The Surat Diamond Economy: How One Indian City Became the World's Polishing Hub

Walk into any jewellery store in New York, London, or Dubai and pick up a diamond ring. The stone in the setting — wherever it was mined — has almost certainly passed through Surat.

Multiple industry sources and GJEPC methodology estimate that approximately 90% of the world's rough diamonds are cut and polished in the city, measured by volume. The calculation encompasses stones sourced from mines in Russia, Botswana, Canada, and Angola, all of which are shipped to Gujarat for processing before reaching end consumers.

How Surat Built Its Dominance

This is not a recent development. Surat's dominance in diamond polishing was built over five decades, as artisans from the Kathiawar region of Gujarat developed skills in cutting smaller diamonds — the melee stones that form the majority of stones in jewellery settings worldwide. Antwerp retained a position in large, investment-grade stones; Surat took volume, and made volume its comparative advantage.

Over three generations, the cluster expanded from a handful of polishing workshops in Varachha to a multi-billion-dollar ecosystem spread across multiple city districts, employing hundreds of thousands of workers.

The 2023-24 Contraction

For much of the last two decades, Surat's diamond economy grew year on year. Then came FY2023-24.

India's cut and polished diamond exports declined 27.5% in the financial year ending March 2024, falling to ₹1.33 lakh crore, according to the Gem and Jewellery Export Promotion Council (GJEPC). The decline reflected weaker consumer demand in the United States — the industry's largest end market — a slowdown in China, reduced purchasing in the UAE, and a structural shift that had been building for years.

That structural shift is lab-grown diamonds.

The Lab-Grown Question

A lab-grown diamond is chemically, physically, and optically identical to a mined diamond. It is produced in a reactor — using either chemical vapour deposition (CVD) or high-pressure high-temperature (HPHT) processes — in weeks, rather than mined over millions of years. It costs a fraction of a natural stone to produce.

Surat's polishers were early movers in lab-grown production. The same skills and equipment used for natural diamonds apply. The manufacturing knowledge base transferred quickly. But the margin dynamics are different: as lab-grown supply has scaled globally, prices have fallen sharply — while natural diamond prices, supported by controlled rough supply, have held more stable.

The consequence is that Surat units producing lab-grown diamonds operate at different margins than natural-diamond equivalents. Lab-grown production now accounts for a significant share of total Surat output.

Recovery Signs: October 2024

After the FY24 contraction, there were signs of partial recovery. October 2024 saw cut and polished diamond exports of ₹11,795 crore (approximately $1.40 billion) — growth of 11.32% over October 2023's ₹10,495 crore, according to GJEPC data. Over the full April-to-October 2024 period, cumulative exports remained below the prior year, however — the recovery was real but partial.

The Surat Diamond Bourse

The most visible recent development in Surat's gem economy is the Surat Diamond Bourse (SDB), inaugurated in 2023. The SDB is widely cited as the world's largest office complex by total floor area — a purpose-built facility designed to consolidate trading, manufacturing, banking, and customs operations that had previously been spread across the city's polishing districts.

The building has attracted hundreds of firms that previously operated out of older buildings in areas such as Varachha and Udhna. Whether the consolidation improves Surat's global competitiveness as a trading hub — rather than purely a polishing hub — is a question the next five years will answer.

The City's Scale

Surat's gem and jewellery ecosystem includes more than 450 organised manufacturers and exporters (cited across trade sources), alongside thousands of smaller polishing workshops that do contract work for the larger houses. Total workforce in the diamond sector is estimated in the hundreds of thousands.

The city simultaneously faces its most significant structural challenge — the rise of lab-grown diamonds — while sitting on the world's deepest concentration of diamond-polishing skills. What Surat does with that combination will determine the next chapter of one of India's most remarkable industrial clusters.