The following has been excerpted from Shantanu Guha Ray’s book, The Diamond Trail: How India Rose to Global Domination on the international diamond trade, which India dominates.
If it were to be sized up against India, Hoveniersstraat, the world’s most famous diamond hub, would fit into a pocket. This sleepy neighbourhood in Antwerp is not as iconic as the Pietermaritzburg railway station in South Africa where a young Mahatma Gandhi was thrown off a train by racist whites for riding first class in 1893.
But the Belgian hub is the place where Indians, for over two decades, have dominated the global diamond trade, thereby turning what was once a predominantly Jewish neighbourhood near Antwerp’s central station into a zone for Gujaratis from India.
Every morning, young, middle-aged and old Indians in Versace and Armani suits haggle with Hasidic diamond buyers, characterized by their long black coats, side curls and skullcaps. The growing Indian population has even turned the street’s celebrated kosher restaurants into numerous curry corners. There is also an iconic Jain temple, interestingly dedicated to the people of Belgium, and frequented by local Europeans and even Jews.
Sitting in his expansive office decorated with expensive paintings and chandeliers, Dilip Mehta of Rosy Blue, one of the world’s biggest diamond companies, laughs. The Indians, he told me, have taken over Antwerp’s big bucks diamond trade from the locals and the Israelis.
‘The shift shows the future, it points at the way the world’s new diamond route will be mapped,’ said Mehta. He is dressed in a crumpled white shirt and beige trousers. ‘The Armani suits are for the new generation, not for us. When we came here more than two decades ago, we, the Indians, were virtually pushovers. No one offered us space, loans, nothing.’ Now, Antwerp has plenty of Indian banks, which stand cheek by jowl with international banks, a clear signal that Indians have arrived, struggled and will stay on.
The first Indians started arriving in the pre-dominantly Jewish neighbourhood of Hoveniersstraat in 1983, surprising the orthodox European Jews and eventually easing them slowly out of the diamond business, operating for six days a week (unlike the Jews whose religion requires them to close their businesses on the Shabbat, from sundown on Friday to sundown on Saturday).
‘Indians are the face of Antwerp, Indians are the face of the world diamond trade,’ said Sanjay Kothari, an avuncular diamond trader. He remembers how Ramesh Mehta, one of the pioneers of Antwerp’s Indian community, helped almost fifty families from India set up their businesses in Antwerp in the late 1980s and early 1990s.
Indians recognized the importance of Antwerp, a Flemish port city of 600,000 people known for its hip fashion designers and conservative politics. Indians knew that about 90 per cent of the world’s uncut diamonds and 50 per cent of its polished diamonds were sold in Antwerp. There is even a trolley stop named Diamant in a neighbourhood that is home to more than two thousand retail and wholesale diamond companies and four diamond exchanges, which were for long controlled by the orthodox, largely Hasidic Jewish community.
One of the oldest, Beurs voor Diamanthandel, was founded by the Jews in 1904.
Kothari told me that it was in the 1960s that the first Gujaratis from the Jain community—the Palanpuri Jains from Palanpur in Gujarat—started arriving in Antwerp. The Palanpuri Jains are a historic business community that has traditionally engaged in trade, and hence their first foray into Antwerp was one based on capital and prior experience in the polishing side of the diamond trade in India.
That was not all.
There were the Katiawadi Patels, who, in the short span of one generation, distinguished themselves with their dizzying rate of social mobility. Historians claim the Katiawadi Patels were once agricultural labourers who moved to Surat 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 worked closely with the Palanpuri Jains in order to first establish themselves in Antwerp. Once they did, they rapidly expanded and now rival the Palanpuri Jain traders there.
The Jains quickly took advantage of two key factors to enter the closed world of Antwerp. They specialized in smaller, lower-value stones, using cheap labour and the excellent skill of Surat’s diamond cutters and polishers to produce diamonds with larger market potential. In short, the Gujaratis were able to polish in rupees and sell in dollars. The Indians also offered longer buying periods on credit in order to undercut the competition, and furthermore, almost all Gujaratis trying to gain a foothold in Antwerp could speak English, the global language of diamonds. No one could stop the Indians.
