Mumbai: Overseas jewellery and diamond manufacturers, hit by slow sales in traditional bases, are now eyeing Indian buyers as the country becomes a major consumer driven by rising income and demand, industry players said.
From providing training and certification to the diamond polishing industry a decade ago, gem and jewellery firms from Asia, Europe and the U.S. are test-marketing products through local retailers, trade events and actively seeking tie-ups.
“It’s tough but there are a lot of rewards awaiting those who are willing to invest time, energy and money,” said Mordy Rapaport of diamond services group Rapaport, whose presence spans New York, Antwerp, Dubai and Hong Kong.
“Now everyone is realising there is lot of actual consumption especially as America is getting pretty full,” he said.
In 2005, the U.S. was the world’s largest jewellery market, accounting for almost a third of world jewellery sales. However, accelerating economic growth and rising income levels in India and China could translate into higher spend on jewellery, bring the two on par with the U.S., a KPMG-Gem and Jewellery Export Promotion Council report said.
“There is opportunity for large retail houses,” said Kenneth Gassman, founder president of U.S.-based Jewellery Industry Research Institute, referring to the potential market in bigger cities such as New Delhi, Mumbai and Bangalore.
India’s appreciating rupee is also attracting U.S. firms to India, he added. The Indian rupee has risen more than 12% in 2007, the strongest among emerging market currencies.
Though foreign players say they are hampered by undocumented cash deals, lack of proper infrastructure for luxury retail and restrictions on foreign brand retailing, they feel there is a niche for their products and services.
Among the arrivals is Belgium’s Mishal Manufacturing NV. The diamond firm, which has a manufacturing unit in China, began test-marketing its diamonds in south India a year ago.
Hong Kong’s Kinetic Artwork, which sells to retailers in South East Asia, is also in India. “I see the time is right to enter as tariffs have come down... people have disposable income to spend on luxury,” says Kinetic head Prakash Sadarangani.
Also marking their presence are retailers such as Italy’s Bulgari <BULG.MI>, which entered India in 2004 and has stores in Delhi and Mumbai through partnership.
“We need new markets like India, Russia and China...Indians have the money,” said another Italian retailer who was in the city recently for a trade event. Diamond certifiers, who initially set up shop in India to service the large manufacturing base, are also expanding. India polishes more than half the world’s diamonds.
International Gemological Institute, which has been in the country for a decade, has 11 certification labs servicing over 65 retailers and other traders. Of its 500-plus gemologists, over a third are in India, said chief executive officer Roland Lorie.
“India’s position as a manufacturing hub has changed. Now, India is manufacturing, trading and retail,” he said. “I’m really bullish on India. This is where we need to be,” Gassman said.