Professional Jeweler Archive: India: The Quest for Quality

May 2005

Merchandise | Diamonds


India: The Quest for Quality

Jewelry manufacturers strive for excellence in an increasingly competitive world

By Robert Weldon, G.G.


Indian-made jewelry’s robust presence is widespread at mass merchants from Wal-Mart to Sears to J.C. Penney.

Its presence also is increasing dramatically at upmarket chain and independent jewelry stores throughout the United States. The reason: quality.
The word applies not only to India’s jewelry, say retailers who have become regular customers, but also to India’s attention to business relationships and U.S. consumer tastes.

India’s ascendant curve in gem and jewelry manufacturing isn’t surprising, given the country’s rich history and tradition of jewelry making. But today, the industry born of loose diamonds and colored gems is maturing rapidly as a supplier of all types and styles of high-quality finished jewelry.

“It’s also about global efficiencies,” says Alex Weindling of Weindling International, New York City, a partner with M. Suresh, a Diamond Trading Co. client, and A.S. Exports, one of India’s top jewelry exporters. “India manufactures 90% of the world’s diamonds, and these diamonds have moved in the same direction as the Lexus automobile: top-quality luxury. I might add India is the only diamond manufacturing center that’s actually growing!”

To get a grip on exactly how dramatic India’s jewelry growth has been, some numbers from India’s Gem and Jewellery Export Promotion Council:

  • In the past decade, the gems and jewelry sector has averaged 30% annual growth.
  • In 2004, net exports rose 36.4% to $14.7 billion. The country’s export target is $16 billion by 2007.
  • By some estimates, over 3 million people will be part of the jewelry business in India by 2007.

About the only thing trending downward these days is the export of loose cut diamonds and colored gemstones. But even that decline hides a positive: jewelry factories – growing like mushrooms in free-trade zones in Mumbai, Surat and Jaipur – are snapping up the loose goods once destined for export. In fact, the past decade witnessed a consolidation of loose diamond manufacturers and jewelry manufacturers into an increasingly efficient arena for making jewelry.

Along with the growth has come a wave of new jewelry brands paraded before international and domestic buyers. India’s middle class, perhaps the largest in the world at an estimated 300 million, is becoming a big consumer of India’s new jewelry designs and brands.

Generational Revolution

A few critics, including Indian manufacturers themselves, say much remains to be done. While India has grown to be a market leader in making jewelry, they suggest design innovation lags behind some other behemoths in the region, including China.

Still, competitive forces are helping to hone the distinctions. “A young generation of highly educated and visionary Indian manufacturers is taking over,” says Henry Shapiro of Diamour Inc., New York City. “These kids are often educated in the West and understand business principles, design and trend concepts, and they’re fluent with the language and customs of the United States,” he says.

They’ve helped to satisfactorily answer longtime questions such as “Is the work guaranteed?” and “Will I get the order on time?” Says one major retailer who asked not to be identified, “The concern about quality, once an issue for nervous retailers taking baby steps in India, has been forgotten.”

Corporate Social Responsibility

That’s not to say India’s manufacturers face no more challenges with buyers from the U.S. and elsewhere. Today’s socially conscious U.S. consumers want to be reassured the jewel they buy is made without child labor, is mined in environmentally conscious ways and does not support nefarious activities such as terrorism or war.

Rio Tinto Diamonds, Melbourne, Australia, a major supplier of diamonds to India’s jewelry manufacturers and the Indo Argyle Diamond Council, RTD’s marketing arm and industry liaison, promote acceptance of a Business Excellence Model, or BEM. “The BEM initiative aims to help Rio Tinto customers and IADC members become customer-focused and employee-friendly organizations,” says Nirupa Bhatt, marketing manager for RTD. “By becoming sensitive to the environment, health and safety issues, and operational quality, BEM-certified companies are benefiting from improved productivity and quality of work.” Twenty-five manufacturers and retailers are now BEM-certified.

