Diamond Industry: A Make In India Success Story
The gems and jewellery industry that registers annual exports of about $40 billion and provides direct employment to over 2 million people has recorded stupendous growth by successfully implementing the very Make in India model that is being promoted by the government today
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The 'Make in India Week' opened in Mumbai last Saturday and by one of those happy coincidences, its epicentre at Mumbai's Bandra-Kurla Complex was only a short distance away from the glittering edifice of the Bharat Diamond Bourse (BDB), the largest complex in the world for trading diamonds, and the epicentre of India's diamond export business.
What's the link between the two, one may wonder? It lies in the business model that has given birth to the industry that operates out of the Bourse.
Many see the BDB as a symbol of the 'Make in India' path of economic growth that the present government has espoused. The core premise of 'Make in India' is that the country has the skilled workforce and infrastructure needed to produce world class goods. Visionary entrepreneurs and businesses can thrive in such a setting. And the diamond industry has already established that this is true.
It is from within the BDB that over 90% of India's diamond export trade takes place, or to put it differently, this is the hub through which the country exports nearly US$ 22 billion worth of polished diamonds each year. The nerve centre of India's diamond trade houses the offices of nearly all of India's leading diamond companies, many of whom have played pioneering and leadership roles in developing this gargantuan industry.
Currently, the country dominates the world trade in diamonds, and is by far the largest manufacturing centre, a position it has held for nearly two decades now. India imports over 75% of the world's rough diamonds, and is an undisputed leader in the cutting and polishing segment of the diamond pipeline. Of the world's polished diamond production, India has an over 65% share by value, a nearly 75% share by caratage and a whopping 92% share by pieces.
Surat, which has won for itself the accolade of the world's diamond manufacturing capital, and the areas surrounding it, directly employ nearly 7-8 lakh workers in the diamond industry. How much this huge edifice has contributed to the growth of employment in related sectors that directly or indirectly serve the industry and its workforce has not been calculated; it surely must be significantly larger.
Additionally, the diamond export industry has spawned a downstream sibling as well - the jewellery industry that services the global markets. Mumbai was the main hub of the jewellery export segment, but other centres like Surat and Jaipur, where diamonds and coloured gemstones are cut and polished, have also developed sizable pockets over the last few years housing jewellery units that service the international markets.
This segment earns the country another US$ 9.9 billion in exports each year and is estimated to provide employment to another few lakhs of workers.
Across all these segments, the gem and jewellery industry accounts for about US$ 40 billion worth of exports each year and has a 13% share in India's merchandise exports.
Ironically, the Indian diamond and jewellery industry is only a mid-sector player in the diamond pipeline. It does not have the advantage of using locally produced raw materials. Both the diamonds and the gold that drive its growth are entirely imported; skilled labour and innovative entrepreneurs add value to these imported product before sending them back to markets across the world.
Diamonds, and to an extent jewellery, are one of the few segments where India has not only excelled over China in terms of facilities and quality, it has also held its own against global competition for a period of well nigh two decades now.
Recently, Praveenshankar Pandya, the Chairman of The Gem and Jewellery Export Promotion Council (GJEPC), the apex body of India's gem and jewellery export business described the industry as a true testimony of Make in India.
He also stated that there was still immense scope for the industry to further expand and grow. The Council has said that if a Presumptive Taxation regime is implemented it is estimated that India can tap additional market share of approximately around US$ 20 bn (by FY 2018-19) and create employment opportunities for a further 1.5 million people within the sector.
Certainly, it's a case study that could be a role model for many other sectors.