REVIEW OF LITERATURE AND RESEARCH METHODOLOGY

REVIEW OF LITERATURE

Review of literature of a subject is helpful in understanding the

conceptual framework and provides a detailed account of work which

was done in the past on that particular subject. It proves helpful to the

candidate in deciding the line of action to start his research study.

Keeping in view all these facts a review of existing literature has been

made by the researcher.

According to Pawan Kumar Garga1, “India’s up-coming

jewellery industry has two closely defined sectors: the export processing

Zones (EPZ,s) comprising 100 percent export-oriented units, and the

domestic tariff area (DTA) which caters not only to domestic needs but

to international markets as well. In fact, the DTA accounts for as much

as 63 percent of India’s jewellery exports. Liberal concessions from the

government have been applicable to EPZ’s since their inception in 1974;

but gradually, the concessions are being extended to the DTA. In a

couple of year’s time, there will be no distinction between the two

sectors as far as official incentives are concerned. The bulk production

from the DTA comprises of handcrafted jewellery. Hand Crafted

jewellery is in the high-price range and is for those who can afford

exclusive and exquisite pieces. These are considered prized possessions

because of their artistic and intrinsic value; and may be worn rarely or on

special occasions. EPZ specialize in mass-produced jewellery. It has a

1 Pawan Kumar Garga, Export of Inda’s Major Products-Problems and Prospects, New Century Publications, Delhi, 2002, p. 90-91.

32

vast and growing market and is for those who go in for the

comparatively lower priced varieties for day-to-day wear. In India, the

demand is for heavy gold jewellery; whereas women of the west prefer

the more delicate type of jewellery which is studded with diamonds and

colored gemstones. There are about one million artisans engaged in

manufacturing jewellery in India. Of those 90 percent are located in the

DRA, manufacturing plain gold jewellery as well as diamond studded

jewellery.

The product group of gems and jewellery comprises of diamonds,

coloured gemstones, gold jewellery, pearls, non-gold jewellery, synthetic

stones and costume/fashion jeweller. In the total exports of gems and

jewellery, diamonds alone account for 80 to 93 percent share. The

diamond cutting and polishing industry in India was revived in early

sixties after remaining dormant for over two centuries. The diamond

cutting and polishing activity witnessed a rapid development and a major

break-through came about in the decades of seventies and eighties. This

breakthrough is mainly due to liberalized policy relating to export effort

of this sector, increased world production of rough diamonds, supportive

role of the Diamond Trading companies in effecting supplies of rough

diamonds and expanding world demand for diamond studded jewellery.

The diamond industry in the country is located in and around Jaipur,

Surat, Bhavnagar, Navsari, Tiruchirapalli, Bombay, Pundra, Varanasi,

Delhi and Lucknow. Jaipur in Rajasthan has been and important centre

for cutting and polishing of colored gemstones. It has been a renowned

centre for cutting or emeralds in the world.”

33

Rai Govind Chandra2 describes about Indian Jewellery prior to

advent of the Greeks, “Indian love for jewellery is proverbial. Through

the ages the Indian genius has produced the most gorgeous, the most

intricate, the finest and the noblest affects I jewellery. The ornaments

found at mohaenjodaro, Harappa , Chandudaro, Lothal, Rupar, Kali

Bangan all testify to the high degree of craftsmanship of the Indian

workmen of the proto-historic period. One indeed marvels at the

delicacy and the finish of the jewellery found in the Indus Civilization.

There are numerous pieces to decorate every part of the body and all of

them are charming and beautiful. They are in no way inferior either in

workmanship or in design the the contemporary jewellery of Sumer or

Egypt. Along with these pieces there are proofs of the jeweler’s

handiwork on the Indian icons discovered in various excavations of this

early civilization. Even the ephemeral clay sculptures have not escaped

from being adorned with jewellery. We find male and female figurines

wearing metallic bands on their heads, earrings, necklaces, bracelets and

girdles. A bronze foot found a Mohenjodaro has a beautiful anklet and

some of the terracotta figurines appear to be wearing bangles on their

ankles.”