At this year’s JCK-Phoenix Show, RTD presented the BEM initiative to retailers, and Bhatt says it was well-received. “Some of the retailers have been visiting India for a few years now and have noticed marked improvement in the BEM-certified manufacturers,” she says.

Architects of Quality

These and other improvements are visible at the SEEPZ free-trade zone in Mumbai and in Surat, an industrial town in Gujarat state where the advanced infrastructure includes vast factories, state-of-the-art facilities and legions of workers.

DTC client Shree Ramakrishna Export, Mumbai, India, affiliated with A. Goldi Inc. of New York City, runs one such operation in Surat, complete with the latest diamond-cutting technology, and also Jewel Goldi, a jewelry manufacturing plant in SEEPZ. Founder Govind Gholakia has long had his own business excellence model, say his employees. His factory in Surat is spotless and hums with efficiency, and all aspects of the business reflect a culture of respect and care. Gholakia’s generosity to his community is legendary. In Surat, the Shree Ramakrishna Export Charitable Trust funds a tuition-free girl’s high school. It also built and runs a hospital and developed a community park.

Government Support

The federal and state governments are helping to support the industry’s effort to redefine itself. One example: Jaipur, a city in Rajasthan state that has been known for cutting and manufacturing colored gemstone jewelry since the Mogul era (16th-18th centuries), remains one of the largest gem cutting centers in the world. New government initiatives have reinvigorated business in Jaipur and led to plans for a free-trade zone like SEEPZ in Mumbai.

KGK Group of Jaipur celebrates its 100th anniversary as a jewelry manufacturer this year with manufacturing plants in India, South Africa, China, Thailand and Sri Lanka and branch offices around the world. KGK, a DTC client, has the capacity to produce 12,000 to 24,000 jewelry items per month. It’s also a model of best-practice principles and has long been noted for its corporate citizenship. In 1996, KGK established the Bhagwan Mahaveer Cancer Hospital in Jaipur and today is working on several projects around the city. “Our strategy is to offer top-quality jewelry,” says Chirag Pandya, KGK’s marketing manager based in New York City. “We see so much jewelry that is copied and overdone, so we strive to be different, developing new lines and designs every three months. We send our designers around the world to understand developing trends. Then we adapt our own designs and communicate our thoughts with customers, our American retail partners. Our vision is to be their creative partners.”

Range of Price Points

Of course, not all retailers are interested in high-end jewelry, so India’s manufacturers provide a broad spectrum. Prime International of New York City, a jewelry affiliate of Jayam N.V., founded by Mafatlal Mehta, has been a DTC client for 40 years and is proud to provide promotional to higher-end jewelry in volume.

“Business is all about the relationships we develop with our customers,” says Shailesh Shah, the marketing manager based in New York City. “Among our main objectives to meet that goal is to provide quality product as quickly as possible at the best possible price.”

The strategy has met with success. One example is a 14k gold bangle bracelet with three SI quality diamonds. “It was marked at $699 retail, and partners sold 60,000 pieces in 18 months,” says Shah. “An in-line diamond and 10k bracelet was offered at a promotional retail price of $185. We sold 12,000 of those bracelets in one day.”

Innovative Design

The goal, regardless of price, is to offer innovative design. “Our design teams travel around the world so they can understand different markets and individual trends so they can adopt different concepts, create new designs and offer updated, fresh looks for our customers,” says Arvind Sanghvi, director of marketing for K.P. Sanghvi, Mumbai, India. “In the past, the entire focus of making diamond jewelry among Indian manufacturers was to flash the diamonds. Now there’s a shift from diamond content to design.” For example, K.P. Sanghvi, with sales of more than $250 million yearly, is known for developing innovative cuts and brands, including the recently unveiled “Cupio” line featuring six-sided diamonds.

Sanghvi says attention to customers’ needs is critical.

“The services we provide in terms of exchange, buy-back facilities and repairs separate us from our competitors,” he says.

