In Gujarat’s Palanpur, diamond trade is in decay but few think solution lies in


This article is part of a special Scroll reporting project: Gujarat’s ‘dhandho’ elections, exploring the state’s complex relationship between business and politics as it heads into elections.

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In the early 2000s, Shailesh Prajapati failed his junior college exams. But he couldn’t have been less bothered. “Apne ko to pehle se hi heera me jaana tha,” he said when we met at an ice-cream parlour in Gujarat’s Palanpur city one warm November afternoon. “I always knew I wanted to be in the diamond business, what was the point of studying too much?”

Several of his neighbours in the village he grew up in, on the fringes of Palanpur, were diamond traders in Mumbai. When they came home for their holidays, they dazzled the youngster with their “tewar”, swagger. “If a government employee earned Rs 800 then, they would make Rs 8,000 easily – and it showed in their lifestyle,” he recalled

Today, Prajapati owns his own diamond processing unit in Palanpur, where he employs 40 people.

One would imagine from his thick gold chain – an undone shirt button means it is difficult to miss – a massive diamond-studded silver ring on his right index finger and impeccably-set, wavy, jet black hair, he’d have also achieved what he’d sought from life as a young boy: the glamour that came from trading an ultra-luxury commodity.

Yet, by Prajapati’s own admission, that dream had been a bit of a mirage. “Woh shaan nahi raaha heere me,” he told me. “The sheen’s worn off diamond now.”

Thousands of workers, most of them from the neighbouring villages, spend ten hours every day cutting, rounding and polishing millions of stones

Where it all began

Palanpur, the administrative headquarters of the north Gujarat district of Banaskantha, is the original home of the Indian diamond industry. Starting in the 1960s, intrepid Jain traders from here – then just another dusty, parched north Gujarat hamlet – broke into the tightly-guarded Jewish-controlled world of diamonds, headquartered in the Belgian city of Antwrep. They procured cheaper rough stones and then processed them back in Gujarat.

Soon, the Palanpuri Jains would take over the world’s diamond trade. Nearly 95% of all diamonds traded in Antwerp are now processed in India, writes journalist Shantanu Guha Ray in his book that charts this meteoric rise.

A poor shadow of the past

Over the years, though, Palanpur’s place in India’s diamond trade hierarchy has eroded. The number of processing units in the city have dramatically declined – the bulk of the cutting and polishing now takes place in the southern Gujarat city of Surat.

Simultaneously, Palanpur has also had to contend with infamy: three of its perhaps best known alumni in the diamond trade – Nirav Modi, Mehul Choksi and Jatin Mehta – are now officially fugitives who, together, are alleged to have defrauded Indian banks of over Rs 20,000 crore.

Nevertheless, scores of diamond processing units, such as the one owned by Prajapati, continue to operate out of dingy rooms in crumbling buildings across the city. Inside, thousands of workers, most of them from the neighbouring villages, spend ten hours every day cutting, rounding and polishing millions of stones. Add to that the hundreds of people from the city who trade in the stone – some procure roughstones, others sell polished gems – means that Palanpur is still a diamond city.

Listen to Scroll’s Arunabh Saikia tell you about his new project reporting on the intersection of politics and business in Gujarat.

Lack of loans and subsidies

Ahead of the Assembly election, those associated with the trade in Palanpur scoff at the prospect of political talk. No political party, they complain, has ever had anything to offer to them. This apathy, they claim, is partly the reason that the industry in Palanpur was on the decline.

“Industries with a much smaller employee base get much more subsidies and loans from the government,” said Amrutlal Patel, who heads the Gujarat Diamond Welfare Federation, a body that represents traders of the stone in Palanpur. “But the government has never given any support to the diamond industry. There isn’t even a dedicated board towards it.”

Goklabhai Patel, who’s been in the trade for the last forty years, slowly climbing up the ranks from a cutter to a small processing unit owner, made a similar complaint. “Everyone is leaving the industry because the banks won’t offer you loans, there’s no government subsidy on machinery,” he said.

Those who don’t have their own processing units say it is even tougher for them to raise capital. “The…



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