Indians are by no means new to the diamond trade. They have been engaged in it for centuries, ostensibly because it was in India that the world’s first diamonds were discovered in 800 BC. India, claim historians, offered the bulk of the world’s supply until the eighteenth-century diamond rushes started in Africa and Brazil. It was only then that the scales titled heavily against India, with the nation focusing more on sourcing than producing rough diamonds.
In Belgium, the Indians took advantage of the country’s liberal immigration laws. They blended well with the Jews, as both communities were religious and had qualities well suited to the diamond business, which required cross-border networking and plenty of wheeling and dealing.
‘There is an Indian hand in more than 90 per cent of the world diamond trade. Indians are now dominating in Tel Aviv also,’ said Kothari.
But the Indian success in the global diamond industry did not happen overnight and it did not happen without tensions. Indians were once considered personae non gratae in Antwerp, but once they established their base, many
Jews who traded diamonds in the public hall of Antwerp’s imposing Beurs Voor Diamanthande, or Diamond Bourse, became worried about the competitive pressure applied by the Indians. As a result, they began conducting their business in the privacy of their own offices for fear that the Indians would poach their clients. But this did not stop the Indians from gradually taking control of the diamond business in the city. They subsequently expanded their businesses globally.
Mainly because of competition from the Indians, many Jews changed their manufacturing practices, shifting their cutting and polishing factories from Belgium to lower-cost centres in Thailand and China. Some secular Jews have even broken ranks with the Hasidim, keeping their businesses open on the Shabbat. The move is not liked by many, especially the rabbis, who routinely knock on their doors on the Shabbat, requesting them to close their shops for the day of rest, but the Jews argue that they must also work like the Indians, six days a week. Still, that is not enough to beat the rise of the Indians. India’s share of the $55-billion-a-year diamond revenues has grown to roughly 78 per cent from about 25 per cent in the 1980s, whereas the share of the Jews has fallen to about 12 per cent from 72 per cent.
Kothari took me to the window of his office, and asked me to look down. The streets were full of Indians, a clear indication of their growth and influence in the Antwerp diamond world. Indians now have better representation on Antwerp’s High Diamond Council, the powerful body that regulates the city’s diamond industry. The first two Indians were elected to the council’s board of directors in February 2003.
Seasoned diamond expert Peter Meeus, himself a Belgian, met me for coffee at his home and explained how he had worked to change the institutional imbalance of the council of which he was once the managing director. ‘Indians are now one of the fastest growing forces in the world diamond trade and they cannot be kept out of any global bodies; it would be suicidal,’ he told me.
I visited the Diamond Bourse’s expansive trading floor where dozens of sellers waited in queues in front of long rectangular tables to present their rough and polished gems. Armed with electronic scales, buyers—both retail and wholesale—from Tel Aviv, New York and London peered through their magnifying glasses at small piles of diamonds spread out on sheets of white paper.
What is interesting is that the majority of the Indian traders do not visit the Bourse, preferring to operate from their offices.
Ashok Desai, a young Indian trader, offered me some insights into the business. ‘It’s a great feeling to walk through the streets, striking deals in offices, and munch a veg sandwich and retire for the night. There are many like me, all trying to work hard to push the business for people back home.’ I asked Desai if he missed his home in India’s Mumbai city. He said he did but was working hard to balance his life. ‘We came in the sixties first, then in the seventies, and eventually the biggest lot came in the eighties and early nineties. But the Jewish diamond trade here dates back to the fifteenth century, when Jews expelled from Spain and Portugal came here. They fled persecution in Eastern Europe; a little over 30,000 died in the Holocaust during World War II. But they again assembled. Once they were great businessmen and traders but now, they play second fiddle to us, the Indians.’ Desai told me how the Jews once dominated Antwerp, a city with more than thirty-five Jewish schools and twenty-five synagogues. And how the Indians slowly replaced them, working longer hours and picking up both small and big businesses. ‘We were first objected to, then ignored and now admired,’ said Desai, who meets his friends every day on Hoveniersstraat for both business and gossip, which usually revolves around Bollywood releases and national politics.
Kothari offered me further insights into the rise of the Indians in the diamond trade. He told me that Indians were able to gain the commercial edge over the Jews by sending their rough diamonds for finishing work to family-owned factories in Surat and Mumbai, where labour was extremely cheap. The Jews were not so lucky; they paid rates that were as much as 75 per cent higher. Even after the Indians paid high rates for transportation to Surat and back, they were able to offer better rates than the Jews, who were reluctant to send their products to low-cost sites and took pride in their cutting and polishing centres. Interestingly, according to an article in the The Wall Street Journal , the Jews were afraid to send their assets to faraway locations because ‘many were Holocaust survivors afraid to part with their assets or send very expensive valuables far away’.
‘And it’s here Indians gained ground,’ said Kothari.
There was another advantage. The Indian method of cutting and polishing diamonds, distinct from the method adopted by the Jews, helped the Indians earn much higher profits as compared to the Jews, who stressed on perfection. In spite of the competition between them, Indians and Jews live like brothers in Antwerp. To bolster their friendship, many Indian diamond merchants have put donation boxes for Jewish charities at the entrances of their businesses. The Indians remember how the Jews helped raise thousands of Euros after a horrifying earthquake rattled Gujarat in 2001. At all Indian weddings in Antwerp, there are special kosher sections, while Indians are routinely lifted on a chair—a traditional Jewish ritual—at Hasidic weddings.
I asked many people what was the main reason for the unique bond between the two communities. Everyone had the same answer: nothing but ‘total trust’. The communities follow a very strong moral code, which is built on the foundation of a common entrepreneurial spirit. ‘We often keep each others’ diamonds worth millions,’ said Abegayel Rubens, a young Jewish diamond merchant.
The special bond notwithstanding, many wonder whether the Jews will be able to survive the competition from the Indians. Hundreds of Jews have already abandoned the trade. ‘It is highly unlikely the Jews will trigger another revival in the diamond trade, they have almost dropped the baton,’ said Meeus.
How does he rate the Indians?
Meeus told me he felt Indians were deeply religious and also philosophical about their success, which stemmed from their belief in karma. ‘They do not take the blame if the business squanders and losses mount. They blame it on [a] previous life’s karma and move on. That’s a very strong position, a very philosophical one. It makes the Indians mentally very strong,’ said Meeus.
As a result, what was once the domain of Epsteins and Finkelsteins is now run by Mehtas and Shahs, who control nearly three-quarters of Antwerp’s diamond industry.
Antwerp’s skilled diamond processing labour force, which hovered between 25,000 and 30,000 in the 1970s, has now dwindled to less than 600, largely due to the Indian practice of sending rough diamonds to India for cutting and polishing. ‘And see the numbers in Surat, it is a little over 450,000; no wonder over 80 per cent of the world’s rough diamonds are now processed in India,’ said Meeus.
I met up with other Indian diamantaires in Antwerp, who agreed with the theory expressed by Meeus. ‘We have survived only because we continued our home sourcing [sending diamonds home for processing]. It continues to be a win-win situation for us,’ said Santosh Kedia, who owns Indigems, an Indian diamond company. He was once chairman of the Antwerp Indian Association, a social club with over 2,000 members, 90 per cent of them in the diamond business.
