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Vipul Shah
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In the ten months since taking over from Rajiv Jain as
chairman of the Gem and Jewellery Export Promotion Council (GJEPC), Vipul Shah
has recommitted the council to further boosting the gems and jewelry industry
in India by exploring new markets for exports, showcasing Indian jewelry around
the world and working to assure a future supply of rough. But he also has
launched new initiatives expanding vocational training at the jewelry designing
institutes in an effort to attract a new generation of designers who can
increase the appeal and artistic vision of Indian jewelry in the global
marketplace.
Apart from chairing the council, Shah is also the chief
executive officer (CEO) of Asian Star Co. Ltd. Under his leadership, the
company has attained the status of being one of India’s leading diamantaires.
He has been instrumental in establishing the company’s jewelry business as a
global distribution network, which currently is considered to be one of the
best in the industry. He recently sat down with Rapaport Magazine to discuss
his plans for GJEPC and his expectations for the future of the Indian diamond
industry.
Rapaport Magazine: You have been in your position at GJEPC
since October 2012. What are some of the new initiatives that you are planning?
What are some of the initiatives started by your predecessors that you will be
expanding? What are your short-term and long-term goals for the council — and
the industry — during your tenure?
Vipul Shah: The council will focus on penetrating new
emerging markets through focused buyer-seller matching programs and trade
delegations in various regions. To provide impetus to the diamond trade, it is
imperative to promote diamonds and boost consumer confidence in the category.
GJEPC will continue to promote India as the leading global gem and jewelry
destination, as well as further consolidate the domestic gem and jewelry
industry, while lending support and encouragement to the country’s jewelry
business. I hope to lead the council to achieve greater milestones and further
the growth that the industry has achieved thus far.
To enhance growth for the gems and jewelry sector, the
council has four key focus initiatives that are currently being pursued or are
in the pipeline.
• Promote diamonds in India and China. Globally, the gem and
jewelry industry is witnessing a downturn, as is India, which has until now
been considered a leading market for diamond and diamond jewelry consumption.
Volatile gold prices, reduced media spends and an absence of diamond jewelry
promotion have limited the growth of this industry in recent years.
In order to provide impetus to the business, we have
designed a sustained marketing campaign that would directly address the need
faced by India and other emerging consumer markets such as China. The promotion
is aimed at boosting confidence in diamonds and driving the desire to own
diamonds among consumers in India and China. At this time, GJEPC is in the
process of studying the penetration, needs and consumer behavioral patterns and
trends of these target groups, which will determine the formulation of plans to
promote the segment.
• Expansion in new markets. We have been very active in
promoting bilateral trade relations with various countries and markets — some
new to us, some familiar — and building a spirit of mutual cooperation. These
activities are aimed at bolstering business enterprise and exploring growth
opportunities in the different markets. Included on the agenda are direct
promotional activities such as joint participation at international jewelry
shows, sending and hosting trade delegations and arranging buyer-seller
meetings (BSM) that facilitate one-on-one, face-to-face personal interaction
between Indian sellers and foreign buyers.
The BSM have been very successful for us in the short time
we have been hosting them. We conducted the first one with Russia and the
Commonwealth of Independent States (CIS), the former soviet republics, in 2007,
followed by one with China in 2008. More recently, we organized the Indo-Russia
Jewellery Summit 2012, as well as meetings with the U.S., Europe, China and a
second one with Russia and the CIS. The council also hosted the first BSM for
colored stones in Jaipur with China, one of our biggest buyers, and the first
diamond jewelry BSM in Australia.
Plans are underway to host an international BSM in Chennai
for gold jewelry, the first of its kind, for Saudi Arabia, Dubai, Singapore,
Malaysia and Indonesia. The BSM have helped Indian exporters and participants
understand and navigate international trade barriers and accepted business
practices, as well as get an insider’s guide to the target markets, thereby
increasing networking and business opportunities within target regions.
The council will continue to participate in international
jewelry shows, where we have been very well received. One indication of how
well is that the India Pavilion at the Vicenzaoro Winter & BaselWorld shows
held in early 2013 was allotted space within the prime exhibition area of the
show, which had us showcasing our goods alongside some of the leading gem and
jewelry names of the world.