The company is bullish about the U.S. and foresees a more lucrative second half for 2005. “Indian products are not only superior in terms of quality, but also are very reasonable to a cost-conscious U.S. customer,” he says.
Marzin Shroff, marketing president at DTC client Suashish Diamonds, Mumbai, India, echoes that thought. “At Suashish, we realized early on we would have to be proactive to be able to meet the evolving needs of our business partners,” he says. “We have attempted to understand our customer’s customer. We are proud that all of our designs are based on extensive research and that our quality-control system resulted in us having among the lowest rejection rates in the industry – well below 0.5%,” he says.

“We are also proud of our ability to partner with our retailers,” he says. “Because we have a steady source of supply, we can project forward availability and advise our retail partners when to take advantage of lower prices.”

Partnering Works

Some Indian companies undertake formal partnerships with U.S. companies. Uni-Design USA is part of the Mahendra Bros. Group, Mumbai, India, a DTC client. The company produces 60,000 pieces of jewelry annually, much of it exported to the U.S.

For Uni-Design, however, it’s as much about quality and design as about numbers. Calls for quality from major jewelers such as Bailey Banks & Biddle, Zale Corp.’s high-end division, have been heard, says Saunak Parikh, director of Uni-Design Jewellery PVT Ltd. “Creativity and commitment.”

“We believe in partnering with our customers,” he adds. “In fact, our support and backing have enabled some of our customers to transform the way they do business. Others have expanded their product line and yet others have entered uncharted territories. Customers work with us because we add value to their business.”

An American Base

Having an American partner is one way for Indian companies to take advantage of the U.S. market. Actually living here is another. “Living in the American environment is a huge advantage for Indian companies doing business here,” says Prakash Lakhi, president of Gemglow Inc., part of the Lakhi Group, Mumbai, India, a DTC client. “It’s the best way for manufacturers to be able to deal with their customers directly.”

It also helps the company catch trends when they start to develop. Lakhi says his company was among the first to develop chandelier and drop earrings as they became popular in recent years. Now the company, which has its own designer line called Studio Rêves, is developing collections of three-stone rings. “This category is still very strong,” Lakhi says, “but the right-hand ring is still waiting to catch up. It’s too early to say whether it will.”

While all the attention paid to quality and creativity has played well in the U.S., India’s industry has benefited also from other factors. It has benefited from its quick response to De Beers’ Supplier of Choice policy, says Lakhi, not to mention a lack of U.S. duties on Indian imports. “That amounts essentially to a 6% advantage for Indian manufacturers that could change dramatically if India is suddenly taxed or if China is not taxed as it currently is,” says Sanjay Kothari, president of Inter Jewel of New York City, the jewelry division of D. Navinchandra & Co., Mumbai, India, a DTC client that also buys diamonds from the Diavik mine in Canada and was one of the first companies to win BEM certification from Rio Tinto.

“We also see branding as a long-term strategic investment that is already bearing fruit,” Kothari says. “We believe there will be a shake-out among the brands and that a few dominant ones will remain. On a sample basis, we used our same branding techniques in selected areas around the United States, and these experiments went very well.”

High Tech

Jewelex New York Ltd., meanwhile, consistently ranks as one of India’s top exporters from the SEEPZ free-trade zone. The company, the jewelry manufacturing arm of P.D. Kothari & Co., Mumbia, India, a DTC client, is probably one of the most technologically advanced, having taken advantage of SEEPZ policies for the importation of high-tech jewelrymaking equipment. “We believe in creating trends,” says Atul Kothari, Jewelex’s U.S.-based president. “We combine the efforts of our research and development team with those of our designers.”

The company has developed a reputation for precision machine-set diamonds, often combining a range of stone shapes. The resulting brands and jewelry lines include “Mosaix,” “BeDazzle” and “Arrondi.”

Jewelex has embraced Rio Tinto’s Business Excellence Model (it’s already certified) as well as branding. “Branding works in our favor because of our direct source with the supply of rough,” says Kothari. “It requires manufacturers to focus on technique, technology, manufacturing capabilities and efficiencies as well as design.”

