"Infrastructure and our know-how of jewellery-making allows us to compete with any country in the world" Kamal Gupta/Chairman/PP Jewellers

In the first week of June this year when JCK Magazine put together its annual jewellery show in Las Vegas, a contingent of 63 exhibitors from India showed up at the Sands Expo & Convention Center, venue to the six-day long show. If the maiden contingent, put together by industry apex body, Gems and Jewellery Export Promotion Council, (GJEPC) drew a huge number, it was for good reason. The US is not just India's biggest market for gems and jewellery, but also one of its fastest growing. Last year, of the $12 billion (Rs 55,200 crore) that the industry raked in, $3.95 billion (Rs 18,170 crore) came from the US-a jump of 19 per cent over the previous year.

The high point of the show, from the point of view of Indian jewellers, was the "Unmatched India Evening" at the Sin City's exotic hotel, the Venetian. Models from different parts of the world sashayed down the catwalk, wearing delicately designed rings, pendants and necklaces. Indian jewellers, long known as mere polishers of low-end diamonds and makers of chunky jewellery, were making a statement to the world of jewellery retailers and buyers. And they were making it with a bang. Says Sanjay Kothari, Chairman of the GJEPC, industry apex body: "The idea was to showcase the versatility of the Indian jewellery sector, which in its diversity can cater to the tastes of individuals in any part of the world."

But why are Indian jewellers making a beeline to the gold jewellery business? The reason is pretty simple. Over the last 40 years, which is roughly how old the industry is, India has risen to the top of the heap of the diamond cutting business. Nine out of 10 rough diamonds are cut and polished and re-exported from India. The problem with that kind of a dominance, however, is that there's little room for growth-unless India can move into high-value diamonds. But that's easier said than done because a strong lobby of foreign jewellers holds sway in this lucrative segment and breaking into this zealously-guarded world means mastering complex socio-political equations that drive the diamond trade.

An easier avenue of growth, as dozens of Indian jewellers have discovered, is to enter gold jewellery exports, where they can leverage the same advantages that have made them the king of diamonds-viz. cheap but highly-skilled labour. Although gold jewellery already fetches India $2.5 billion (Rs 11,500 crore) in revenues annually, it wasn't an area of focus until recently. Jewellers were happy cutting and polishing diamonds for buyers abroad, and their gold jewellery was sold mainly to buyers within the country. One big reason was that their craftsmen were trained in the traditional (read: clunky) style of jewellery- making, whereas markets like the US demanded simple but stylish ornaments. Retraining designers or getting new ones from abroad was too much trouble, especially when diamond polishing was a booming business. Now, of course, hard-pressed for growth (and realising the fact that export margins are 3 to 4 per cent higher), they are willing to go the whole hog after the $56 billion global market.

InterGold Jewellery, a Rs 1,000-crore company with Rs 315 crore in exports last year, plans to move into high-end, sophisticated jewellery that fetch higher prices. Rajesh Exports, which claims to have the largest jewellery-manufacturing unit in the world, already tops the list of exporters with Rs 900 crore in sales abroad last year, and intends to tie up with big entities in Europe and US for distribution of products in these markets. Jindal Exports, a Delhi-based jeweller with a topline of Rs 2,000 crore and export income of Rs 275 crore, has so far only exported plain gold ornaments, but is now considering studded jewellery, where the profit margins are higher. Says Kamal Gupta, Chairman, PP Jewellers, with Rs 200 crore in exports: "Infrastructure and our knowhow coupled with highly skilled and economic labour would allow us to compete with any country in the world."

"A rich heritage of jewellery-manufacturing gives us an edge" Sameer Shah/Executive Chairman/Gemplus Jewellery

Certain regulatory and market developments at home may be making it easier for exporters like Gupta to compete globally. All restrictions on gold import have been eased and jewellery manufacturing equipment attract lower rates of duty, thanks to the general reduction in tariffs. Besides, a shift in the taste of domestic buyers-standardised designs sold at retailers such as Tanishq and Oyzterbay, apart from family-owned chains-is allowing the jewellers to invest in hiring designers, not just from design schools in India, but also professional designers from abroad. For example, Gemplus Jewellery's inhouse team of 30 trained designers from India, Italy and Japan helps churn out 100,000 units of jewellery a month.

Still, initially it may be difficult to match up to the quality standards of countries like Italy, Germany and Hong Kong who have catered to the US for more than a century now, but Indians are confident of honing their skills over time. Says Kunal Doshi, co-Convenor, Panel Committee on Gold Jewellery, GJEPC: "If we could become No. 1 in diamonds, I don't see any reason why we can't repeat that success in gold jewellery in due course of time." Aiding India's exports is the rising Euro (versus the dollar), which has affected exports from Europe. Italy, for instance, has seen its market share drop from 38 to 30 per cent in the last two years.

Yet, there's no dearth of competition from developing countries. Consider: In plain gold jewellery, Turkey leads with a 20-per cent share, followed by Malaysia and Singapore. China and Hong Kong pose stiff competition in studded jewellery, and countries like Pakistan and Thailand are masters of the coloured stone-embedded jewellery. Notes Sameer Shah, Executive Chairman, Gemplus Jewellery: "A rich heritage of jewellery-manufacturing, large pool of talented artisans, economic prices and easy access to diamonds and gold give India its long-term competitive advantage."

"We intend to tie up with big entities in Europe and US for distribution" Rajesh Mehta/Chairman/Rajesh Exports

At the moment, there are four channels through which Indian gold jewellery is exported: retailers, whole-sellers, independent stores, and Indian stores. The wholesale channel is the most preferred because it is seen as low-risk and hassle-free, although retailers such as Wal-Mart and JC Penny are sought after too. The high-end segment is tapped through independent stores, 32,800 of which are there in the US alone. But the bulk of sale happens via Indian stores, which are frequented if not entirely by Indians, but Asian consumers with similar tastes in jewellery.

In the years to come, the challenge for Indian jewellery exporters will be to churn out designs that appeal to a wider swathe of young consumers in western markets. "There is an increasing trend to export 10-14 carat studded jewellery in fusion designs at a lower price than the traditional 22 carat ornate gold. So we need to be on the ball as far as jewellery fashion goes" says Saunak Parikh, MD, UniDesign. If the JCK Show in Vegas is anything to go by, then the Indian exporters may have already got the message.