Shitla Prasad Tiwari3 explains that with the passage of time, as

civilization advanced, we notice an all round change regarding the quest

for jewellery which is displayed more and more by women alone. The

change in the outlook, the desire or the liking for jewellery and its

acquirement especially by the women-folk, is once more noticed all over 2 Rai Govind Chandra, Indo Greek Jewellery, Abhinav Publications New Delhi, 1979, p. 18. 3 Shitla Prasad Tiwari-Nupura the anklet in Indian literature and Art, Agam Kala Prakashan, Delhi, 1982, p. 24-25.

34

the world. It is from this point onward that the gentle-sex, desirous

always of pleasing and therefore presenting itself in an elegant and

ornate form has even sought to add to its charm by adorning itself with

jewels. The effort of the male-sex, which has always been a lured by the

ornate beauty of the fair-sex, was also directed towards the end of

acquiring more and more jewels for his beloved ones the marks of this

all-round adornment of the beauty are visible in the art, literature and the

craft everywhere. In the field of plastic arts, it is seen in the ornate forms

of female sculptures decked with a number of ornaments covering

themselves almost from top to bottom. In the field of literature,

particularly the Sanskrit literature of India, the poets are never found

tired in describing their beauties with so many figures of speech or

Alamkar in Sanskrit is explained by the Rhetoricians with the help of

actual ornaments like kataka (the armlet) or Hara the Necklace. It is said

that the almakaras in literature are there to serve the same purpose of

adding charm to individual part of a body of an expression that is

otherwise added by the ornaments to the body of a person. As regards

the craft, the whole history of the jewellery and the ornaments all over

the world, presents a good testimony to this effect. All the countless

records of the gems, jewels and the ornaments along with the efforts of

the individuals who acquired them and the workmanship of the artists

who fashioned them equally bear out the same fact. Thus, the all round

activity of man was motivated by the only human instinct of making the

fair-sex look more beautiful, mere imposing or more striking by

ornamentation.

35

Rakhee Rani4 in her research project on a comprehensive study

of income generation of workers of gold ornament with special reference

to Meerut City found that savings of variety of karigars are different in

all respect and vary from Rs. 2500 to Rs. 25000. The income is divided

on the basis of nature of work for example those workers who are

involved in bangles, rings, and earrings they are getting more

remuneration as compared to those who are just involve in making balls,

wire and polishing work. Generally the manufacturer are getting their

jewellery made on orders only. This work is basically done on contract

basis and jewellers also provide gold to complete the design. This gold is

provided by the jewellers to the karigars to get the variety of jewellery

i.e. 68, 76, 80 tanch etc. The wages to the karigars is paid in term of

gold.

In jewellery making 22 carat gold is used but still the purity is of

91.6 is guaranteed in it. The brightness of this gold is a bit less. The

designing of 22 carat gold ornament is made attractive by Rodiayam

Polish. 18 carat gold is only used in making diamond jewellery. 17 carat

gold is very hard that is the reason that the designing work is very

difficult in this case. This carat of gold is generally not used in jewellery

manufacturing.

According to report published in Jewellery Bhavisheya5

pertaining to the exports of gems and jewellery for the period of August

2010 as compared to the same period last year, the overall exports of

gems and jewellery at US$ 3,155.14 million (Rs. 14693.49 Crore) is 4 Rakhi Rani:A Comprehensive study of income generation of workers of gold ornament with special reference to Meerut City- a project submitted to CCS University,2006 page 45-46. 5 A report published in Jewellery Bhavisheya, Modi Nagar,volume 6, No. 11 December, 2010, P. 22.

36

showing a growth of 67.44% (61.31 % in rupees term) as compared to

US$ 1884.30 million (Rs. 9,108.72 crore) of same period previous year.

