World's biggest diamond hub suffers hit in Mumbai blasts

[1]

One of this week's deadly Mumbai blasts scattered diamonds, possibly worth millions of dollars, onto the street but has not convinced traders to abandon their hub in the heart of the city for a purpose-built diamond bourse in the suburbs.

About 60 percent of the world's diamond processing passes through the Opera House area in south Mumbai, site of the most powerful of the three coordinated blasts, which killed 18 people and injured 133 others.

Generations of merchants, mostly from the Gujarati community that also dominates Mumbai stockbroking, have developed a unique culture of security over the years, using the area's dense crowds to their advantage.

"Diamonds move from office to office unseen. People carrying them are not identified and there is security in the anonymity," said Rajiv Popley, director of Popley Group, which has a store in the main building and a retail network in India and Dubai.

Traders carry the diamonds in their pockets, often rolled in tissue paper. They dress casually, blending with the thousands of commuters that pass through the nearby rail station.

Mumbai's diamond trade began about 40 years ago in what is now the main building, Panchratna, which means five gems in Hindi. The bourse has since expanded into about 10 buildings, with up to 4,500 stores. All vaults are housed in Panchratna.

Traders from Belgium and Israel are often seen in the small shops with metallic shutters set along a cobblestone street.

The new Bharat Diamond Bourse complex, which opened in October, is spread over 20 million square feet in the Bandra-Kurla complex in suburban Mumbai, home to global banks and other multinationals, and nearly deserted after dark.

India's newer and larger National Stock Exchange is also housed in Bandra-Kurla; the Bombay Stock Exchange, Asia's oldest, remains in south Mumbai's traditional trading district.

Shaped like a diamond, the new bourse has 2,500 offices and formal security, including armed guards, a feature absent in the Opera House area, where merchants carry their diamonds every evening to the vaults at Panchratna, which close at 7 p.m.

"The new site will not allow such things moving in and out for security reasons, and that will hinder the security of the people if they have to declare they are carrying diamonds. Also, it is not a crowded area and anyone entering or leaving can be a target for robbery," Popley said.

Wednesday's blast came just as most merchants were carrying their diamonds to the vaults. The site was sealed after the blast, and the fate of the diamonds is not known, traders said.

Diamonds are big business in India.

In the year through March 2010, India imported 150 million carats of rough diamonds and exported 59.9 million of cut and polished diamonds valued at $18.24 billion.

India processes 7 in 10 of the world's diamonds, with 90 percent of those sold in the Opera House area.

Most traders live in south Mumbai and don't want to make the longer commute, often with their diamonds, to Bandra-Kurla.

"We don't have formal security here, but there is intelligence, and that is more valuable than armed guards. We know who is going in and out with what, but outsiders don't have to know," said Akshay Doshi, who owns a store in the Opera House area and does not want to move.

"The blast happened outside the bourse. Not inside."