Gems and jewellery sector in India - potential for success?

Abstract

Gems and Jewellery is intricately associated with India’s socio economic scenario from ancient times. In recent times this is a sector that has performed beyond expectations and is the second highest grosser of export revenue after software services. The success of the Indian Gems and Jewellery Sector can be attributed to the availability of skilled craftsmen, cheap labour and thriving demand both domestic and exports. An example of the labour factor cost advantage is illustrated by the fact that to cut a raw diamond, Indian labour would cost $10 per carat, whereas the US industry would incur costs of $150 per carat. India is the largest consumer of gold, the third largest consumer of diamonds, and it holds 94% (pieces) of the market for “Cutting and polishing raw diamonds”. Despite these advantages India holds just about $13 billion of the global Gems and Jewellery Market, which is pegged at $85 billion. This can be attributed to the Indian industry occupying a mid – position in the value chain, being squeezed on either side by powerful players. It is obvious that the Indian Jewellery Industry, though very successful could do much better. This study tries to understand the salient features of the industry that are impeding its growth and explore the possible actions that need to be taken in order to propel it to the next stage of growth. This industry will be contrasted with the IT industry to understand what the key difference were and whether any of the learnings for the IT industry could be applied to the Gems & Jewellery.