GJEPC was also a part of the India Show at Dhaka,
Bangladesh, in December 2012. The show was organized by the Federation of
Indian Chambers of Commerce and Industry (FICCI) and aimed at encouraging
importers to directly source from India, thereby strengthening trade relations
in the jewelry sector.
The council hosted the sixth edition of Signature while
extending India International Jewellery Week (IIJW) to New Delhi for the first
time, with the goal of including jewelers and jewelry designers of Northern
India. GJEPC also teamed with the India Trade Promotion Organization (ITPO) to
host the first and one of the largest consumer jewelry shows in the country,
bringing together more than 100 renowned jewelry brands and retailers from
across the country under one roof.
• Domestic initiatives. Proposals submitted under the Indian
government’s 12th five-year plan, and approved by the Ministry of Commerce
& Industry, include the establishment of a convention center in Mumbai, a
common facility center at Gujarat, a gem bourse in Jaipur, a gem and jewelry
park in Mumbai, a “Technology Up” program to increase the use of technology in
gem and jewelry manufacturing tasks previously completed manually and a gem and
jewelry training center at Domjur, Kolkata. The total proposed outlay for the
gem and jewelry initiatives in the five years of the 12th Plan, which extends
from 2012 to 2017, is in excess of $200 million.
The council also will be involved with the Gem and Jewellery
Skill Council of India (GJSCI) in establishing performance standards for the various
institutes and laboratories in the country.
• Emphasis on exports. In order to maintain the consistency
of rough supply in both diamonds and colored gemstones, GJEPC will work with
the Ministry of Commerce & Industry to develop cohesive trade policies and
business-friendly regulations. The modernization of both diamond and jewelry
manufacturing units also is on the agenda.
RM: Is the role of India changing in the global diamond
market? How so?
VS: Yes, certainly. In 2008, when the rest of the world was
reeling under recession, India was comparatively less affected. That was thanks
largely to Indian entrepreneurs, who were flexible enough to adapt to the
changing situations in the global market and navigate the crisis successfully.
During this difficult time, even Indian banks had a crucial role to play in
shaping the Indian diamond industry by making credit readily available with
easy documentation. As a result of those efforts, today we see certified,
bigger and fancy diamonds making their way into our country.
RM: What are your priorities regarding taxes — which current
tax policies are most burdensome and what are you doing to repeal them? How has
the recent increase in the value-added tax (VAT) on Mumbai diamonds and
precious metals impacted the trade? What are the implications for diamond
prices? Are you lobbying to repeal the tax?
VS: No tax structure is burdensome. It is the implementation
of the taxation system that is sometimes out of sync with the practicalities of
conducting business. We believe that the taxation system should be structured
in such a way that it fosters growth and makes us more competitive. That’s why
we have proposed a presumptive taxation system for diamonds, which we hope will
be approved by the Indian government soon.
The change in the VAT from 1 percent to 1.1 percent cannot
be classified as a big change. Even though it has increased transaction costs
minimally, the VAT in India still remains the lowest in the world. Also, taxes
on exports are refundable in India and most parts of the world. So we do not
expect any impact from this slight increase. We are, however, lobbying to get
tax refunds for exporters processed expeditiously, which the government is
reportedly considering.
RM: India needs a steady stream of rough to keep its
manufacturing centers open. Does the new underground operation at Argyle help
with the supply? What is the relationship with ALROSA? You have announced you
are interested in getting long-term rough commitments from anywhere in the
world. Have you identified any new sources or trading partners for rough and
with whom are you negotiating? Which countries/companies do you think have the
most potential as rough suppliers to India?
VS: Yes, we need a steady stream of rough diamonds to ensure
smooth operations of our manufacturing centers. Argyle mines will continue to
supply us with the quality of rough preferred by Indian exporters. With the
opening up of underground operations at Argyle, the pressure on the rough
supply is expected to ease, along with the prices.
Our relationship with ALROSA has been excellent. In fact,
three of our member companies have secured long-term supply contracts with
ALROSA and we hope to see even more Indian companies getting access to ALROSA
rough on a long-term basis.
Among other activities we conduct as an Engineering,
Procurement & Construction (EPC) company, one of our jobs is to negotiate
with different entities and governments in mining countries such as Africa,
Canada and Russia to develop long-term relationships for the benefit of our
members.
