Diamond baron Nirav Modi's Surat connection is not known much in the public domain, except for the fact that his company has a manufacturing unit in the SEZ in Sachin, about 14 kilometers away from Surat.
In fact, there are several diamond traders in the southern Gujarat city, who got to know about Modi's Surat connection after the scam broke out. The ED has had undertaken search operations in Nirav Modi's manufacturing unit in Sachin.
According to Dinesh Navadia, former president of Surat Diamond Association (SDA), Modi had limited contacts with Surat. The scam, he said, has come as a jolt for Surat.
Modi's may not be the only case of fraud or defaulting, other scams could be on a lower scale. Navadia said that in 2013-14, when a diamond firm had defaulted in about Rs 5 crore, he had filed a RTI asking on what basis the loan was given. “Through the RBI, I got a reply that they did not have the details,” said Navadia.
A leading diamond merchant from Surat, Kirti Shah, said that now with this scam, the banks would become cautious in giving loans to those in diamond business. Shah said that about three to four years ago, he faced lot of difficulty in getting a loan of about Rs 3.5 crore as the banks said that they would not lend to the diamond industry. “I was told that the diamond industry has been put in red zone,” he said.
A former president of SDA, Pravin Nanavati, said that there can be no diamond businessman who does not have contact with Surat. According to him, out of the 6,000 small, medium and large diamond cutting and polishing units in the city, Modi would probably had trade relations with at least 200 to 250.
However, none would speak up, said Nanavati. He had known Modi and his uncle Choksi, personally. According to Nanavati, both Modi and Choksi appeared to be proudy and did not have a practical approach. “They would behave in the manner they would want to,” observed Nanavati.
Like Modi, Choksi too had some manufacturing units in Surat, said Nanavati. According to Nanavati, they started winding up the units after issues related to payments of consignments of polished diamonds taken from the market arose.
Kirti Shah warns that financial fraud is not the only thing that is a cause of concern for the diamond industry. While it directly affects the industry when the players seek loans from the banks, the fact is that what is the guarantee that natural and synthetic diamonds were not mixed, he pointed out.
Sources in Surat's diamond industry said that as compared to synthetic diamonds, the price of real diamonds is about three times more.
There is also a question mark over the type of diamonds (real or synthetic) recovered by the investigating agencies, sources said, adding that it also needs to be ascertained whether people have been sold real or synthetic diamonds.
Both Shah and Nanavati advocate the need for strict norms for certification of diamonds.