According to the annual performance report by GJEPC, India’s gross export of gems and jewellery for the FY 15- 16 was approximately US$38,600 million, accounting for 14.7 percent of the country’s cumulative exports of about US$261,140 million, ranking the G&J sector second only to pharmaceuticals, as a foreign exchange earner for the country. While cut and polished diamonds accounted for 52 percent of the gross G&J exports in FY 15–16, gold jewellery exports were about US$8,610 million and accounted for 22 percent of the gross total.

That said, the steep drop in gold jewellery exports in FY 15– 16 as compared to FY 14–15 was a matter of concern for the industry. “We believe that the international political situation, fluctuating raw material costs and competition from travel, luxury and electronics [for consumers’ disposable incomes] have taken over the share of the jewellery industry, resulting in this decline”, says Ghanshyam Dholakia, founder & MD, Hari Krishna Exports. But the good news is that during the first three quarters of FY 16-17, gold jewellery exports have already recorded a 12.3 percent hike as compared to the first three quarters of the previous year.

India’s diamond jewellery export industry has been on an upward trajectory ever since it came into existence towards the end of the 20th century. Surat is the centre for cutting and polishing diamonds, but Mumbai is the hub for production with its Santacruz Electronics Export Processing Zone (SEEPZ), a SEZ, developed to encourage and benefit exporters. Initially established for the promotion of electronics, the government decided to allow the manufacture and export of G&J from SEEPZ in 1987–88, on seeing the potential for the sector.

The 110-acre land is surrounded by high walls and heavy security at the gates. The close proximity of SEEPZ to Mumbai’s Chhatrapati Shivaji International Airport, the presence of customs offices inside the SEEPZ compound and a seven-day work week help ensure speedy, on-time delivery to any part of the world within 24 hours of manufacture. Initially starting with only nine jewellery factories, today SEEPZ houses more than 170 diamond and jewellery export companies, and provides employment to 35,000– 40,000 people. In fact, the value of goods here accounts for a staggering 60 percent of the total gold jewellery exported from India. Various small- and medium-scale jewellers across the country also export jewellery, but most of them deal in plain gold jewellery or traditional Indian wares, which means that their share of diamond-studded jewellery exports is relatively small.

INTERNATIONAL INSIGHTS

For finished diamond jewellery from SEEPZ Mumbai, the top three buyers—the US, Hong Kong and the UAE—account for 81 percent of the market. However, the US is the leader, hands down, with a total of 55.7 percent share in the first quarter of FY 15–16. “The US has a lot of organised retailers capable of placing large-quantity orders,” says Hitesh Shah, executive director, Renaissance Jewellery Limited, which is based in Mumbai’s SEEPZ and employs more than 1,300 people, in a facility spread across almost 81,000 sq ft. “Furthermore, the US market caters to low- and mid-priced products where India has an edge due to its labour costs. These factors have made the US the biggest client for Indian jewellery.”

“The US market is fashion-forward, price-sensitive and evolving,” elaborates Rajeev Sheth, chairman and MD of Tara Jewels Limited, another SEEPZ-based outfit that employs upwards of 1,000 people. “In contrast, the European market is extremely conservative, traditional, quality-driven and less sensitive to price. However, the Chinese and Indian markets have similarities—investment has been the hidden motive behind the purchase of fne and precious jewellery. Lately, both markets are becoming more fashion conscious. The Middle Eastern market is very unique, and inclined towards bling and high-carat gold. Aside from diamonds, jewellery studded with gemstones like morganites, sapphires, rubies, emeralds, opals and amethysts are in demand. Tanzanites are the latest trend.”

WHY WE SHINE

“India has been a major player in cut and polished diamonds, so it was natural that the business expanded and succeeded in the field of fine jewellery,” explains Jimit Sanghvi, CEO of KP Sanghvi International, which was founded in 2007 and uses about 12 million stones per year in its factories. “Technology, creativity and the globalisation of communication over the last two decades has helped business flourish and grow exponentially.”

Ashish Shah, managing director of Gold Star Jewellery, which employs 1,400 people in its location at Mumbai’s SEEPZ, attributes India’s success in this industry to a variety of factors: “Today, our core value system of supplying conflict- free diamonds, adherence to fair trade practices, constant innovation, penchant for quality and timely delivery has helped us evolve and become a part of an exclusive, elite group of diamond companies in the world. India has carved a name for itself with its consistency and reliability in supply, effective marketing support, and assurance in the authenticity and integrity of its diamonds.”

Many manufacturers in SEEPZ have sister concerns in Surat while large companies like KP Sanghvi, KGK Group and Hari Krishna Exports are present in both cities. This provides jewellery manufacturers easy access to a plethora of cut and polished diamonds at highly competitive prices. This, along with direct associations with the world’s leading mining companies De Beers, Alrosa and Rio Tinto help companies reduce expenses and keep prices low. Various parallel industries have helped in India’s growth in this segment: for instance, skilled artisans in Gujarat, talented manual designers in Kolkata and the vibrancy of Jaipur (where gemstone cutting is big business) help give India an edge and sustain its strengths.

