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Diamond Business
Diamond cutting & polishing business has resurfaced in India after it disappeared from there when the European colonizers arrived. The latter had nothing to do with it. The mines had exhausted, and with no new mines discovery in India, the world markets looked elsewhere for a source. Through the ages until discoveries of diamond mines elsewhere in the world, India was the only source of diamonds. South Africa became the next best source in late nineteenth century, followed by Canada, US, Australia, African States on the western coast and now Russia. Diamonds, as these are discovered on the surface or deep in the ground, or in the riverbeds are called “Roughs”. Roughs arrive at the consumer’s hand cut & polished, reshaped and finally encrusted in Gold, Platinum & Silver to enhance their beauty. This also multiplies their value exponentially. Diamonds are best friend of kings, monarchs, maharajahs, dukes and rest of the aristocracy. Wealthy individuals also own diamonds as an investment. They are also girl’s best friends. All these drive the current market demand and also the prices. Larger diamonds are sold for millions of dollars and smaller one from $800 onwards. Diamonds like “Koh -I-Noor” are priceless. Its ownership has been determined by the outcome of a battle or change of dynasty. No commoner could ever afford its ownership. Medium sized diamond like “Hope Diamond” has been bought and sold many times over the last two hundred years. Smaller diamonds adorn wedding & engagement rings, watches, jewelry and other ornaments. Diamonds also have industrial uses, since it is the hardest substance known to man. Total “Rough” diamond market worldwide is about $14 Billion a year. Once cut, polished and reshaped, it doubles or triples its value. Market share of diamonds that adorn ornaments, together with other precious metals (especially Gold) translates into about $70 Billion a year jewelry business. It is one business, which requires, skill, innovation, cheap labor and market contacts to prosper. India has all the forgoing characteristics.

Value of Diamond Imports & Exports from India: India imports (for re-export) about $8 Billion “Roughs” every year. This translates into about 130 million carats a year. It is about 70% supply of all diamonds worldwide. India exports back about $12.5 Billion worth of cut and polished diamonds (80% of imports) to the world markets. Remainder is domestically consumed. Indian consumers have a hunger for diamonds & jewelry. The latter is popular during all seasons, especially more during the wedding season. All this work is concentrated in Gujarat city of Surat and Mumbai in Maharashtra. About 8,000 small and medium diamond-processing facilities employ close 800,000 people. Since polishing is a hand and grinding wheel operation, hence nimble and young hands are preferred. The trade works in the same way as described above, except that the Indian merchants play a greater role. This high margin business has maintained a steady progress in last 30 years. One reason for its phenomenal success is that government's) in India came to help instead of hindrance. They established training schools, trade councils and standards organizations etc. to make the best advantage of this growing trade. Very early, when the trade was at its infancy, Government of India set the value added to the “Roughs” at about 50% to enjoy substantial tax and export benefits. This became the corner stone of all progress.

Headway to be made in Jewelry Exports: All the Gold brought into the country does not end for private use. A much smaller component in turned into jewelry and exported. About $1.5 Billion worth of Jewelry is exported by India every year. US accounts for the largest share of exports market (about 40%), followed by Middle East. It is again value added export where gold bars are imported and then turned into items of beauty for export. Lower labor cost is key reason for this recent surge in sales abroad in last few years. Still it is an infinitesimal amount in $70 Billion jewelry market. It can be greatly increased, provided product quality in improved and linkup is made with the world’s great Jewelry stores. The latter demands a much higher quality and design, which is only possible with better labor training, better process & procedures, better quality control and import of much needed equipment and machinery. Like IT & BPO, it is high skill and labor-intensive business. In return, it offers greater margins. Higher level of investment made in all the forgoing will help to grab a bigger share of world’s jewelry market. This investment will have a short payback and cash inflow for a much longer period. Industry estimates indicate that size of jewelry market worldwide is stable, with few bumps.