In the Mumbai diamond market, rough stones arrive mostly from Antwerp. “The rough stones are received on credit, without a written contract,” the economist Kaivan Munshi writes in a study published in the Review of Economic Studies in 2011. In the late 1970s the Kathiawaris, a community of agricultural laborers and sharecroppers, entered the business. Their community network supplied the credit and the referrals to suppliers.
In Munshi’s words, “the threat of community-based sanctions is sufficiently severe,” and “intra-industry marriage can serve as a very powerful commitment device.”