I asked Dilip Mehta if the new generation Indian was European at heart and understood the diamond business like a typical Westerner. Mehta laughed, leaning back in his high- backed leather swivel chair. ‘The young Indians taking over the business can do a million things but will still follow the Indian way of doing business. It all rests with the family and that is our biggest strength.’ Mehta said the diamond trade was a global business, hence it was important for successful diamantaires to have a reach that extended from the African countries where the diamond mines were located, to Antwerp where stones were traded, to India and increasingly China, where cutting and polishing was focused, and finally to the jewellery centres of the world such as New York, Hong Kong and Dubai. ‘What I find extremely interesting and fascinating is that Indians are the only ones in this total value chain across the world,’ said Mehta, whose company earns annual revenues of well over $1 billion and has a presence in fourteen countries including factories in India, China, Thailand, Sri Lanka and Armenia. It employs over 10,000 people globally, but there is a Mehta heading each operation. ‘It is here the Jews have lost out on the race because not many in their families wish to continue with the diamond trade,’ added Mehta. Incidentally, he was given the honorific title of ‘Baron’ by the Belgian king in 2006, for services rendered to the country.
Over tea and biscuits, Mehta talked of the days when he was building his business in Antwerp. He was not a brilliant one in studies and having dropped out of college, he was promptly dispatched by his family to Surat, which was emerging as a diamond cutting and polishing centre. Mehta said he rode a bicycle, cooked every night and often wondered why his family did not give him a car and cook.
He moved to Antwerp in 1973, dutifully following his father and brother who had set up shop in the port city in the late 1960s. They were barely managing to make ends meet, buying cheap, low quality roughs, sending them to Surat for polishing and finally selling the finished product in Antwerp for a very small profit.
‘I worked with my cousin from a two-room office and every day, would go door-to-door with our stones. I was told by my father that you are in the sales business and a salesman should not have any ego. I remembered his words and dutifully followed them every day,’ said Mehta. He knew the cheap labour in India and the support of an extended family were advantages for the business. But there was a third ingredient in the Mehta story—one that he said was common to all the Indian stories in Antwerp—which worked wonders: the zeal to work harder and longer hours than the competition. ‘The Jews just couldn’t withstand our competitiveness because as Indians, we are married to our businesses and work all the time, in the dead of the night, even on Sundays. At the end, we must get across our product to the client and make cash, even if it means we get some very, very small margins. We have a tendency to win the game, win the race.’ He said living in Antwerp had initially been a challenge for him and his family because they had had to learn how to keep some distance from the Jews and Belgians on the one hand, and yet learn the tricks of the trade from them on the other. ‘Once, it pained me to see most Indians living in the ghettos because they were not well equipped to handle the savvy Europeans who often felt that Indians were ill-mannered and talked in their own language all the time. I told my family members that we needed to break this taboo and that we should not be seen as unmannered and incompetent.’ Mehta said he encouraged his family members and even staffers to mix more with the locals, and yet retain their Indian identity. ‘I was, and still am, very particular of dresses my colleagues wear to parties. I do not push them to avoid drinking liquor because I do not think that is important. What, for me, is important is you conduct yourself well so that someone remembers you. I pushed Indians in Antwerp to set some standards for themselves. It worked and we never looked back. I even encouraged my staff to learn Flemish, the variant of Dutch spoken in northern Belgium. I encouraged them to live like expats, one foot in Belgium, one in India.’ Kothari also shared his views on how Indians were slowly assimilating in Belgium. He told me they were now encouraging the locals to learn cricket, which is gaining popularity even in the United States, Russia and China. Similarly, at the opening ceremony of a Jain temple, the Indians dedicated the temple to the Belgian people, declaring that the place of worship enhanced ‘the glory of Belgium’ and was intended as a ‘return gift to the country’ from the Jain community.
The move worked wonders in Belgium; Indians were considered family. The Indian success story is based on three ingredients: low-priced labour, large families and a willingness to work harder than the competition. Indians now account for nearly $21 billion of the annual diamond trade of $26 billion. And the magic is not just happening in Antwerp; the economic power of the Indian diamantaires has spilled over to the US and Dubai markets.
But that, by all accounts, is a separate story.
Excerpted from Chapter 3: Freedom at Hoveniersstraat: India rules Antwerp’s diamond trade