By Kathryn Lum, European University Institute
From the outside, Number 2 Hoveniersstraat Street in Antwerp is a nondescript office block. Only the clusters of businessmen speaking in Gujarati on their mobile phones or with each other, give any indication of the hive of activity inside. In the lobby, streams of people shuttle back and forth through the electronic barriers while a queue of visitors waits to have their photo taken and their fingerprints scanned in order to receive a temporary ID card. The business is diamonds. It is a scene repeated elsewhere in the city, and it represents the remarkable and growing dominance of the Indian diaspora in a famous local industry.
As you look along the names on the office doors, what is striking are the names. Whereas a generation ago, the vast majority of them were Jewish, today, a significant majority are of Indian, and in particular, Gujarati origin. Names like Mehta and Patel are particularly common. Indeed, while the orthodox Jewish presence in Antwerp is still highly visible, the numbers have dwindled over time, as a new generation of young and dynamic entrepreneurs from the Gujarat have displaced them. It has been unexpected, so what is the secret to their success?
The diamond industry cannot enforce written contracts – diamonds are easily portable, universally valuable and virtually untraceable, and state courts are incapable of enforcing executory contracts for diamond sales. It operates on credit, relies on trust, and hence favours tightly knit community and family-based business networks. The Orthodox Jewish community in Antwerp had long relied on the effective social control mechanisms of their community in order to ensure trust, with anyone seeking to cheat seeing their reputation and hence ability to do business quickly destroyed. Gujarati business communities operate along similar lines, with strong family networks and a high incidence of marriage within their ethnic group. In the Gujarati case however, an additional source of community cohesion, support and solidarity comes from their caste community.
Building from the bottom
My interviews with Gujarati traders show that beginning in the 1960s, the first Gujaratis, from the Jain community and known as Palanpuri Jains, from the area of Palanpur in Gujarat, began to arrive in Antwerp, the world’s biggest trading hub for rough diamonds. The Palanpuri Jains are a historic “business community” in India that has traditionally engaged in trade and hence their first foray into Antwerp was one based on capital and prior experience on the polishing side of the diamond trade in India.
The Gujarati Jains took advantage of two key factors to enter into the closed world of Antwerp’s diamond industry: they started to specialise in smaller, lower-value stones, and used the cheap labour and excellent skill of Surat’s diamond cutters and polishers to produce diamonds that had larger market potential. Thus, Gujaratis were able, as one trader put it: “to polish in rupees and sell in dollars”.
These two factors, along with others, such as initially buying from source and offering longer buying periods on credit in order to undercut the competition, enabled the Gujaratis to gain a foothold in Antwerp. Many of the early traders also mention English as the international language of diamonds further facilitating their entry into the field.
This foothold has now expanded to such an extent, that in the latest elections to the Antwerp World Diamond Centre in 2012, five out of the six representatives elected to the board were Gujarati. In 2014, a Gujarati businessman was nominated vice president.
However, when we speak about Gujaratis in the diamond industry in Antwerp, we are in fact referring to just two communities which have come to dominate the trade – the Palanpuri Jains and the Katiawadi Patels. The latter are a community that in just one generation has distinguished itself with a dizzying rate of social mobility. The Katiawadi Patels were once agricultural labourers who moved to Surat (Gurjarat’s diamond polishing centre), in order to escape drought. They started off as cutters and polishers, but quickly moved up the ranks and over time accumulated enough capital to open their own factories. They were able to use their contacts with Palanpuri Jains in order to first establish themselves in Antwerp. Once they did, they rapidly expanded and now rival the Jain Gujarati traders there.
Although the Patels did not arrive with the same level of financial capital as the Jains, their control of diamond polishing in Surat means that their climb within the industry is secure, and indeed will continue to grow with time. Currently, most factory owners and managers in Surat are Patel, with workers now coming from other states. In contrast to the Jains, whose sons have more business opportunities available to them, the sons of the Patels, who rely more heavily on diamonds, continue to enter into the diamond business in large numbers, starting from a young age to visit their fathers’ offices to learn the trade. The growing prominence of the Katiawadi Patel community has led to tension in India´s diamond trading centre of Mumbai. In a recent hotly contested decision to move operations to Surat, where rent is cheaper, the diamond community was divided between the Palanpuri Jains, who prefer to remain in Mumbai, versus the Patels who pushed strongly to shift to Surat.
The Gujarati-dominated diamond industry has recently been receiving more attention from one of their own, India’s new PM Narendra Modi. The 2014 budget passed by the Indian government gave a strong fillip to the diamond industry in the region, by raising custom duties on the import of polished and semi-polished stones, which will protect local polishing jobs (the diamond industry employs 500,000 people in Gujarat). The Modi government has also recently announced that it will be building a fast train linking Mumbai to Ahmedabad, which will cut the current travel time of seven hours to just over two hours. Gujarati traders in Antwerp eagerly await a visit from Modi, in whom they have invested high hopes for boosting the diamond industry. Although based in Antwerp, the diamond business is intricately linked to the Indian economy, immediately affected by Indian policy, and frequently connected to transnational family businesses that span multiple continents. The industry faces a number of challenges, from growing competition from the internet and from China/Hong Kong, to the rise of synthetic diamonds, and the decision by De Beers, the largest company by revenue, to move the sorting and trading of rough stones from London to Botswana.
However, in order to continue to shine, both Gujarati communities would do well to look towards a group that is currently completely overlooked in the diamond business: women. Daughters are not encouraged to enter the diamond trade, with many traders claiming that they are simply “not interested”, and the few that do, are not taken seriously and consequently drop out when they get married. The diamond industry in Antwerp is currently even more male dominated that most national armies. By not cultivating the talent and skills of their daughters, Gujaratis are losing out on even more sparkle.
Kathryn Lum does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.