The overall export of cut and polished diamonds at US$ 2,301.77 million

(Rs. 10,719.32 crores) in the month of August 2010 is showing a growth

of 65.24% (59.19% in rupees term) as compared to US$ 1,392.99

million (Rs. 6,733.70 crores) for the same period of previous year. The

provisional export of gold jewellery for the period August 2010 at US$

527.04 million (Rs. 2,454.44 crore) shows a growth of 49.61 percent

(44.13 percent rupees term) over the comparative figure of US$ 352.27

million (Rupees 1,702.89 Crore) for August 2009. The Export of

coloured gemstones at US$ 28.66 million (in rupees 133.48 Crore)

shows a growth of 14.05 percent (9.89 percent in rupees term) during

August 2010 as compared to US$ 25.13 million (rupees 121.47 crore) in

August 2009. In a recent development the government of India has

revised ‘all industry Rates for duty Drawback’ on precious metal gold

and silver jewellery that is meant for export purpose only. The revision

was announced through a notification on September 17, 2010. The rates

have been made effective from 20th September 2010.

In the opinion of M. S. Shukla6 Much of the Indian jewellery has

persisted to culture traditionally cherishing and adverting to its prized

consummate forms and former masterpieces of design and technique. Its

motifs, patterns and styles have generally remained unchanged and

changes if any have stayed far from radical and drastic. It has retained its

customary character and models at Cambay, for example, and been

created with traditional tools and technology that have been employed

6 M.S. Shukla, Panorama of Gems and Jewellery in Indian historical Setting, Kala Prakashan, Varanasi, 2000, p. 159.

37

for centuries. The rough bead forms are smoothed by finer chipping,

then ground smooth, drilled and polished. The only changes are marked

in the limited range of shapes and grinding and polishing being done

mechanically. The other Indian manifestation of jewellery, though

broadly conventional, has maintained their variety along with aura of

beauty and superbness cultivated indigenously over millennia.

In his article Easther Bardhan7 mentioned that the Gems and

jewellery sector is facing several challenges and opportunities. These

challenges are reflected in form of hurdles in sectoral development,

barriers bankers face in financing the industry and lack of solutions

provided by professional service firms. The diamond processing industry

took birth in 1960, when the synthetic industrial material trends head

edged out the demand and prices of industrial demands. At this point the

labour available in India proved to be cheaper than the labout in

Belgium, resulting in affordable diamonds for less affluent buyers. In

1960 the story of fragmentation began with the big players becoming

bigger and small players shrinking in microscopic level. This

complementary phase has been transforming to show the chequered

realty of present times. Rough diamond cannot be processed in absence

of proper finance. The major reason why 12 out 13 diamonds are cut and

polished in India is the presence of strong banking support, which fuels

the growth in the export segment. Banks provide various credit facilities

and packages to the gems and jewellery sector, specially dominating the

export segment. Fragmentation is an inherent problem as it restricts

domestic growth in terms of upgraded technology, global business

practices, organized setup and also in terms of funding. The major 7 Easther Bardhan, Economic Times, September 11, 2007.

38

barrier banks face while financing the jewellery sector is that almost 80

to 90 percent are the jewellery units are family-owned. Family units

gave room to practices like fake balance sheets and parallel book

business which might lead to double financing.

The sector is also fighting with the dependence on imports and

lack of technological expertise. There unexplored reserves of gems in

Orissa, MP and AP, yet figure shows that the import have risen by 10

percent from 6.3 percent in 2004-05. This rise in import is ultimately

resulting high inventory carrying cost. Hence it is essential to take

unique approaches to address industry needs and increase dialogue

between industry and service providers.

According to an article published in Golden Times8, “Gold is the

only thing that seeps into every strata and class of the Indian society, is

equally sought by the well-heeled urban businessman and the poverty

stricken rural labourer. Indians see the metal as a symbol of purity,

prosperity and fortune. Indian customs demand buying gold for special

occasions like wedding, births, birthdays and celebrating various

festivals or offering gold to Indian deities. According to Rig Veda,

India’s most ancient text, the giver of gold is blessed with life of

radiance and grandeur; for giving a receiving gold is synonymous with

welcoming the Goddess Laxhmi. Gold is, hence, invariable purchased

all over India during Diwali-a festival celebrated by one and all.

