Literature review of Jems and Jwellery

8/13/2019 Literature review of Jems and Jwellery

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Chapter 2

REVIEW OF LITERATURE

2.1 INTRODUCTION

Literature Review is considered an important component of

research. Review of literature involves summarising the

current status of research works already done. Its helps to

identify the gaps in terms of the area appearing relevant and

those which have been already studied and those which are

subject for further studies. A review of the pertinent past work

and contradictions, pitfalls and other failings of the earlier

work is necessary mainly to substantiate the need for another

research study. Previous research studies are abstracted and

significant writings of authorities in the area under study are

reviewed.

The review of relevant Literature on the study area is

necessary before going deep into the research work. Reviews

of related studies enable the researcher to get an in-depth

knowledge of the topic and to conduct the study in a different

approach from that of the existing studies in the relevant field.


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This enables to carry out the study in the untouched field. In

this chapter, the researcher has attempted to take up the review

of the available literature on various aspects of Gems and

Jewellery industry in India vis-a-vis challenges and

opportunities before the industry. In doing so, the researcher

surveyed a number of journals, magazines, research papers,

project reports, published and unpublished reports and thesis,

dissertations, conference and seminar proceedings, books and

websites. Such a review has provided a proper background to

the researcher for the development of the present study. It will

be worth mentioning to state that very few studies have been

carried out on the topic Gems and Jewellery Industry in India:

Challenges and Opportunities. Hence, this study has

significance. The reviews made in this aspect are summarized

below:

Vinod Kuriyan,1 in his article reports that with the

volatile price of gold casting a shadow of uncertainty over both

Jewellery production and retail, the Indian Gems and Jewellery

Industry responded with some surprising bold experimentation

with looks and alternative materials. The domestic turnover


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was down mainly because of the uncertainty over the price of

gold. However, the outlook for diamond jewellery looks good

due to two factors i.e. price competitiveness and increasing

preference of the consumers. Despite the price rise of the

precious metal there was a marked improvement in the quality

of displays and positioning of the products. The domestic

Indian Jewellery is coming into its own and will take its place

along side the already globally successful export production

industry.1

Mallika Hegde (2006) in her Ph.D. unpublished thesis,

Performance Evaluation of Minerals and Metals Trading

Corporation (MMTC) of India with special reference to

Precious Metals Division, opined that jewellery trends are

changing the world over. The customer has become more

demanding, looking for better quality in the product. New

tastes and preferences in line with the best changing fashion

trends need new skills in manufacturing, new materials and

new standards of perfection. Towards this end, MMTC is

totally committed to meet every need and choice from any part


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of the world, as a challenge to its learning, acquiring and

developing new skills.2

Dasiy Tanwani (2007) in her article, Indian Jewellery,

Retail, an impressive phenomenon , published in the Journal

of Gem and Jewellery Industry, states that the Retailing in

Indian jewellery sector is emerging stronger with various big

companies opening multiple stores across the country.

Jewellery brands have made diamond jewellery more popular

than ever before. Just like foreign lands jewellery in malls is

now a common feature in India too. The traditional jeweller

has recognized the need of branding and superior services. The

customer is accorded utmost respect and is pampered with

comfortable shopping and better services. However, there are

certain aspects of jewellery retailing that have not been

incorporated completely by all.3

Denise Meyer,2 in his article opines that the consumer

has to see the advertisement three times before she or he

remembers the product. Whether it is the print media or

television or radio advertisement, the average consumer must

be exposed to the same message at least three times before it


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sticks. He also opines that the consistency of the message and

