Rapaport Magazine
In-Depth

GJEPC Moves Toward New Markets

Vipul Shah, chairman of India’s GJEPC, follows up on existing plans and offers up some new initiatives as well.

By Zainab Morbiwala

Vipul Shah

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.

Reaching Out: An Interview with Pankaj Parekh, vice chairman, GJEPC

Pankaj Parekh
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.

Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
© Copyright 1978-2022 by Rapaport USA Inc. All rights reserved. Index®, RapNet®, Rapaport®, PriceGrid™, Diamonds.Net™, and JNS®; are registered TradeMarks.
While the information presented is from sources we believe reliable, we do not guarantee the accuracy or validity of any information presented by Rapaport or the views expressed by users of our internet service.