Gold to Indians is that ultimate love object. Not only does it adorn

our bodies it also acts as a good investment and is therefore, also

8 Gold is much beyond jewellery- an article published in The golden times, The Economic Times, September 30, 2008.

39

ancestral. From mother to daughter to granddaughter, father to son to

grandson gold has the tendency of getting passed down from generation

to generation. So far Indians at least, gold will never lose its sheen. In

fact, the mentality is so possessive for gold that it will be sold as a last

resort only and before most of the other assets are liquidated. Indeed the

cultural and emotional significance attached to gold is such that

purchases made during times are personally important, regardless of

price.”

According to Nirmal Bardia9 convener, Jaipur Jewellery

Association “Jaipur’s Colour stone industry has a major contribution in

the country’s export of colored gems, hence we need shows to focus the

developments in this area. Also, the month of August is a good period

for trading as Marriage and festival seasons closely follow. Jaipur has

enough potential for multiple shows. Since Jaipur Jewellery Association

(JJA) and Jewelers Association Shows (JAS) both are directed towards

growth of the industry, there is no rivalry between the two. Jaipur’s

gems and jewellery industry keeps busy over 100000 artisans,

manufacturers, importers, dealers and exporters. The city is traditionally

known to be the hub of colour stone. Nevertheless, emerging

international centers have taken away considerable share of business

from the industry here. Optimistically, initiative like shows and

exhibitions will help to boost opportunities by attracting global buyers

and exhibitors.

9 JAS 2007; A message delivered in the show of jewellery association by the convener Mr. Nirmal Bardia. Published in a magazine Diamond World. Vol-34, No-3., 2007, Page 46

40

According to Jewellery Design and Technology Institute,

Noida10 it is its firm believes that – if one cannot make jewellery, one

cannot design jewellery. And according to them an important addition is

required to be made in the field of Jewellery Manufacturing. A

beginner’s course in Jewellery Manufacturing techniques should be

introduced in which the students learn how to work with machines and

use different types of hand tools on well equipped workbenches.

Students practically learn the technical aspects of jewellery making

which is imparted through experimenting with various techniques. At the

end of the course the students work on a manufacturing project and

create various items of jewellery such as bracelets, chains, charms,

earrings, rings, cuff-links, tie chains, Brooch, pins, pandants etc.

In his book Rai Govind Chandra11 stated that the first phase of

Indo-Greek jewellery appears to have begun when Greek settlers of the

new cities established by Alexander round about 300 B.C. began to turn

out beautiful Pieces. Naturally at first there must have been some

resistance on the part of Indian craftsmen to adopt the western motifs

during the first few years, and the Indian jewelers must have continued

to make pieces after their own designs. Therefore, during this period two

types of jewellery were manufactured, one wholly Indian and another

Greek. These two sets are perfect examples of their respective arts.

Later, however when the demand for Greek type of jewellery increased,

the Indian craftsmen also began to turn out copies of Greek models. This

must have happened during the first century B.C. examples of such

10 A Survey Report released by the JDTI Jewellery Design and Technology Institute, Noida. Published in Diamond World, March-April Edition 2007.Page 174. 11 Rai Govind Chandra, Indo Greek Jewellery, Abhinav Publications New Delhi, 1979, p. 95and109.

41

jewellery have been found at Taxila and other places. Later these motifs

began to be introduced in Indian jewellery in the 1st and 2nd century

A.D. their designs bespeak of the new impulses form the west and in

their changing patterns is hidden the history of this period.

The function of the jeweller in the manufacturing of jewellery

must have remained the same as it was during the proto-historic period.

They would have worked out the design of the ornament according to

the wishes of the customer or copied the forms of existing pieces, and

passed them to the craftsman for making them. It is possible that they

would have supplied the precious metals and the stones to the artisans as

he does today because the craftsmen are generally immobile and do not

go out in search of the customers or to find out the various metals and

stones needed for making jewellery. It is the jeweller who performs this

function. He keeps the stock of the raw material and invests money in

the finished products. When the season is slack he gets pieces of

ornament made from the craftsmen and keeps them for ready sale. The

sources of the various raw materials must have been kept a closely

watched secret of the jeweller in those early days as it is even today.

This knowledge would have formed his assets.