RM: Rio Tinto will be starting construction on the Bunder
mine in 2014. Once that mine starts to operate, what impact do you think it
will have on the Indian diamond industry? Will Indian manufacturers be given
first choice for the rough?
VS: Rio Tinto’s Bunder mine will be a new source of rough
diamonds and we are pleased to have that extra supply available to the diamond
industry. The Madhya Pradesh government has already stipulated that the product
mined there should be traded in that state only.
RM: You recently held a banking summit in Mumbai to
facilitate greater understanding between banks and the industry. How serious a
problem are credit availability and loan restrictions for Indian manufacturers?
What impact do they have on operations? What came out of that summit and how
will it help the industry going forward?
VS: Banks and financial institutions have a great role to
play in the evolution of the diamond industry in this world — and India is no
exception. As we all know, ABN AMRO is a Dutch bank and diamond trading started
in the Netherlands, due in large part to the availability of financing there.
Banks have played a great role in providing capital to our industry and coupled
with that, pragmatic government policies allowed that capital to flow to the
Small Medium Enterprises (SME) sector, thus making us a formidable
manufacturing destination. Credit availability is not that great a problem, but
how the banks are assessing the right kind of players to give capital to — and
at what cost — is a problem. The banking summit proved an icebreaker in
difficult times and increased the understanding and transparency between the
bankers and the industry. It also proved a great confidence-building measure
for the banks in the viability and future prospects of the diamond industry.
RM: How is the global economy impacting the Indian diamond
industry? What is the industry
doing to protect itself from the ups and downs of the European Union (EU) and
U.S. economies? What countries are you looking to for stability and growth in
terms of sales and exports?
VS: The U.S. is almost out of recession and things look
pretty promising since the recently concluded JCK Las Vegas show. The EU
remains a concern. However it
constitutes a small percentage of diamond supply. China and Russia, along with
the Middle East, are stable markets. The Japanese market also is showing a
strong revival.
RM: How do you plan to draw more foreign buyers to the
jewelry shows in India?
VS: The council undertakes road shows across the globe to
promote the jewelry shows, namely the India International Jewellery Show (IIJS)
& Signature. Promotional international road shows are conducted in the
Middle East, Southeast Asia, Europe, the U.S. and more. The council maintains a
database of visitors, one that has been growing over the years, and timely
communications, updates and invitations are sent to that database. The council
also regularly hosts the trade associations of target markets and countries at
the events with the goal of expanding the network for Indian exporters in the
target regions and countries.
Diplomatic missions and Indian high commissions have also
been active in providing intelligence, assistance and contacts from time to
time for promotions in the international market.
RM: GJEPC launched a program to train workers. Can you tell
us more about that initiative and how it will affect the diamond industry? The
project was given $180 million in initial funding by the government. What other
support do you expect, or want, from the government going forward? Exactly what
types of training will be offered in the initial stage? What jobs are in
highest demand? How long will it take before these workers finish training and
begin work? How will the workers be placed in jobs? What happens to the program
if there is a slowdown in the industry?
VS: The gems and jewelry industry is labor intensive in
India and already employs some 3.4 million workers, of which approximately one
million are in the diamond sector. The industry is constantly growing, with
more jewelry units going up, and the shortage of skills can be a big bottleneck
in the future if our industry is going to continue to grow. This council is
already running training institutions around India, including the India Diamond
Institute at Surat and the Indian Institutes of Gems & Jewellery (IIGJ) in
Jaipur, Delhi and Mumbai. With government support, we are in the process of
establishing an institute at Kolkata and common facility centers in smaller
cities of Gujarat.
We are also working on a program to upgrade employee skills
for our sector. The Gem & Jewellery Sector Skill Council has been formed
with the National Skill Development Council. And other industry bodies like All
India Gem & Jewellery Federation (GJF), Jaipur Association of Jewellers
(JAS) and SEEPZ Gem & Jewellery Manufacturers Association (SGJMA) are all
working to develop the skill base of our sector by bringing in skill training
infrastructure across the country.
RM: What else can the government do to help the industry?
Anything new on your progress toward creating special trading zones or a
worldwide trading hub in the country?