the medium will enable the consumer to remember the product

and what it stands for.4

Pallavi (2007) in her article, High-End Couture

Jewellery Pieces: What Sets them Apart and Why they Lead the

Design Trends for the Industry, published in the magazine

The Art of Jewellery, states that the business of jewellery is

set to get more and more evolved yet difficult each year as the

people across the world get more into the fold of fashion

products and evaluate the level at which the fashion interpreted

in the jewels they buy and wear. It has become an obvious fact

that the jewellery world has to come face to face with the

challenges of the fashion industry and make products that

address the emotional, psychological, philosophical and

fashion needs of the people today. She also opines that the

jewellery buying today needs to be a holistic experience and a

jewellery store needs to move beyond, and become a world

that invites you, charms you and surprises you all the time.5

Nilesh Shah, in his article states that the Indian Gems

and Jewellery and diamond industry is going through taxing


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times with the proposals in the finance bill and the new taxes

slab onto this industry not only bite the size of the profits but

also increase the burden of procedures and paper work and

making it all cumbersome and difficult to follow, the

provisions of the bill are vague and incomplete leaving the

industry unclear on procedures to recover their money. He is of

the opinion that the industry is not averse to paying tax and the

procedure is very tedious. The hassles and the corruption at

every point have made this sector to deal with many agencies

which is a headache for this sector. With the introduction of

Value Added Tax (VAT) the picture has become more chaotic

as VAT requires good implementation too, though the sector

has welcomed VAT in the sector as long as it was beneficial

for the Gems and Jewellery sector.6

Shanoo Bijlani and Regan Luis (2009) in their article,

Foreign Brand Recognition Poor in India and Price StillDominates, published in Solitaire International, The Indian

Gem and Jewellery magazine, reports that an increasing

number of global brands are setting up base in India,

commensurate with the rapid growth in the number of high net


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worth individuals in the country. But, they have to face the

Indian consumer who is not brand conscious, but definitely

price conscious. Further the global players coming in India

have to bear in mind that, a brand has to be aspirational. Indian

consumers buy these products not because they need them, but

because it elevates their social position. What this means for

the domestic and international players is that, they will have to

necessarily invest in building retail management strengths,

understanding the consumers better, branding and distribution

capabilities. The opportunities for growth are huge, provided

they are tailored made for the Indian consumers.7

Fflur Roberts, states that the global luxury goods market

of Gems and Jewellery indicates another solid years of

performance in stores for 2012 despite, persistent economic

turbulence, mounting troubles in the Euro zone and ongoing

political instability in several emerging markets. This is

expected to grow by 4 percent in comparison to the previous

year. This is because developed countries remain by far the

largest spenders on personal luxury specially markets in USA,

Japan, Italy and France together account for half the value of


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sales in 2012. The consumers of middle class of China, Russia,

Brazil and India are showing a growing demand and luxury

consumers around the world showed almost 22 percent growth

in comparison to 2007, which is an indication that the there is

a luxury resilience in the Gems and Jewellery sector even

though there was economic turbulence globally .

Pranay Narvekar, in his article states that the industry's

legacy is on the crises and the industry has already seen a

pivotal shift in how rough diamonds are priced and sold and

there is a paradigm shift from the producers to the managers.

The business is no longer run by persons who are producers

and now they are managed by professional senior managers

who may or may not have experience in the diamond business.

The sole focus is on the profitability of the company over the

duration of their tenure in office which is generally around

three to five years. The benevolent producers no longer exist

with all the large producers focusing on maximizing the prices

rather than ensuring the basic health of the industry. The senior

management has to justify that he is securing best possible

prices during the course of his tenure and is not really


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concerned about whether his customers are profitable or what

they require from the market.

Focusing solely on ones profitability is acceptable for

industries where there are multiple uses of same raw material

and product is easier to value. Diamonds on the other hand,

belongs to one supply chain with all the finished diamonds

ending up in jewellery, hence all supply chain should focus on

their end customer. The research shows that global retail

diamond consumption growth has not even kept pace with

inflation growth, let alone Gross Domestic Product (GDP). The

price rise in diamonds, of late is already making its impact felt

on consumers, with reports of customer tastes moving towards

lower qualities of diamond and with new luxury designs

having lower diamond content.9

Sumit Lal (2005) in his article, Indian Branded

Jewellery Industry, published in The Gem News, Indian

Diamond Institutes Quarterly Bulletin, states that the Indian

diamond merchants are involved in the business of cutting and

polishing diamonds for decades, have finally woken up to the

potential for the manufacturing and trying to enter the


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Diamond Branded Jewellery. He opines that the consumers