Nitish Deb12 concluded in his research that as far as the question

of Uttar Pradesh economic and financial prospects are concerned Uttar

Pradesh is not only a geographical unit but it also consists a vision, vast

traditions and lifestyle. In Uttar Pradesh export is increasing at the rate

of 15% per annum. In the year 2004-05 total export of Uttar Pradesh 12 Nitish Deb “Role of Gold ornaments in export trade of Uttar Pradesh after liberalization with special reference to district Meerut”, 2005, pp. 253-259.

42

Increased by Rs. 23059.95 Crore whereas the total export of India in

the same period was Rs. 33739.05 Crore. In this way the total

contribution of Uttar Pradesh is about 7% in the total export of India. In

total export contribution of Uttar Pradesh Gems and Jewellery industry

contributed Rs. 274.26 Crore. In this way there is a significant increase

in this regard. There is no authenticated data about jewellery export

available in Meerut District. But on the basis of data collected through

the survey total jewellery export is about Rs. 100 Crore per annum. India

is the largest consumer country in the world because the 20% of world’s

total gold jewellery is absorbed in India itself. As per the study there was

a total consumption of Rs. 285 per person in India whereas India comes

at the lowest stage. Gold production is not at very significant level in

India. India produces only 9% gold of its total demand. In India people

are very much interested in gold collection as an investment option. As

per world Gold Council in India there is about 10,000 tons gold is stored.

In India, Delhi and Mumbai are the main centers for Gems and

Jewellery.

Gold is a precious metal which is found any time and everywhere.

It said that gold is even found at small cottages and in huts. Every Indian

woman has at least some thing made of gold. Gold is produced as

mineral and passes out with many stages to reach at its final

consumption stage. 80% of total gold is used in manufacturing jewellery,

15% of total gold is used in other industrial uses and rest 5% is used for

investment purposes. Gold is all time favorite to all for its virtue. In

India gold is considered as a good alternative of investment. It is termed

as a symbol of prosperity and a good friend in once bad time. On the

other hand it is considered bad and unproductive. Presently the work of

43

jewellery is centered to a very little part of Meerut and restricted to few

families only. There are about 80 units of gold jewellery actively

participating in this field as a retailer whereas about 200 units are

performing like a cottage units. There are about 35000 karigars involved

in jewellery manufacturing who produce about 100 kg. Gold and 200 kg.

silver jewellery per day. About Rs. 100 crore Capital is invested in this

industry.

In Meerut, Gems and silver jewellery is popular as well. But there

is a very limited usage of other metal like copper, brass and gilt. Just of

give growth to the gold jewellery industry and to increase the export of

gold jewellery a gold city proposal is proposed, which will give strength

to the development of jewellery industry.

Export of jewelry is a complex exercise. To bring people here for

export oriented activity there is a special need of training and awareness.

There is an increase in the export of jewellery day by day. In the year

2004-05 there was a total export of Rs. 5240.24 crore from Meerut

whereas the total export of Uttar Pradesh was Rs. 23059.95 crore. In the

year 2003-04 jewellery export was Rs. 274.26 crore and in the year

2002-03 Gems and jewellery export was just Rs. 155.29 crore where as

the total export in that year was Rs. 14455.59 crore. It shows a

significant increase in the export of jewellery business. In this way Gems

and jewelley contributes near about 17% to the total export of India as a

whole. In the year 2004 there was a total consumption of 520 tons gold

Jewellery in India which was about 20% of the world consumption. The

proposed model of gold city is a necessity in itself and there is a great

need for its establishment.

44

As per a report published in Marketing Mastermind13 “India

possesses world’s most competitive gems and jewellery market due to its

low cost of production and availability of skilled labour. As per this

report “Indian Gems and Jewellery Market - Future Prospects to

2011”, highly skilled and low cost manpower, along with strong

government support in the form of incentives and establishment of SEZs,

has been the major driver for the Indian gems and jewellery market. The

market also plays a vital role in the Indian economy as it is a leading

foreign exchange earner and accounts for more than 12% of India’s total

exports. Currently the Indian market remains highly fragmented, but is

rapidly transforming into an organized sector.

