If India is the land of color, Jaipur is where that color is most saturated. For mining companies like Gemfields and Grizzly, it’s home to 90% of their Zambian-emerald customers. For jewelers and retailers, Jaipur’s gem and jewelry events are a must. And for designers, Jaipur is a prime place to find specialists in the art of enameling, gem carving, bead manufacturing and jewelry production.
Of artisans and affordability
One of the key factors in Jaipur’s ascent is the lower cost of labor in this field. Another is that Jaipur has emerged as the global processing hub for Zambian emeralds, tanzanite, and more accessible material like amethyst, aquamarine and rose quartz.
“Earlier, China was the leader in jewelry manufacturing, as it was in a state of rapid growth,” explains Aditya Jain, partner at Jaipur-based producer Gems Park. “In 2012-13, however, its manufacturing cost per gram of gold became higher, and it lost its competitive advantage, which has worked in favor
of hubs like Bangkok, Mumbai and Jaipur. While Mumbai is preferred for diamond jewelry, Jaipur is the place for anything related to colored stones, enamel, and gold and silver jewelry.”
Not only that, Jain continues, but “everything is available at a moment’s notice. If my client from California calls and requests 200 gold rings with aquamarine gems, I don’t hesitate to confirm because I know I can source the rough and fulfill the order in a week.”
Besides gemstones, the city is home to artists specializing in fire-enamel techniques such as champlevé, with a few offering skills in basse-taille, cloisonné, and even plique-à-jour. Given the revival of interest in ancient artisanship and the preservation of archaic techniques in India, international designers are flocking to Jaipur seeking inspiration and craftspeople. One such designer is Marie-Hélène de Taillac, who specializes in colored gemstones and works closely with Jaipur-based jeweler Munnu: The Gem Palace. Alice Cicolini collaborates with award-winning local enamel artist Kamal Assat, while Silvia Furmanovich’s distinctive style relies on independent artisans who combine precious stones with miniature gem-powder paintings.
Duty calls
India’s developing market economy and export-oriented trade mean it’s hungry for international business, and that has led to a “never say no” attitude within the industry. On many occasions, manufacturers will work weekends and holidays and pay staff overtime to ensure their clients receive products on time and to their specifications.
The sector, however, is not without its challenges. While 300 varieties of colored gems are processed in Jaipur, a combination of slow demand and thin margins is increasing pressure on liquidity, according to industry sources. A continuous supply of rough gems is vital to keeping the business wheels turning, but source countries in Africa and Asia are restricting rough-gem exports in the hope of developing local skill in cutting and polishing. Due to corruption and porous borders, rough from these restricted locations is nonetheless finding its way to processing hubs around the world. Not only does this defeat the original purpose of the policy, it increases acquisition costs because of payments made throughout the smuggling process.
On top of that, in a span of eight months, India’s import duty on cut and polished gems went from 2.5% to 5% to the current 7.5%, which further erodes lapidary margins. And last month, the Indian government announced a 0.5% tax on the import of rough gems, which raises some questions. In particular, how will the tax impact Jaipur — a processing center where approximately 80% of gem imports are rough — and its competitive edge? Neighboring Thailand is also a processing center, and it has 0% import duty on both rough and cut stones, making it potentially more attractive to companies in the trade. Indeed, the Thai government has been working to attract investment in the sector and further raise the country’s profile as a global hub for gem and jewelry manufacturing.
In this climate, what is motivating India’s finance ministry to introduce a new tax? Media reports suggest it’s the government’s way of tackling fraudulent behavior such as under- and over-invoicing of gem imports. Others believe the move is more for research purposes, to help the finance ministry gain better insight into (declared) rough-gem values. Yet given the country’s strict regulatory framework and magnified scrutiny of funds, the vast majority of the industry is already playing by the book, according to sources in the trade.
The Gem and Jewellery Export Promotion Council (GJEPC) is urging Finance Minister Nirmala Sitharaman to roll back the 0.5% duty on rough gems, claiming it will result in job losses and cause significant disruption. While the material impact of the tax is limited, the underlying fear is that the ministry may soon increase it, as it has done for cut and polished stones.
Honing its edge
So what does the future hold for Jaipur? The GJEPC has several initiatives under way. The first is the establishment of “common facility centers” across India, giving small and medium-scale manufacturers access to high-quality machinery. On a grander scale, the GJEPC is planning to establish a gem bourse in Jaipur over the next three years, providing all logistics, insurance and ancillary services in a single location.
The GJEPC is also upgrading its gem testing lab. It will soon provide origin reports, as well as reports on pearls, and is moving to a larger campus of 10,000 square feet in Jaipur’s Sitapura industrial area. In January, the lab entered an agreement with eBay to offer its stone-certification services to the platform’s customers at a discounted cost.
With global events adversely impacting markets and moods, and burgeoning customer segments gravitating toward wearable, distinctive pieces, Jaipur offers opportunities for designers, retailers and manufacturers. Companies from Thailand and China, however, have already entered the emerald-processing segment, winning top lots at Gemfields’ rough-emerald auctions last year. While some in Jaipur are confident of the city’s position in the Zambian-emerald market, others worry about the future. Some Jaipur-based companies have already established operations in Thailand, and Chinese bidders at rough emerald and ruby auctions are working in collaboration with Thai partners as well. In the years to come, it remains to be seen whether Jaipur’s character will continue to attract artisans, entrepreneurs and — most importantly — customers.
Images: Richa Goyal SikriArticle from the Rapaport Magazine - March 2020. To subscribe click here.