Challenges Ahead

The U.S. accounts for 60% of India’s exports so what happens here is the subject of much attention. Mehul Shroff, for one, has some concerns. Shroff runs the New York City office of Jewel Art, the jewelry manufacturing division of Asian Star, Mumbai, one of India’s largest exporters. He’s concerned about U.S. jewelers’ – particularly volume jewelers’ – ability to adapt to increasingly scarce diamond rough and escalating costs. Shroff, meanwhile, concentrates on higher-end retailers, who face less price resistance from their customers and can sell in ranges of $500-$800 for rings and $700-$1,500 for earrings.

He’s not alone in voicing concerns about sluggishness in the U.S. jewelry market since the terrorist attacks of Sept. 11, 2001. “For mass merchandisers, the U.S. market continues to be weak,” says IADC member Mehul Kothari of Vijay Gold Design, New York City, the jewelry division of DTC client B. Vijaykumar & Co., Mumbai, India. “The Chapter 11 filing of Friedman’s [a U.S. jeweler] sent a shudder down many spines. This will have a negative effect on lower end goods. However, America is resilient and will rebound in a couple of years.”

Indian manufacturers’ own way of doing business has drawn concern also. Some analysts suggest Indian manufacturers have coasted on easy credit terms for too long and that profit margins may depend on them too much. India’s industry debt has nearly doubled since 2000, says recently retired ABN-AMRO executive Peter Gross.

Combined, these factors may put pressure on financially weaker manufacturers. One solution for some Indian manufacturers is expansion into new markets, including Europe (where the economy also remains sluggish) and the booming Middle East and Southeast Asia. “India is one of the fastest-growing markets for diamond jewelry, growing at over 20% annually,” says Marzin Shroff of Suashish. “We are extremely excited by what the future has in store.”

The Indian government also has generally adopted a pro-investment, low-tax policy toward the industry in recent years, one that has fostered investment in the latest technology in machinery, education and branding. But in February, the government surprised manufacturers when it announced a new 2% excise tax on “branded jewelry” that caused deep confusion. It wasn’t clear what would be considered a brand or who the tax would affect. After an ensuing strike by small jewelers, the government said the tax would be levied only on large, established brands, some 40 of which exist in the Indian market.

Then the big players objected. “Any setback to jewelry brands will hit innovations in jewelry design in India,” says Arvind Sanghvi. “If the past few years have seen some good innovations in design, it is entirely due to the emergence of branded jewelry,” he says. “Absence of brands means absence of competition, and absence of competition means absence of design innovations and customer-friendly pricing ... Even though the 2% numeric seems modest, it will have major spin-off effects on all parties.”

Despite the speed bumps, India’s trajectory seems assured for the next few years. According to India’s Gem and Jewelry Export Promotion Council’s vision statement, instituted in 2004: “Our vision is to make India the preferred source for quality gems and jewelry, and our mission is to enable every individual associated with the Indian gems and jewelry industry to achieve their full potential.”

For now, all sides of the equation – including Indian exporters and U.S. buyers – find no fault with that goal.

Gold bypass ring features three round diamonds.

Uni-Design Jewellery Pvt., Mumbai, India; (91-22) 5668-1000, fax (91-22) 5668-1050, info@unidesign-jewel.com, www.unidesign-jewel.com.

Nirupa Bhatt, marketing manager for Rio Tinto Diamonds, congratulates recipients of the Business Excellence Model certificates. Twenty-five manufacturers and retailers are now certified. Photo by Robert Weldon.
Gordon Gilcrist (front, fourth from left), managing director of Rio Tinto Diamonds, poses with representatives of the Indian manufacturers and retailers who have achieved certification under RTD’s Business Excellence Model. BEM incorporates internationally accepted guidelines in the areas of quality, environment, health and safety, and social responsibility. BEM-certified diamond manufacturers include Shakti Diamonds, Mahendra Bros., Mun Gems, Niti Diamonds, Poddar & Co., Raghabhai D. Patel, R. Kantilal & Co., S. Narendra, Suashish Diamonds and Tej Diam. Jewelry manufacturers include Chirag Designs, Diam Star, Inter Jewels, Jewelex, Jewelry Solutions, Siddhant Diamonds, Suashish Jewellery and Uni-Design.
Peacocks are the national bird of India so their feathers are considered auspicious symbols. This peacock feather brooch is crafted in 18k white gold and set with pavé white and champagne diamonds, pavé sapphires and tsavorite garnets, all surrounding a 1.11-ct. pear-shaped diamond. Photo by Robert Weldon.
Jewel-Goldi, New York City; (888) 398-3050 or (212) 398-3050, andy@jewelgoldi.com, www.jewelgoldi.com.
Mass quantities of the jewels pictured at right were sold in record time thanks to clever positioning and retail prices. Photo by Robert Weldon.

Prime International, New York City; (800) 445-4267 or (212) 869-4267 primeintnl@aol.com.

White, yellow and pink gold bracelets each have about 4 carats of machine-channel-set diamonds. The 14k ring also features machine-set diamonds. Photo by Robert Weldon.

Jewelex New York Ltd., New York City; (800) 208-9999 or (212) 840-6970, general@jewelexltd.com.

A 0.75-ct. diamond and six 0.25-ct. Ceylon sapphires form this ring.

KGK Jewelry Inc., New York City; (212) 893-8080, chirag@kgkgroup.com, www.kgkjewellery.com. KGK Jewelry Inc. is part of the KGK Group in Jaipur, India.

From Studio Rêves by Gemglow, this fanciful pendant depicts dancers dressed in pavé diamonds in white and yellow gold. Photo by Robert Weldon.

Gemglow Inc., a division of the Lakhi Group of Co’s., New York City, (866) 443-6456 or (212) 829-0868. info@gemglow.com, www.gemglow.com.

Ring comprises round diamonds in white gold. Photo by Robert Weldon.

Gemglow Inc., a division of the Lakhi Group of Co’s., New York City; (866) 443-6456 or (212) 829-0868, info@gemglow.com, www.gemglow.com.

Fashion diamond ring in 14k white gold features princess-cut diamonds totaling 3 carats.

B. Vijaykumar & Co. Mumbai, India; (91-22) 2386-3853, bvk@vsnl.com.

Pendant flower motif in 14k white gold has 1.25 carats of white and champagne colored diamonds. Photo by Robert Weldon.

Dinurje, New York City: (866) 346 8743 or (212) 944-1200. hpatel@dinurje.com, www.dinurje.com.

Cross pendant is covered with 0.25 carat of round brilliant-cut SI3 to I1 diamonds in 14k gold. Suggested retail, $325.

Jewel Art, the jewelry manufacturing arm of Asian Star Co. Ltd., New York City; (888) 354-0666 or (212) 354-0666. In Mumbai, (91-22) 2364-8450, mehul@asianstar.us.

These 10k white gold fashion rings are each set with 2 carats of brilliant- and tapered-cut diamonds.

Mohit Jewellery Private Ltd., Mumbai, India; (91-22) 5693-8563, contact@
mohitjewellery.com, www.mohitjewellery.com.

Right-hand ring holds 1.50 carats of diamonds in 14k gold. Photo by Robert Weldon.

Gold Star Jewellery LLC, New York City; (212) 391-2021. sales@goldstarjewellery.com, www.goldstarjewellery.com.

This 14k white gold ring has diamonds totaling 1.25 carats.

K.P. Sanghvi, Mumbai, India; (91-22) 2363-0315, info@kpsanghvi.com, www.kpsanghvi.com.

Tricolor gold makes a statement in these jewels from Inter Jewel.

Inter Jewel, New York City; (800) 468-3745 or (212) 869-0287, fax (212) 869-4062, sales@interjewel.com, www.interjewel.com.

Copyright © 2005 by Bond Communications