Currently, the industry is facing a slowdown due to global

economic turmoil. But due to various government efforts and incentives

coupled with private sector initiatives, the Indian gems and jewellery

sector is expected to grow at a CAGR of around 14% from 2009 to 2012.

At present, the Indian gems and jewellery market is dominated by the

unorganized sector; however, the trend is set to change in near future

with the branded jewellery market growing at an expected CAGR of

more than 41% in the coming four years. With its consumption pegged

at nearly 20%, India remains world’s largest gold consumer and this

share is expected to grow further. By analyzing past and future aspects

of the market, the report highlights the potential growth areas in the

market and gives an overview on the market for gems and jewellery in

the country. It also evaluates the emerging trends in the concerned

industry. 13 Marketing Mastermind: “Indian Gems and Jewellery Market - Future Prospects to 2011” the ICFAI University Press. June 2009.

45

The report also covers the industry forecast and analysis based on

various macro and micro economic factors, sector and industry specific

databases, statistical and analytical models. This model takes into

account the past and current trends in an economy and more specifically

in an industry to bring out an objective market analysis.

According to a survey report published in GJF News14

“Mumbai’s gold trade is fast losing out to Gujarat and Rajasthan.

Though official gold prices in the city are much lower than those coming

in from the two neighboring states, actual purchases prices are higher on

account of value added tax (VAT). VAT is not included in the official

prices of Mumbai gold. In Gujarat and Rajasthan, only sales tax is

applicable as these states have not yet accepted VAT. Perhaps for the

first time, there are two prices of gold being quoted in Maharashtra.

Gold in non-VAT states is still subject to sales tax at 0.25 per cent,

which is far lower than the one per cent levy under VAT Maharashtra.

While sales tax is included in the official prices quoted in the non-VAT

states in Maharashtra, the official price of gold stands lower since the tax

is added as a separate component to the quoted price, which makes the

actual price higher than at the official ones. Due to this, Maharashtra

continues to be a loser in the bullion trade as Gujarat and Rajasthan have

not adopted the VAT system and their gold is cheaper.

14 GJF -A News Letter of All India Gems and Jewellery Trade Federation-“ Mumbai loses gold race to Gujarat and Rajasthan. Vol. 1, issue-1, 2005.

46

Pawan Kumar Garga15 stated that Gems and jewellery

comprising diamonds, coloured Gemstones, gold jewellery, pearls, non-

gold jewellery, synthetic stones and costume/fashion jewellery constitute

a growth potential export sector. Export of all items of this product

group taken together have increased phenomenally during the last fifteen

years net exports to Rs. 33,734 crore in 2000-2001, as per the economic

survey, 2001-2002.

The product group of gems and jewellery makes significant

contribution to India’s overall export earnings and remains in the

forefront of foreign exchange earners. Diamonds accounts for 80 to 93

percent share in the total exports of gems and jewellery. In fact cut and

polished diamonds remain the single largest item which has made

significant contribution to the export effort of this sector. The other two

main items, though distantly following diamonds, are gold jewellery and

coloured gemstones together accounting for 6 to 18 percent share of the

total exports of gems and jewellery. In term of directional pattern, while

Indian gems and jewellery are exported to a large number of world

markets, the USA, Hong Kong, Belgium and Japan are the major export

destinations. These four markets accounted for about 74 percent share in

India’s total exports of this thrust sector in 1997-98. All these markets

happen to be the thrust markets for export expansion of gems and

jewellery. Other important destinations for India’s gems and jewellery

exports are Israel, UAE, UK, Thailand, Singapore and Switzerland.

15 Pawan Kumar Garga, Export of Inda’s Major Products-Problems and Prospects, New Century Publications, Delhi, 2002, p. 94.