That said, India is facing growing competition from China and the UAE for manufacturing diamond jewellery. Due to the higher duty structure in India, Dubai is emerging as a major destination. According to Sanjay Kothari, vice chairman of KGK Group, that was one of the first entrants into the diamond processing and jewellery business, “We need to plan better and offer unique designs in order to beat the cost benefits offered by Dubai and China”.

The innovation and efforts of Indian companies’ in-house design and sales teams, which go to great lengths to understand and anticipate demand and forecast fashion trends and overseas buying patterns, have certainly helped boost jewellery exports.

For the US market, engagement rings with solitaires and diamond clusters, anniversary bands and men’s wedding rings form the most important and popular items. When it comes to ring designs, halo rings (a thin line of diamonds surrounding a centre solitaire) are most sought after, followed by concepts inspired by geometric shapes and nature. Other items include charms, earrings, pendants, fashion rings and necklaces, which tend to range from US$30–$12,000. Designers in India are constantly working to create new and exciting products along these lines, keeping the price range in mind.

A DAZZLING EVOLUTION

“The evolution of business modules and technological advancement along with the reduction in the production costs have drastically improved the business environment for entrepreneurs like us,” says Ashish Shah. “There are also a few government norms, which provide easy access to the procurement of raw materials, relief in taxes and strong logistic network across the globe, which have enabled us to cater to any part of the world. SEZs give us leverage in terms of conducting conflict-free trade that allows us to meet the demand of the buyers while complying with the rules and regulation of the industry.” The Indian government presently allows 100 percent foreign direct investment (FDI) in the G&J sector through the automatic route. The cumulative FDI inflows in diamond and gold ornaments in the period from April 2000 to March 2017 were around US$896 million, according to the Department of Industrial Policy and Promotion (DIPP). While the list of government benefits is long, there are a few procedures that can be ironed out to help growth. The Ministry of Commerce and Industry is considering the recommendations made by GJEPC with respect to the availability of duty-free gold for small- and medium-sized exporters from nominated agencies. The Gold Replenishment Scheme (which will allow manufacturers to replenish gold that they have exported without paying any duty) is not operational, and jewellers have also not been able to get their gold stockpiles used in the manufactured jewellery or for export purposes—all of which factory owners and companies have been lobbying for.

To see the sector perform better, “exports to the US are showing an upward trend but the only deterrent is the duty imposed by the US on jewellery imports. The inclusion of G&J in the Merchandise Exports from India Scheme (MEIS) will bring some respite and boost trade to the region. There is stiff competition for our industry and this would be a great help,” says GJEPC’s Pandya.

Dholakia adds, “We feel that the improvement and modernisation of labour laws, requirement of more export- oriented economic zones, establishment of a gold board, ensuring access to better financing, relaxation of certain taxation laws, segregation of investment and consumption demand, and setting up a gold tourism circuit are certain key areas focus on which can help in reviving the jewellery exports sector in the country.”

Clearly, this is not an industry that is waiting on things to change; they are entrepreneurial and proactive. Until a few decades ago the industry was highly dependent on manual skills, but now, each factory in SEEPZ is a hub of state-of-the- art machinery. Sophisticated equipment like laser solders, 3D printers, lost wax casting and centrifugal casting are all part of the process at every factory. From hand millegrain to machine setting, from caged backs to filigree, from comfort fit to metal- mould casting—the ways in which gold, silver, platinum and palladium are used by the industry is myriad. Most companies even have exclusive product development centres and are proud of a string of diamond-setting patents. “The industry has adopted computer-aided manufacturing techniques and thus, we are able to manufacture large quantities of the same designs with flawless precision,” says Kothari of KGK Group, which claims to use 24,000 carats of diamonds in 250,000 pieces of jewellery per year in its manufacturing.

But the G&J industry is evolving in many other ways as well, including in the area of social responsibility. Surat- headquartered Hari Krishna Exports has made international headlines for distributing apartments and cars to their employees, as a Diwali bonus. Consequently, they have generations of craftsmen from the same families working with them. “We ensure a low attrition rate by offering employees a progressive career, creative satisfaction and the opportunity to enhance their ability to overcome newer challenges and improve their skills by providing them education, market exposure and training,” says Dholakia. “We provide free lunch to all our employees and encourage sports and other activities throughout the year. We also organise regular medical check- ups, blood donation drives and motivational training camps for them.”

In the SEEPZ compound, factory roofs are studded with solar panels and water conservation tanks are a common sight. Office spaces and work floors are immaculate and see frequent visits from foreign buyers. Outdoors, gardens are well maintained, there’s even a natural lake in addition to pocket-friendly food at the many canteens. Inside, workers painstakingly create magic with metal and precious stones. Glamour, as we know, requires hard work.