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Indian gem and jewellery manufacturers have the skill and capabilities to cater to any market in the world

11 february 2019

colin_shah_xx.pngBesides spearheading the “White Paper” last year, Colin Shah, Vice Chairman of the Gem & Jewellery Export Promotion Council (GJEPC) has been actively involved in the initiatives of the Council like MyKYCBank and many more…

A first generation jeweller and an astute businessman who learnt the ropes of the diamond business at age 17, Colin Shah went on to establish his own company Kama Jewellery in the year 1996.

Today, Colin Shah is the Managing Director of Kama Schachter Jewelry Pvt. Ltd. His recent foray into jewellery retail is another step to pursue his passion for diamond jewellery. His offline and online retail presence go by the parent company’s name – Kama Jewellery.

In an Interview with Rough & Polished, Colin Shah- GJEPC’s Vice Chair, talks about the initiatives by the GJEPC; and on the current challenges before the Indian G&J industry.

You took up the responsibility of GJEPC’s Vice Chair, albeit during trying times, but do you think the resilient Indian Gems & Jewellery industry can overcome the umpteen hurdles to regenerate itself, like in the past? Exports too seem to be going downhill for quite some time now…

Currently, there are many challenges before the Indian gems & jewellery industry. But, the Indian industry is known for its resilience over the past few decades. In the past, it has overcome many a hurdle and rose like the ‘Phoenix’ and witnessed immense growth. In a similar way, the Indian G&J industry will survive whatever challenges that it has to face now or in the future and return to a healthy and fast-growing industry.

GJEPC, as the apex body, has been taking proactive steps combating various issues like those of undisclosed mixing of synthetic with natural diamonds. This problem has been tackled by the industry to an extent now by making affordable detection machines and also through opening detection centres across the country. In addition, the trade organisations have come forward and formed the Natural Diamond Monitoring Committee (NDMC).

Diamond financing has been an acute problem for a few years now. But of late, finance to the sector has been cut down by 10%, which has affected the industry leading to the downfall of gem & jewellery exports. The GJEPC is working with the Government and Banks to resolve this issue at the earliest. Besides, to strength the industry, on the whole, we are on the verge of finalizing a diamond and jewellery policy. We are working with DPA closely to improve the demand for diamonds globally.

Bank finance for the industry, especially SMEs, has been declining by the day. In this scenario, many private financial companies/lenders may come to the rescue. Is it prudent for industry players to depend on them at this stage? Your opinion.

The Indian gem & jewellery export accounts for $41 bn annually. The trade majorly depends on finance offered by the banks to run its business. Any reduction in bank finance to the traders will affect the exports. In such a scenario if the private financial companies are offering finance at a price that is affordable and profitable for the business, there is no harm in approaching them.

You spearheaded GJEPC’s White Paper’ last year. Also, Dubai Diamond Exchange & AWDC have signed on to the MyKYCBank initiative as well. Do you see these initiatives bringing some respite to the industry in the long run?

Yes, these self-regulation measures would definitely help the industry in the long run. Through the White Paper, we offered a series of recommendation to banks to make sure the genuine players continue to get finance from banks. These recommendations included that GJEPC will provide critical data analysis at regular intervals, on key observations of the trade that will facilitate banks to assess industry scenario; formation of an informal arbitration body consisting of bankers, GJEPC and BDB members to be formed to find fair resolutions for NPA management, recovery and disputes; insisted all members register under MyKYCBank for better information facilitation and transparency for the banks.

More and more trade associations joining the MyKYC Bank initiative will create credibility for the platform. So far, GJEPC, Bharat Diamond Bourse, Antwerp World Diamond Centre and DMCC has joined the MyKYC Platform.

Were any steps taken recently by the GJEPC to convince lending banks to be reasonably stringent and not ask for higher collateral security for financing? Is the government helping out to ease the situation? According to reports, SBI, the biggest bank in diamond financing, has made it more difficult for G&J industry players to get finance…

The diamond and jewellery business is in excess of Rs.5 lakh crore but the banking finance extended is just around Rs. 70,000 crore. It is estimated that the banking sector has under 1 per cent of their total lending as exposure in the gems and jewellery sector. Any further decline in bank finance would adversely affect the gem and jewellery export business.

Through White Paper we had presented the self-regulation measures and other processes that the industry would take to make sure that genuine players continue to get bank finance. GJEPC has been constantly working with the Govt. and banks to resolve this issue and we are hopeful that banks will continue to support this industry as they have done in the past.

What’s your take on the ‘much-discussed’ lab-grown diamonds? While mixing is just one problem, ‘demand’ and ‘prices’ for ‘smalls’ are said to go down in the future. Should India be concerned, being the largest manufacturers of small diamonds?

I believe that both--natural diamonds and synthetics-- are 2 different products appealing to different emotional needs of the consumer. Synthetics are a function of technology and we all know the products made from technology gets better by the day and prices fall over time as technology gets better and better. Natural diamonds, on the other hand, are made over billions of years and available in finite quantities and are unique. Therefore, we don’t see how synthetics will influence the demand and price of natural diamonds which are rare, finite and unique and therefore precious.

Undisclosed mixing of synthetic with natural diamonds has been a concern but the industry has been successfully tackling it. GJEPC has also set up detection machines at major gem and jewellery clusters in India, offering detection services at affordable prices. We have also set Diamond Detection & Resource Center in Bharat Diamond Bourse in Mumbai and in Surat, the diamond hub of the world.

We have also been organising seminars for retailers and manufacturers, making them aware of the various products available and detection facility available in the market. We are conducting a survey to make sure that there is no undisclosed mixing of synthetics with natural diamonds happening. Also, we are sensitising the Govt. of any issues arising in the industry. The industry has become more vigilant and taken all self-regulatory measures for the sustainable development of the industry here in India.

For the natural diamond industry to survive the onslaught of lab-grown diamonds, getting into manufacturing larger, quality stones have been suggested. Is it possible for India, with the current manufacturing infrastructure and the restricted financing available to the industry? Your comments.

India is the largest diamond producer in the world. 14 out of 15 diamonds set in jewellery across the world are processed in India. We export diamonds worth $23 bn annually. Today apart from cutting and polishing small size diamond we have also developed the skills to cut and polished large size diamonds.

Synthetic diamonds and natural diamonds are very different products, and each will have their own market and consumers. We also have products such as Cubic Zirconia and imitation jewellery in the market but this has never been a threat to the natural diamonds. However, all our efforts should go into keeping both products separately, natural and synthetic diamonds.

What is your take on the status of Indian industry currently; where is it heading to right now; and what do you envisage for the industry going forward?

The year 2018 has been a challenging one for business with demonetization and introduction of GST for every sector. In addition to this, for the gems and jewellery sector, the banks and financial institutions have tightened their lending norms which have affected the exports adversely.

Indian gem & jewellery manufacturers have the skill and capabilities to cater to any market in the world. And over the years we have established a good rapport with buyers across the world. Internal issues like finance crunch should be resolved so that we can meet the ever-growing demand from the international market or else India will lose business to competitors.

The US which is India’s major market accounts for half of India’s gem and jewellery exports. We see an improved macroeconomic condition in the US. The demand from this market will rise in the future and India will be ready to deliver the demands of the international market.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished