The availability of skilled workers and the implementation of a business-friendly taxation system are vital to sustaining India’s stature as a global diamond manufacturing centre, local diamantaires said.

According to a Times of India report, Surat’s diamond community is feeling the heat from China, whose diamond cutting and polishing activities generated a turnover of $2 billion in 2011, up 233 percent from only $600 million in 2007. The figures were released by the Shanghai Diamond Exchange (SDE) and the Diamond Administration of China.

China’s diamond trading activity through the SDE rose by 63 percent year-on-year to $4.71 billion in 2011, with diamond imports growing 56 percent to $2 billion.

China is also posing a serious threat to Surat in terms of cost-competitiveness. Currently, the cost per carat for cutting and polishing diamonds in China is $17, while India’s amounts to $13 per carat, according to the report.

"Surat is finding it hard to find labour. Salaries in other industries are rising faster than in the diamond industry and [diamond manufacturers are] having a hard time employing a new generation of diamond polishers,” Dinesh Navadia, president of the Surat Diamond Association, was quoted as saying. “If this labour problem continues, China could be a real threat to us.”

Sanjay Kothari, vice chairman of the Gems & Jewellery Export Promotion Council, said the country’s taxation system needs to be revised to enhance the sector’s competitiveness.

"The Chinese diamond industry is growing at a much faster pace,” Kothari was quoted as saying. “We have [already called on] the central government to introduce a presumptive taxation system [that is similar to the system currently enforced in] in Belgium, Israel and China.”