VS: We are working with the government to come up with
Special Notified Zones for consignment import of rough diamonds to expand
trading activities. Also we have asked the government to implement tax
regulatory policies that are on a par with countries like Israel and Belgium.
RM: What are the current domestic product trends in terms of
gold and diamond jewelry? What sizes, what metals, what types of designs are
most popular and with what age and income groups? How much of a diamond bridal
market does India have and how fast is it growing?
VS: The domestic market is becoming more and more design
conscious with diamond-accented jewelry demand growing by double digits every
year. Whereas the traditional ethnicity in design has remained strong in
35-plus age groups, below that age people prefer the lighter-weight and trendy
jewelry desired by working women who want to be chic and contemporary.
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Pankaj Parekh
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Despite holding a bachelor’s degree in
MechanicalEngineering, Pankaj Parekh, vice chairman, Gem and Jewellery Export
Promotion Council (GJEPC), found his true calling in his family jewelry
business, which he joined in1988 and where he focused on jewelry exports. In
1997, he was the first person to be elected from Eastern India to the Central
Managing Committee of GJEPC. Since then, he has held several posts in the Central
and Regional Committees of the council, and he is currently chairman of the
Eastern Region as well.
Rapaport Magazine: You have been in your position at GJEPC
for almost ten months now. What are your short-term and long-term goals for the
industry during your tenure?
Pankaj Parekh: Since I have taken office, most of my time
and energy has been spent on fire-fighting and meeting with officials in Delhi
with respect to our efforts to revise certain government policies and duties
that have a great impact on our sector. That has left hardly any room for
creative work. In the short term as well as the long term, I have suggested and
we have unanimously decided to expand our export base over and above the U.S.
and other conventional markets to reach the so-far-untapped markets of the
world. From India, goods go to Dubai and from there to various countries in the
growing Gulf market. While not ignoring the U.S., which has always been our
main market, we are putting considerable promotional efforts into increasing
our market presence in and around the Gulf countries and also the Commonwealth
of Independent States (CIS) countries, the former soviet republics.
RM: Is the role of India changing in the global diamond
jewelry market? How so?
PP: Instead of exporting loose diamonds, we are encouraging
the export of finished jewelry, which has given us a look at the path to the
future.
RM: Which current tax policies are most burdensome when it
comes to promoting jewelry exports from India? What is the kind of correction
that you would like to see in the market?
PP: Recently, the Current Account Deficit (CAD) of the
country has increased and, as a result, the government is implementing all
sorts of rules and regulations that are detrimental for the future of this industry
in an effort to reduce that account deficit. We firmly believe that the export
market cannot improve unless the domestic market also improves.
RM: How is the global economy impacting the India jewelry
industry?
PP: Since the global slowdown of 2008, we have not really
fully recovered. One after the other, the international crises are hurting our
exports. The exorbitant recent sliding of the rupee is also hurting our
industry. All of the raw materials for manufacturing are imported and the bank
financing requirements remain the same, so when the rupee declines in value,
there is an increase in the rupee requirements we have to commit to raw
materials and capital.
RM: When we talk of vocational training extended to students
to ensure the designs they produce are on a par with international taste, what
is the role of GJEPC?
PP: For imparting vocational training, we are leaving no
stone unturned. Recently we have acquired land and other infrastructure in
Domjur, near Kolkata, to start an India Institute of Gems & Jewellery
(IIGJ). Domjur is the center of the country’s most talented artisans.
RM: How do you plan to draw more foreign buyers to the
jewelry shows in India?
PP: We are doing more and more preliminary road shows in
various parts of the world. Over and above the U.S., we have done one-on-one
buyer-seller meets in Russia, China and Australia for diamond-accented jewelry
as well as colored stone jewelry.
RM: What are the current domestic product trends in terms of
gold and diamond jewelry?
PP: With increasing disposable income in the hands of young
people below the age of 35, the smaller-size goods are becoming hot sellers.
Due to the mushrooming in the number of diamond certification labs, the
confidence of customers in investing in diamonds has gained a great momentum.
The certifications also are helping to shift the market toward diamond jewelry
from gold, even in the bridal market.
Article from the Rapaport Magazine - August 2013. To subscribe click here.