19 Aug 2019
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40 Years of the Indian Diamond Industry
A chronicle of the transformational power of collective organisation
By: Diamond World News Service
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Jan 13 2014 2:14PM
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Reference: 8713  

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India’s connection with diamonds stretches back several millennia. But some of the most dramatic changes in the Indian diamond industry took place over the last four decades or so. A large, amorphous industry with no icons and no image for anyone to picture, hauled itself out of obscurity and from a fragmented collection of cottage industry workers into the world’s largest diamond workforce that processes 11 out of 12 of the world’s diamonds. Not only that, the Indian diamond industry now makes and retails diamond jewellery to consumers all over the world. Documenting that transformation, driven by the industry’s ability to collectively organise itself reveals how the industry’s evolution has come full circle to be one of the world’s few conglomerates that can actually generate trends and drive sales. Turning 40 itself, Diamond World looks back on the four decades of change in the diamond industry it was privileged to chronicle. Vinod Kuriyan Reports.

The evolution of the Indian diamond industry over the past four decades truly mirrors the transformation of a caterpillar into a butterfly. Back in 1973, the Indian diamond industry was an unglamorous caterpillar munching on a huge volume of mainly small diamonds of such poor quality that were at best described as being only “near gems”. But the Indian diamond processing caterpillar’s remarkable digestion was able to turn these otherwise unwanted stones into a gigantic pile of nice, affordable gem diamonds that almost anyone could afford.

The Indian process caterpillar’s steady processing of these diamonds over the years transformed the world’s diamond consumption patterns. But the process also had a transforming effect on the Indian industry itself. Slowly, with increasing confidence and a growing expertise, the caterpillar’s appetite turned towards bigger and better diamonds. It munched itself up the tree to qualities that previously only the Israeli industry could process. Then, it went further up, taking into its processing maw what the Belgian industry and finally what any cutting centre in the world including New York processed.

The caterpillar then moved downstream into jewellery production and finally, a short while ago, began the process of building a global brand for the “Made In India” label. The Indian industry is no longer an unglamorous caterpillar, it is a butterfly that is now fluttering on the world stage, now being recognised for itself.

With an export figure of $1.74 billion (around 15 percent of all the country’s merchandised exports) in fiscal 2012-13, the Indian diamond industry has spearheaded the growth of the entire gems and jewellery sector. It has come an astonishingly long way from the $17 million in 1966. That was the year that a sprawling, amorphous, cottage-style gem and jewellery processing industry had just got itself collectively organised through the formation of the Gem & Jewellery Export Promotion Council (GJEPC).

That collective organisation is a landmark in the growth of the Indian diamond industry. From the formation of the GJEPC onwards, diamond cutting in India began to inexorably move towards a more clearly defined structure and better business practices. Today’s large, highly automated factories are an outcome of the change in thought process that began with the formation of the GJEPC — not only a collective industry voice but a systematic partnership between the industry and the government.

The Indian diamond industry’s full history is well known, stretching all the way back to the famed Golconda mines and the first understanding of how to cut a diamond. But the growth and continuing evolution of the current behemoth that leads the country in its overseas trade, is a result of organisation rather than just the result of an historic start. In that sense, the story of the modern Indian diamond industry goes back more than a century ago to a fateful meeting in 1909 of the elders of the Jain community in the village of Palanpur in Gujarat. The elders decided that the best way for the community to haul itself out of poverty and climb to a more secure future was for its young men to plunge into the process pipeline of the diamond industry — at that time almost exclusively servicing India’s many royal houses as well as its British colonial masters. The community elders were not exactly stepping into an unknown void. Two entrepreneurs from Palanpur, Amulakh Khubchand Parikh and Surajmal Lallubhai Mehta, had already blazed the way in the diamond industry, starting out in the closing years of the 19th century and having established successful operations based in Mumbai at the time of the Palanpur community meeting. Also, dealing was seen by the community as an honourable profession. Thus at the impetus of the community elders, more Palanpuri youngsters made the journey to Mumbai, each reaching out and helping a group of young, impoverished men from their community, giving them a place to live while they learned to either cut and polish, sort or sell diamonds. The community and family ties that those pioneers had in great measure helped craft the global success story of the Indian diamond industry.

Those ties played an important role in keeping the Indian diamond industry alive in the years after India achieved independence. The country’s left-leaning socialist government under Jawaharlal Nehru, banned all imports of diamonds — rough or polished — as well as banning the import of processing equipment. While the Indian diamond workforce dwindled to just a handful who survived by re-cutting old diamonds from the maharajahs’ collections, Indian diamond dealers did well in centres such as Antwerp.

By 1955, when the Indian rupee had stabilised enough to warrant the easing of some restrictions, collective representation by the diamond industry helped negotiate a fixed import licence system. The Indian industry could import a fixed amount of diamonds every year. Naturally, as business grew, this system got in the way. “Creative” ways were found around this hurdle, and the Indian diamond industry increased the pace of its growth.

The First Indian Sight By the 1960s the collectively organised industry’s abilities played a key role in helping De Beers, who at that time had a lock hold on the world’s rough diamond supply, in making up its mind to appoint its first Indian Sightholder in 1962. The Indian Diamond Export Corporation, which is recorded as the first Indian Sightholder, was in fact a consortium of a trio of dealers — Mohanlal Raichand, H.B. Shah and Hashamali Jhaveri. They were the thin edge of an Indian entrepreneurial wedge that would open up the global diamond industry.

Others from the community followed. Kirtilal Manilal Mehta, who as a boy of 12 began dealing in rubies in what was then Burma, moved later to Mumbai and into the diamond industry, building up what would become Gembel, a global diamond powerhouse.

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S.V.Satyanarayana
(Hyderabad)
A good article indeed. Another interesting article I read some time back was by Russel Shore which was published in Gems & Gemology, 2005.It dealt more with global scenario. One more article published in Times of India serially for a few days was about the Indian industry starting from 1960s is interesting to many.I think the articles appeared some time in 2005 or 2006, written by Rajghata. Can somebody help me to get his email id ?
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