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Discipline gives China the edge

world Updated: Sep 10, 2009 01:23 IST
Gaurav Choudhury

Vasant Mehta, the Mumbai-based chairman of the Gems and Jewellery Export Promotion Council talks to Gaurav Choudhury about the ‘rapidly growing’ competition from Chinese diamond factories.

What’s the size and scale of the Indian diamond industry?

The export of Indian diamonds for 2008-09 was around $14 billion. India supplies about 55 per cent of the world’s diamonds in value terms. We cut and polish 11 out of 12 diamonds set in jewellery worldwide. This makes India the number one cutting centre, with a workforce of eight lakh. The total number employed in gems and jewellery is around 34 lakh.

How does the Indian diamond industry compare with the Chinese industry?

The Chinese diamond industry is still in its initial stages compared to the Indian industry. They are estimated to have a workforce of 25,000. But they are growing at a rapid speed and could be competing with India in the near future. Direct diamond trade between India and China is not much due to the heavy import duty in China. Majority of thebusiness is via Hong Kong.

What’s your view on the rising number of Chinese diamond cutting factories?

The increasing diamond-cutting factories in China will make them our competitors, as over and above the low wages, the production there is higher due to a disciplined workforce. There’s also the advantage of industry-friendly labour laws, which attract foreign companies to open manufacturing units in China.

Chinese technology is superior but costlier. Will it grow into serious competition for India?

India has the latest diamond processing technology and it’s not very costly. The factors described above may result in some future competition.

Many Indian companies send diamonds for cutting and polishing to China and then sell them in India. Will the trend continue, and affect the Indian industry?

Yes, but the volumes are very low as there is only one type of product that China can cut more economically and efficiently at present. Any business that goes away from India is going to affect the industry and if there is a substantial growth in China, we will be facing tough competition. The industry and the government have to make our products competitive by reducing our cost of production and by reducing the bank interest and levelling it with rates in other countries.