Financial Daily from THE HINDU group of publications
Tuesday, Mar 16, 2004
Financial Daily from THE HINDU group of publications Tuesday, Mar 16, 2004 |
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Outsourcing Industry & Economy - Gems & Jewellery Is jewellery the next outsourcing boom? Sowmya Sundar
THE J.C. Pennys and the Wal-Marts are looking to source from India not just textiles, but jewellery as well. Mr Marzin R. Shroff, President (Marketing), Suashish group, a leading exporter of polished diamonds says that there is an opportunity in the sector, with more global retailers looking to source jewellery from India. "From jewellery retailers the list is now expanding to departmental stores such as J.C. Penny, Wal-Mart," he points out. What explains the sudden spurt in interest? Mr Rajesh Mehta, Chairman, Rajesh Exports, a Bangalore-based unit said, "Jewellery outsourcing was taking place on a small scale, but now it is improving. In addition to availability of skilled labour and advanced technology, favourable Government policies, too, have brightened the prospects for domestic manufacturers. The Government has allowed duty free import of raw material and recently lifted curbs on direct gold imports." The listed players in this sector are actively investing in fresh capacities or acquisitions. For instance, Rajesh Exportshas just completed a Rs 40-crore expansion project in Bangalore. The Suashish group has moved one of its manufacturing units from the US to India. Shrenuj & Company has acquired a manufacturing unit in Mumbai. According to sources in the Gem and Jewellery Export Promotion Council (GJEPC), about 100 jewellery-manufacturing units are coming up in Mumbai alone. A gems & jewellery complex in Visakhapatnamand an exclusive gems and jewellery park in Kolkata have been set up recently.
Taking advantage of the opportunity, Indian jewellery manufacturers are also trying new ways to expand their presence abroad including direct retailing. Recently, Shrenuj & Co acquired a Hong Kong-based jewellery retail chain and announced plans to set up few more stores in Hong Kong. SB&T, on the other hand, is taking the Internet route - it plans to sell through an online portal - for which it entered into a tie-up with Gerald Ratner of UK, an online jewellery retailer. This venture, the company claims, would give the company access to the European market. Rajesh Exports, on the other hand, has announced that a delegation from Europe has inspected its factory and negotiations are at a final stage for a big order. Mr Marzin, however, cautions that "there is a herd mentality and every body is excited. But this may lead to a glut in the market three to four years down the line." He is also sceptical about retail forays. He said, "India's core competence lies in manufacturing and distribution. But retailing is a different ball game altogether." He points out that facing a different customer, understanding his tastes and catering to a new market not only requires market research and resources but also a lot of investment.
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