attitude and approach is rapidly changing and the largely

unorganized sector is gearing up to service the consumers

present attitude and approach. The young generation is clearly

looking for contemporary, bearable style that is aesthetically

appealing with a clear accent on the design and quality. The

consumers are moving away from the option to wear

traditional jewellery of relatively cheap and poorly made to

fashionable jewellery. Todays buyer also seeks the wider

selection at a single convenient location and also excepts an

international shopping experience that have witnessed in other

sectors of the economy. He is also of the opinion that lack of

distribution, advertising, branding and the lack of skilled

manpower and technology to create and produce the design for

the international market are the key challenges that have been

identified for the related underperformance in the jewellery

segment.10

Arjun Batra and N. K. Gupta, in their research paper

reveals that the global economic turmoil erupted from US sub

prime mortgage market in August 2007 and engulfed almost


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the entire world economy with its negative repercussions. India

also felt tremors of the same due to reversal of capital flows,

slow down in demand-external as well as internal, narrowing

profit margins and shrinking growth in all sectors of our

economy. Overall annual economic growth rate receded along

with fallen merchandise exports but the Indian Gems and

Jewellery industry kept scintillating even in this global melt

down.

In studying the Gems and Jewellery industry during pre

recession and post recession periods, they studied performance

of five organizations with respect to the assessment of the

impact of recession on the sales, expenses and profitability of

these companies. On the basis of the study, they suggested

certain effective measures to enhance their potential and

competiveness in the Gems and Jewellery sector.

Chanchala Jain, in her research paper states that Gems

and Jewellery industry is an important emerging sector in the

Indian Economy and as ranked among the fastest growing

sectors, it contributes greatly to foreign exchange generation.

According to the study, Gold jewellers form around 80% of the


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Indian Jewellery market, with the balance comprising

fabricated studded Jewellery that includes diamond studded as

well as gemstone studded Jewellery. She analyzed the

performance of Gems and Jewellery industry in India for the

period 2006-2011. Based on the study, she opines that there is

a continuous increase in the export of Gems and Jewellery

industry in India and plays a vital role in the economic

development of the country. There is a vital scope for

expansion in the markets in the global economy and can be

recognized as a major foreign exchange earner. Due to the

importance of this sector the government has taken many

initiatives to boost the exports and declared a thrust for

exports.

Anli Suresh, in her research paper states that the ever-

growing demand for gold in India irrespective of the

continuous escalation in its price and Indian demand for

savings and real income levels will drive gold, not by price.

The study observed that the emerging socio-economic trends

may provide some challenges to the gold market; however,

purchasing will remain underpinned by Indias long-standing


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and deep cultural affinity for gold. The study envisage that the

Gem and Jewellery sector has a huge market in India and

abroad and the limited size of total gold market provides

tremendous leverage. Due to the rising geo-political tensions

across the globe, the public distrust the paper assets and the

investors turn to gold for a safe heaven. When the economy

crisis occurs, the government rescues themselves with the

printing press making their currency worthless and gold worth

more. The study also analyzed the Gems and Jewllery in India

both in gold and diamond, export of Gems and Jewellery and

government initiativeness. The study concludes that Indians

are buying gold for its virtues as an investment rather than for

adornment.

Indu Rao, in her working paper states that the Indian

diamond industry thrives in the atmosphere of secrecy and

informality that envelops the diamond trade and has for long

been labelled as an unorganized sector of the economy.