47

As per a report published in Research and Markets16 “Gems and

jewellery have been used by the Indian Civilization since ages for both

its aesthetic as well as investment purposes. Precious metal and stones

have been an integral part of the Indian civilization since its recorded

history. India has the distinction of being the first country to introduce

diamonds to the world. The country was also the first to mine, cut and

polish and trade in diamonds. The industry can be classified into various

sub segmented like diamonds, coloured stones, gold and silver jewellery,

pearls etc. However, the two major segments in Indian are gold and

diamonds. India dominates the diamonds processing trade with 11 out of

12 diamonds being cut and polished in India. The industry is

characterized by highly unorganized trade, labour intensive operation,

working capital and raw material intensiveness, price volatility of gold

specially and export orientation. Demand for gold and diamond

jewellery is driven by festivals and wedding, increasing affluent and

middle class population, increase in per capita spend on luxury items etc.

Though India plays a dominant role in the gems and jewellery

industry in terms of processing and consumption, mining of gold and

diamond is amongst the lowest in the world. India imports gold and

rough diamonds along with other precious metals. Gold is purchased

from countries Switzerland, South Africa, Australia, UAE etc. and rough

diamond are sourced from Belgium, UK, Israel, UAE etc. With political

pressure to increase local beneficiation to African mining nations, new

cutting and polishing centers like Botswana, Namibia, Angola will

emerge , reducing India’s dominance in Diamond processing.”

16 A report published in Research and Markets brochure-ww.researchandmarkets.com/reports/682397

48

According to Anjani Sinha17, “Retail investor can soon exchange

their e-gold units issued by Mumbai-based National Spot Exchange Ltd.

(NSEL) with jewelers across the country. The exchange plans to launch

the scheme from March and hopes to empanel around 10,000 jewelers in

the country for this. The exchange is an electronic spot market promoted

by Financial Technologies India Ltd and National Agricultural

Cooperative Marketing Federation of India Ltd. According to the

proposed scheme and investor can buy gold form the exchange’s

platform and take physical delivery of jewellery against the surrender of

demat units any time. There could be a savings of 10-15 percent for an

investor through this scheme against the normal buying of gold in the

form of a coin or exchange of old jewellery.”

In her research report Gunjan Bihani18 stated that “The appeal

for jewellery is the highest among younger consumer sections. China’s

young working age population is quite high. There is also a large

demand from the matrimonial market. Every year, about 18-22 million

people in China get married. Total annual wedding expenses in China

are estimated at 250 billion RMB (about US$ 30.5 billion). Even if one-

tenth of that is used for jewellery consumption, the figure is a high 25

billion RMB (about US$ 3.1 billion). The younger consumer section is

also fashion-conscious, and the rate of design obsolescence is fast,

thereby helping innovation and sales. The high growth of diamond and

platinum jewellery witnessed in the Chinese market after the initial rush

17 Sinha Anjani, Jewellery Bhavisheya, volume 7 No. 2, March 2011,Page no. 31 18 A Report on jewellery market in China and its development; Submitted by Gunjan Bihani on

March 2, 2011

49

for gold in the 1980s can be attributed to the desire for new and trendy

ornaments among the younger consumers.

According to Nusrat Ahmad19 “The Indian Gems and Jewellery

sector is going through rough patches since 2008 with more than 100000

skilled and unskilled labourers being laid-off due to poor demand from

the US market as it is reeling under the current global economic

downturn. Exports to the largest market- the US declined by over 25

percent in 2008 (January- December). Simultaneously, plunge in

domestic jewellery demand added to the sectors woos, as raw material

cost jumped, inflation stabilized, gold prices are touching high records

and people are left with low disposable income to purchases the luxury

goods.

Out of the total demand for Indian gems and jewellery in 2008

(January- December), 90.45 percent was export driven and remaining

9.55 percent came from domestic customers. However, as per

ASSOCHAM’s estimates, in the calendar year 2009, the share of

domestic demand will increase to 10.81 percent in total demand for

gems and jewellery and exports based demand have carve out a share of

89.19 percent.

