Surat SEZ bears brunt of Modi, Choksi exit

Surat/Ahmedabad: Even as diamonds, gems and jewellery exports from the special economic zones (SEZs) across India registered a handsome growth, Surat Special Economic Zone (SurSEZ) witnessed a drastic fall of 58% in 2018-19. The the dismal performance of India’s first private sector SEZ at Sachin in the Diamond City has been attributed to exit of fugitive diamantaire Nirav Modi and his uncle Mehul Choksi’s from the Indian market.
Physical exports from Surat SEZ dropped to just Rs 6,774 crore in 2018-19 from Rs 16,166 crore in 2017-18. The exporters were even higher at Rs 20,479 crore in 2016-17, shows data posted on the website of Kandla Special Economic Zone (KASEZ). All SEZs in Gujarat fall under the jurisdiction of Kandla SEZ development commissioner.
“Nirav Modi and Mehul Choksi are responsible for the decline in exports from the Surat SEZ. Modi was operating five gems and jewellery units, while Choksi too had few units there. Majority of the export contribution came from Modi’s units,” said Colin Shah, vice-chairman, Gems and Jewellery Export Promotion Council. The uncle-nephew duo fled India in early 2018 after the Punjab National Bank (PNB) scam was unearthed.
The low-quality diamonds and lab-grown diamonds were supplied in the exchange of rough diamonds imported by Modi’s Firestar diamonds from Russia and Australia to Modi’s jewellery units located in Surat SEZ.
Rough diamonds imported in the SEZ were allegedly over-invoiced to get more funds from the banks. On the other hand, the low-quality diamonds imported from Surat units were set in the jewellery sold to the export markets in Hong Kong and UAE.
“Modi and Choksi contributed around 70% of the total gems and jewellery exports from SurSEZ. After the fraud case, their units were shut and consequently the exports from the SEZ showed negative growth,” said Ajay Sharma, deputy chief executive officer of Diamonds and Gem Development Corporation (DGDC), the developer of SurSEZ.
On the contrary, the export of gems and jewellery as well as diamonds from SEZs across India soared 53% to Rs 55,241 crore in 2018-19 (upto February 2019) from Rs 40,295 crore in 2017-18.
Interestingly, most of the 20 operational SEZs in Gujarat have witnessed a surge in exports during 2018-19. Overall, the physical exports from these SEZs surged to Rs 1.85 lakh crore in 2018-19 from 1.53 lakh crore in the previous fiscal.
Currently, more than 120 units from SurSEZ are operating and exporting to various countries across the globe. Major categories of units in operation are from Textiles, Garments, Made ups (pillows, quilts, bedsheets, etc), IT Hardware, Engineering Goods, Pharmaceuticals, Chemicals, Gems & Jewellery, Diamond, Tobacco among others.