However, it resembles a close-knit community composed of

thousands of small, medium and large sized Cut and Polished

Diamonds (CPD) units and has grown to become one of the


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highest foreign exchange earners for the country. The industry

exports CPD worth US $ 14 billion annually and enjoys a 95%

market share of the global exports of CPD pieces. An in-depth

study of the industry reveals that the so called unorganized

sector is in fact highly organized and has great potential to

offer useful insights to the field of management in terms of

new forms of organizing, networking, business processing and

for doing international business. This paper presents summary

of findings from research conducted in the Indian diamond

industry over a period of last four years. The first part of the

study includes insights about the remarkable rise, growth and

the unique working of the industry. The second part makes use

of a case study of a 40 years old large-sized CPD units to help

gain further understanding of the Indian diamond industry and

part three is about the impact of the 2008 global turmoil and of

the industrys revival after a severe recession. The study of the

Indian diamond industry reveals that, the production and the

exports are on its rise, recession and recovery provide useful

insights to the field of management.


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Amitava Hazra and Madhumita Malakar, in their pilot

study opines that the Gems and Jewellery industry, is

predominantly an unorganised sector and almost 96% of the

business is with the family jewellers and the remaining 4% is

with the organised sector. This being one of the major foreign

exchange earner for Indian economy, its growth and

competitiveness in the global market is to be sustained through

the process of innovation. It also states that among many

factors that contributed to the upsurge of the industry, the most

intangible one is the various technological and non-

technological innovations that have been brought in by the

industry to capitalise on the opportunities created by the series

of policy changes.

The mainstay of the study examined both the

technological and non-technological dynamism of the firms.

The technological part is grouped under the heading Product

innovation to capture the initiatives towards changes in

product, process, raw material use, and R&D initiatives. Non-

technological initiatives of the firms are grouped here under


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market innovation. Major findings of the study are certain

initiatives in this sector towards developing technological and

market advantage at a global scale and to upgrade the existing

skill of the manpower appears as one of the major factors,

which needs to be addressed.

This has been seen as the precursor of innovation. The

Initiatives in achieving globally acceptable quality and

standard are apparent in the organised sector. The complex

process of innovation in market place has been broadly

categorised in the study are targeting and creating new

markets, new designs, going for brands to promote products.

The study had taken a close look at various government

policies that had influenced the technological and market

related initiatives of the firms. Supportive policies to boost

export have actually brought confidence and dynamism in the

industry. It is observed in the study, that in an industry that

largely, caters to the traditional demand and also modern snob

market, innovation is essentially in industry organisation with

limited technological changes.


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The indicators suggested above are derived from the

observations on the behaviour of the existing firms and in the

industry. Although these indicators refer specifically to the

features of the Gems and Jewellery industry of India, they also

bring out the fact that organisational innovation is actually a

derivative of market types and skill requirements in the

production process of the industry. In this sense the indicators

would have general appeal and should reveal features of the

similar relations in other industries.

Export-Import Bank of India, in its study titled reveals

that, Indias Gems and Jewellery industry is highly

unorganized and fragmented with more than 90% of the

players having family owned businesses and there had been a

loss of market for Gems and Jewellery exports due to recession

and global economic slowdown.

Following the economic slowdown, asset price

evaluations, job losses and decrease in disposable income have


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happened, along with escalation in gold prices, which have

changed the consumption pattern of gems and jewellery.

Further, the economic slowdown has also affected the

consumer buying pattern, with growing demand for single-line

jewellery, low-carat jewellery, and gems-studded jewellery.

The study also states that the financial performance of players

in this sector has also been affected by the recessionary trends

in demand. Out of the fourteen jewellery companies analyzed,

6 companies witnessed a decline in income, and eight

companies witnessed decline in profit during the first half of

2009-10.

The steep rise in raw material prices has squeezed the

cost efficiency of the Indian Gems and Jewellery sector. It also

shows that although India currently enjoys dominance in the

worlds cut and polished diamond market, China may emerge

as a rival in the long term, mainly because of the availability of

cheap labour, growing domestic demand, and also the

improvement in the quality of workmanship in the country.


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Utilization of hi-tech, speedy and efficient machinery

and software has led to the gradual replacement of traditional /

manual methods of polishing, manufacturing and designing of

gems and jewellery. Proactive players in the Indian Gems and

Jewellery industry are always on the lookout for better

technology for their units. However, such technology

absorption is relatively low in Indian Gems and Jewellery

industry, due to the small size and unorganized nature of

majority of the players. Also, mere absorption of technology

may not be helpful, without a proper blend between manual

labour and machinery to provide ethnicity to the end-products.

Usage of semiskilled and unskilled workforce in operation of

such high-end machines may result in significant under-

utilization of the machinery / technology, and may at times

cause losses in operations. Skill development is therefore very

essential for proper reclassification of the workmen in this

industry.

The study conducted by Investment Information and

Credit Rating Agency of India Limited (ICRA), analyzes the


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structure of Gems and Jewellery industry of India and its

importance to economy. The demand, for Indian gold and

diamond jewellery both domestically and internationally are

increasing. The key issues facing the sector are large presence

of unorganized sector are discussed in detail. The study also

describes the recent trends in jewellery consumption and the

possible long term threat from different markets. The study

states that the Gems and Jewellery industry is highly sensitive

to the government policies and hence continued support from

government is crucial for the growth of this sector.

The outlook of the study reveals that the diamond

industry is optimistic that the recent healthy growth in world

GDP, and increased marketing expenditure could result in

increased demand growth. Both China and India represent

potential new sources of demand for diamonds. China has the

potential to become a leading consumer of diamond jewellery.

China's retail sales in recent years have shown strong growth

relative to other centers. In India, diamonds are an established

consumer product, but the potential size of the market is only

just being recognised, especially in comparison with annual


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gold demand. The long-term outlook for the Indian diamond

and jewellery industry continues to be positive. Indias

competitive advantage is likely to centre on its skilled labour

combined with a ready adoption of leading-edge technology

and an increasing degree of vertical integration.

An EXIM Bank study, reveals that theIndia's exports of

Gems and Jewellery showed a year-on-year (y-o-y) growth of

40.7 percent in 2008-09 compared to 23 percent witnessed in

the previous year, despite a global economic slowdown. The

Indian Gems and Jewellery industry is one of the important

sectors of the Indian economy. The Gems and Jewellery

industry in India comprises sourcing, processing,

manufacturing and selling of precious metals, diamonds,

pearls, precious and semi-precious gemstones and artificial

jewellery. India is one of the fastest growing jewellery markets

in the world and is the largest consumer of gold in the world.

India is also one of the largest diamond processors in the

world, with more than 90 percent in terms of pieces, around 80


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percent in terms of carats and around 55 percent in terms of

volume being processed in India.

India is also the largest consumer of gold in the world

(over 700 tonnes in 2008), accounting for around 24 percent of

world gold consumption, majority of them going into

production of jewellery. Over the years, India is also emerging

as largest trading centre for gold. However, during the second

quarter of 2009, the consumption of gold had shown a decline

mainly due to the rising prices and global slowdown. Despite

global economic slowdown, in the year 2008-09, the exports of

Gems and Jewellery from India showed a y-o-y growth of 40.7

percent as compared to a y-o-y growth of 23 percent

witnessed during 2007-08. Demand for Gems and Jewellery

are income elastic and is likely to remain moderate in the near

future. The continuation of demand slowdown in the US and

Europe might slow down the exports of Gems and Jewellery as

also the domestic retail market. One of the major trends

witnessed in the Gems and Jewellery industry due to the

economic slowdown has been the recycling of gold or in other

terms, gold scrap.


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Key focus has been the surge in the levels of gold scrap

coming back to the market. With mine production on a

declining trend and the outlook relatively benign, scrap levels

are likely to remain as the primary supply of gold due to

uncertainty over the short to medium term. Selling old gold

jewellery has provided consumers with access to the much-

needed funds during these very difficult economic times. In the

price sensitive markets, the profit-taking motive behind

recycling activity has been very strong, highlighting the

intrinsic value of jewellery and the strength of the savings /

investment aspect of gold jewellery purchases. Increase in

recycling activity has been both a western and non-western

phenomenon, although volumes in the non-western markets

have continued to dominate. In western markets, the primary

motivation behind recycling of gold has been distress selling,

while in the more traditional non-western market, the primary

motive has been profit- taking. The prospects in growing

economies in India, Middle East, Hong Kong and China are

expected to help the sector to regain its glitter. Changing


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References

1. Vinod Kuriyan, New Looks and Innovations marknew Indian Jewellery, Solitaire International, The

Indian Gem and Jewellery Magazine, Mumbai, June-

July 2006, pp. 44-48.

2. Mallika Hegde, Performance Evaluation of Mineralsand Metals Trading Corporation (MMTC) of India

with special reference to Precious Metals Division ,

S.N.D.T Womens University, Mumbai Ph.D.

Unpublished Thesis 2006, p. 436 , p.437.

3. Dasiy Tanwani, Indian Jewellery, Retail, animpressive phenomenon, Journal of Gem and

Jewellery Industry, Jaipur, Vol. 45, No. 2, February

2007, pp. 21-27.

4. Denise Meyer, The Power of Three, ProfessionalJeweller, Philadelphia, January 2004, pp. 76-77.

5. Pallavi, High-End Couture Jewellery Pieces: WhatSets them Apart and Why they Lead the Design


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Trends for the Industry, The Art of Jewellery,

Bangalore, Vol.6, No.5, May 2007, p.136.

6. Nilesh Shah, Taxation Woes, Diamond World,Mumbai, May-June 2005, pp. 156-158.

7. Shanoo Bijlani and Regan Luis, Foreign BrandRecognition Poor in India & Price Still Dominates,

Solitaire International, The Indian Gem and Jewellery

Magazine, Mumbai, February 2009, pp. 49-51.

8. Fflur Roberts, Luxury Resilient in the face ofEconomic Turbulence, Solitaire International, The

Indian Gem and Jewellery Magazine, Mumbai,

November 2012, p. 66, p.67.

9. Pranay Narvekar, Rough Diamonds a ParadigmShifts, Solitaire International, The Indian Gem and

Jewellery Magazine, Mumbai, June 2012, pp.50-

54.

10. Sumit Lal, Indian Branded Jewellery IndustryThe Gem News, Indian Diamond Institutes Quarterly

Bulletin, Vol. X, January- March 2005, p. 13.


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11. Arjun Batra and Dr. N. K. Gupta, ScintillatingGems and Jewellery under Global Meltdown- A

Study on Indian Gems and Jewellery Industry, The

International Journal of Research in IT and

Management, Jagadhri, Vol. 1, Issue 1, May 2011,

pp.105-115.

12. Chanchala Jain, A Trend Analysis of ExportPerformance of Gems & Jewellery Industry In India,

International Journal of Engineering Sciences &

Management (IJESM), Greater Noida, Vol. 2, Issue 2,

April- June 2011, pp.170-174.

13. Anli Sureshin, A Review on Gold Quest in theInvestment Portfolio by Indian Investors,

International Journal of Research in Management &

Technology (IJRMT), Vol.1, No.2, December 2011,

pp.128-134.

14.Indu Rao, Organizing the un-Organized? The Rise,Recession and Revival of the Indian Diamond

Industry, Indian Institute of Management, Ahmedabad,

W.P. No. 2009-09-01, September 2009.


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15. Amitava Hazra and Madhumita Malakar, Statusof Innovation in Gems and Jewellery Industry of

India, Centre for Knowledge, Ideas and

Development Studies (KNIDS), Kolkata, July 2006.

16. Export-Import Bank of India, Indian Gems AndJewellery: A Sector Study, Occasional Paper No.

138, Quest Publications, February 2010, pp.

94-119.

17. Investment Information and Credit Rating Agencyof India Limited (ICRA), The Indian Gems and

Jewellery Sector, New Delhi, July 2006, pp. 35-

36.

18. EXIM Bank, Indian Gems and Jewellery ExportsRise 40pc despite Recession, 2009.

Documents

Literature review of Jems and Jwellery