The rupees value against the dollar determines the cost of raw

material imported for gems of jewellery as payments are made in the US

currency. During the calendar year 2007, the value of rupee against

dollar stood at Rs. 41.93 per dollar, with raw material payments by India

worth at USD 16,780.61 million. However, in 2008 rupee depreciated

against dollar and reached at Rs. 43.38 per dollar, with imports touching

19 Nusrat Ahmad, Outlook for Indian Gems and Jewellery Sector, ASSOCHEM ECO PULSE STUDY, 2009.

50

USD 20,143.35 million. In calendar year 2009, it has been observed that

on an average rupee further depreciated against dollar at Rs. 49.40 per

dollar that could aggravate the import cost of raw material. However, if

value of rupee against dollar is maintained at Rs. 49 per dollar in the

2009, without further depreciation, only then manufacturers would have

been able to carry on production and employment.

Gems and jewellery, diamonds and precious metals have been

given a special boost by the Ministry of Commerce and Industry, the

Export Promotion Council for Gems and Jewellery and Star Trading

houses (in the gems and jewellery sector), besides Diamond India

Limited, MSTC Limited and STCL Limited have now been added under

the list of nominated agencies for the purpose or import of precious

metals.”

Ashima Mahindra20 in her report stated that The gold market in

Meerut is a good example of what impact the global economic

slowdown is having on out local markets. Being one of Asia’s largest,

the gold market in the old quarters of the city employs over 25,000

skilled craftsmen and around 60 kilograms of the precious metal is

processed here every day. But constant fall and erratic fluctuation in

global gold index because of the stock markets is badly affecting the

gems and jewellery markets. The uncertainty in global prices has eaten

up lots of jobs and the workers have been sitting idle for days and weeks

now. And with most of the workers being migrants, they are bound to

take extreme steps to overcome their depression. Most of the traditional

traders are blaming the greed of speculators for the mess. Meerut’s

20 Ashima Mahindra, Shine’s off Meerut Gold Market, Meerut Plus, A Supplement of The Times of India, N. Delhi.

51

bullion market sources gold from all over the world and turns it into

exquisitely crafted ornaments. Apart from the global crisis, the

government decision to allow online trading in gold has disturbed the

price. The Indian rupee against the dollar has pushed Indian domestic

prices to record highs, causing buyers to tighten their spending with

sales in the country forecast to fall at least 15 percent on the year.

Buying gold ornaments, often to be presented as gifts, is considered

auspicious during the festival season and sales of gold usually surge

around this period. But India being a highly price- sensitive market,

demand has suffered as the rupee price has risen.

The Review of existing literature provided detailed

information regarding the history of jewellery industry, evolution

of branded jewellery, manufacturing process of jewellery,

changing scenario in jewellery industry in India. All these

information helped the researcher to a lot in completing her

research work.

52

HYPOTHESES

The proposed research work is based on the following assumptions:

1. Production process of Jewellery is traditional.

2. Due to manual manufacturing system in Jewellery, generally the

cost of production works out very high.

3. Hallmark system is not in common practice among the jewellers

and buyers in India.

4. Marketing charges and margins are charged at very high rate from

the customers by the branded companies in Jewellery industry in

India.

5. A number of factors leave their direct or indirect influence on the

production cost and marketing of Jewellery.

6. There is a great scope of reducing production and marketing costs

in case of Jewellery manufacturing and its marketing.

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RESEARCH METHODOLOGY Following research methodology was adopted in the proposed

research study:

1. Selection of Area: District Meerut was taken for the purpose of

survey because this District has a prominent place in the field of

manufacturing and marketing of Gold and Diamond Jewellery.

2. Selection of Sample Units: For the purpose of survey 50 traditional

jewellers and the same number of goldsmiths manufacturing different

types of Jewellery was taken at random bases to study the marketing

process, marketing costs and margins.

3. Period of Study: Because this study has been conducted at micro

level and it is totally survey based, hence for the purpose to collect

the data regarding costing, marketing charges and margins, the year

2009-10 was taken for the study.

4. Collection of Data: Both the primary and secondary data was used in

this research study. Primary Data was collected through personal

interview from manufacturers and traders of traditional Jewellery

industry.

5. Tabulation, Analysis and Interpretation of Data and

Information: the collected data and information was tabulated in

such a manner so that these may be analyzed and be logically

interpreted.

6. Conclusion and Suggestions: In the end logical conclusions have

been drawn from the study and constructive suggestions have

proposed in the light of the findings.

* * *