Diamond traders angry with BJP but wary of backing Cong
CUTTING CLOSE Despite the ‘twin blows’ of note ban and the new tax, Surat traders want to hang on to the ‘cordial terms’ with the incumbent party
When Prime Minister Narendra Modi launched the ambitious Mumbai-Ahmedabad bullet train project in September, it was supposed to usher in a boom for Surat’s diamond traders. The train, which will halve journey time between the two cities, was expected to be a great help for the hundreds of traders in Gujarat who travel regularly between Surat and Mumbai.
But if diamond traders are to be believed, their ~1.5 lakh crore business had already been derailed by what they describe as the twin blows of demonetisation and teething issues with the Goods and Services Tax (GST). Many say they are far more concerned about taxes and related problems than the reduced travel time.
“We process the diamonds here while trading happens in Mumbai. If we are sending diamonds to Mumbai – even within the company – we have to pay 3% GST. Then there is the tedious process of filing returns. This has become a headache for us,” said Dinesh Navadiya, diamond merchant and state chairman of the Gem and Jewellery Export Promotion Council.
This discontent has put them on the radar of both the Bharatiya Janata Party (BJP), which has traditionally been popular among traders, and the Congress, which plans to milk the discontent for electoral success after being out of power for 22 years.
Surat’s diamond processing industry handles about 90% of the nationwide business in the sector and employs 2.5 million people across the state. The industry is divided between 75-80 major firms on the one hand and small and medium businessmen on the other. Smaller traders say they suffered more than the bigger houses, whose businesses are export-oriented where cash is not a big factor.
“Notebandi (demonetisation) did affect small traders like me. Since we were dealing mostly in cash — whether buying rough diamonds or paying our workers — we faced trouble. We were just coming out of it when GST happened,” said a trader who runs a small processing unit in Surat and didn’t want to be named.
Diamond traders protested, though on a smaller scale than their counterparts in the textile industry.
Many of the 4,500 diamond processing units as well as about 10,000 merchants and brokers in Surat’s Varachha, Mahidarpura and Katargram shut shops on June 17, objecting to the levying of 3% tax on polished diamond, 5% on labour and 0.25% on rough diamonds.
This discontentment has spread from Surat to adjoining Navasari city as well as Bhavnagar, Palanpur and Amreli – where thousands depend on the trade. “About 30% traders are badly affected. The effect is more seen in Saurashtra where it is more like a small scale industry,” said Pravin Nanvati, a trader and former president of Surat Diamond Association.
The business has gone down by 18% to 20%, claimed Navadiya. For example, Diwali incentives given out this time were modest compared to the lavish presents such as apartments, cars and scooters that made headlines in previous years.
Congress sensed an opportunity. Party vice president Rahul Gandhi visited diamond traders on November 8 — on the first anniversary of note ban — and later wooed them at a public meeting in Varachha, considered a stronghold of Patidars who comprise a majority of traders and can influence the outcome in some 60 of 182 assembly seats.
Not to be outdone, BJP, too, deputed railway minister Piyush Goyal and other top leaders to talk to the textile and diamond traders. Party chief Amit Shah too met them.
While the traders are angry with the BJP, they are wary of shifting their support, trusting it for fostering “a friendly business environment”.
“The BJP government created a secured atmosphere here. There have been no criminal elements troubling the diamond traders, Even the infrastructure in Surat is developed to cater to our needs,” said Hitesh Mehta of P.Hitesh and Co, a diamond firm.
Other businessmen say they have been on cordial terms with local BJP leaders for many years, a relationship that paved the way for the diamond industry to flourish in the city. They don’t want to risk any disruption.
But resentment with the BJP is still simmering. Navadiya admitted to being a Vishwa Hindu Parishad supporter but found the GST arrangement to be unjust.
“For Tata’s plant, the Gujarat government spent ~35,000 crore and got jobs for 2000. Our diamond industry is giving jobs to 25 lakh people without any government support. Why the government needs to impose GST at 3% in an unjust way on us?” he asked.
Gujarat’s Mehsana is the Mecca of Patidars, especially the Kadva sub-group of the elite caste that has gravitated politics in Gujarat since the 1990s. Its primacy can be measured from the fact that Sardar Patel was a Kadva. So is Hardik Patel.
To some the Mecca metaphor might seem inappropriate. Let’s compare it then with what Bihar’s Madhepura is to the Yadav community: Rome Pope Ka, Madhepura Gope Ka.
The defining distinction is that the Yadavs aka Gopes are counted among OBCs and have quotas in jobs and education. The Patidars, or Patels, are out of the affirmativeactionambit.They’re fighting for equity in it.
In 2015, restive youth were at the receiving end of police excesses in Mehsana and elsewhere that left 14 dead. Those who escaped the denouement felt betrayed — and humiliated.
Betrayed because Anandiben, a fellow Patel, albeit from Leuva sub-group, was the chief minister. Humiliated because most of the five Mehsana MLAs left the agitators to fend for themselves.
I visited the town a day after Rahul did earlier this week. It’s a veritable satellite of Ahmedabad, separated by a 75km stretch of a well-tarred state highway. The district is home to Prime Minister Narendra Modi, who is from its Vadnagar taluka. Gujarat’s deputy chief minister Nitin Patel is the MLA from Mehsana proper.
SURAT: MEHSANA/AHMEDABAD: