. The advantages these towns and their workers possess are unparalleled.

Gujarat in general and Surat in particular has repeatedly shown resilience in the face of adversity such as natural and man-made disasters. The entrepreneurial spirit of its people has made it a favorite investment destination, despite the blows it suffers.

The town was repeatedly raided and looted by the Maratha king Sivaji in the 17th century, fire destroyed the city in 1837 and more recently it has suffered communal riots (1992, 2002), an outbreak of a plague epidemic (1994) and floods (2006). The floods in Surat cost the diamond polishing units $60 million, yet the city has quickly bounced back, registering an 11.8% growth rate this year.
Surat might be shaken after the discovery of bombs but its spirit has certainly not been shattered.

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