The Economic Times
May 02, 2006
India has been on the forefront, making an indelible mark in the global diamond and jewellery market year after year. From being a leading diamond manufacturing centre, India has rapidly advanced on the path of becoming the global hub for gems and jewellery. And believe it or not, close to 90 per cent of the US$ 22 billion worth industry mostly comprise entrepreneurs with less than US$ 111 million turnover.
Emerging from relatively humble beginnings of a small and unorganised sector in the 1950s and 1960s, the Indian gems & jewellery industry has rapidly emerged as the manufacturing powerhouse of India. New initiatives in the sector are mostly spearheaded by the government-sponsored Gems and Jewellery Export Promotion Council (GJEPC).
If the United States accounts for 50% of the global diamond consumption, India lead the globe in diamond manufacturing with 60% share in value, 85% in volume and 92% share in the number of pieces produced. While these statistics are impressive enough in themselves, it is the scale, breadth and depth of the industry which add the final sparkle to the sector.
With a work force of close to 1m and an estimated 25,000 units in diamond industry and a work force totaling 3m, the industry is now churning out new employment opportunities for many. India is home to the largest collection of laser machines in the world, with over 500 lasers deployed in the diamond industry alone. In addition, modern equipment such as computerized diamond planners, auto bruters, semi-automatic and automatic polishing machines are used in most manufacturing units. It is estimated that 80% of the high tech polishing machines world-wide are sold to India.
The other development has been the move by some companies to manufacture large size and fancy cut diamonds. A country that entered the international diamond industry as a manufacturer of small diamonds only, today, is producing virtually stones of every shape, size and colour. Most companies are now innovating and developing new cuts, some of them being patented internationally.
With the plain and studded jewellery sector growing at 15-20% per annum, the total gems & jewellery exports of the country has witnessed exponential growth in the last five years, with exports increasing from $7779.5m in FY01 to $15,706.9m in FY05, making the industry one of the country’s largest forex earners.
The forward integration into jewellery manufacturing for export markets by Indian companies, which began in the late 1980s, has now turned the country into the fastest growing jewellery manufacturer in the world.
What is significant is not just the growth in exports but an overall development that this industry has attained, spurred by policy changes implemented by various governments over the past decade and even before.
The expansion of Special Economic Zones (SEZs) through both an increase in the capacity of the existing ones, as well as the setting up of new zones, is rapidly augmenting capacities in this sector. For example, the Seepz SEZ in Andheri in suburban Mumbai, with over 100 modern units and employing 35,000 workers, now has the single largest concentration of jewellery manufacturing facilities in the world.
For imparting new technology and educating the huge work force, the GJEPC has set up the Indian Institute of Gems & Jewellery just outside Seepz.
The sector, mostly comprising SME units, is now looking forward to the ‘Diamond Bourse’ — a world class diamond trading facility, coming up in Mumbai. The bourse is modelled after the world famous Diamond Bourse in Antwerp, Belgium. On an individual level, more and more companies are going in for business standards certifications whether it’s the ISO or the industry specific Business Excellence Model ( BEM) of Rio Tinto, or the Best Practice Principle (BPP).
With India getting an upper hand in global trade, the annual India International Jewellery Show (IIJS) has become a platform to showcase the best of Indian gems and jewellery.
The government has been quite supportive of the industry in introducing policies time and again that help boost exports. But there is still enough room for changes and developments that need to fall in place to encourage foreign direct investment in the sector and for mining companies set up operations in India. The overriding priority for the diamond cutting and polishing industry is the sourcing of steady supplies of rough stones. Instead of sourcing rough diamonds from De Beers alone, the Indian industry is looking at a host of ‘junior’ exploration firms to source several small, but assured supplies of rough stones.
Unlike other sectors, despite the presence of large players, SMEs continue to dominate the gems and jewellery sector in India. Even the large players, who are a few in numbers, entirely depend on the SMEs in the market for completing their processing. Most large companies either do not specialise in all categories or don’t have the capacities to match market demands. So they outsource the processing jobs to SMEs.
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