The segments of the Gems and Jewellery sector in India are broadly classified into Jewellery Fabrication and Diamond Processing.
Jewellery Fabrication: Jewellery fabrication primarily refers to the fabrication of gold jewellery and diamond jewellery. While a predominant portion of gold jewellery manufactured in India is for domestic consumption, a significant portion of rough, uncut diamonds processed in India in the form of either polished diamonds or finished diamond jewellery is exported.
Diamond Processing: The Indian diamond processing industry took roots in the 1960s. As compared with the traditional diamond cutting & polishing centres of Belgium, India, with its low labour cost, opened up new possibilities for the world diamond industry by making diamonds affordable for new, less affluent buyers. As a result, India captured an increased proportion of this market, and at present, India is the world's leading diamond cutting and polishing centre. India produces around 95% of the world's cut and polished diamond pieces. By carat weight, India is estimated to process 80% of world rough production by volume and 58% by value. While Belgium and Israel dominate the cutting and polishing of larger-sized and larger-value diamonds (over 0.5 carats), India dominates the lower-sized, lower-value market (less than 0.5 carats).
Diamond processing and jewellery fabrication make up over 90% of the total Gems and Jewellery exports:
Current employment pattern.
The bulk of the Gems and Jewellery industry in India is concentrated in the unorganised sector and employs an estimated 3.2 to 3.4 million people directly6. It is also estimated that 94% of t he global workers involved in the diamond industry are in India. Due to the economic recession during 2008-09, more than 100,000 skilled and u unskilled workmen have been laid-off due to poor demand. However, it is expected that this will be only a blip in the long term outlook
Functional distribution of human resource
Our interactions with representatives from the Gems and Jewellery industry reveal that a significant proportion of the workforce is involved in manufacturing operations (jewellery fabrication and cutting/polishing activities), followed by functions such as QC and other support functions such as HR, administration, finance, etc.
In the CPD segment, most personnel are engaged in the cutting and polishing manufacturing operation, while in the jewellery fabrication segment, most personnel are engaged in the setting (wax setting / metal setting), grinding and assembly and finishing / polishing operations.
The following table represents the education-wise break-up of people across various segments of the Gems and Jewellery sector in India. As seen, most of the persons employed in the gems and jewellery sector in India are minimally educated and most have studied till 10th standard or below.
Considering jewellery manufacturing, some of the important clusters are: Delhi, Rajkot, Ahmedabad, Mumbai, Kolkata, Thissur, Chennai, Madurai, Coimbatore and Hyderabad. Around 58% of the employment is direct. In jewellery retail it is estimated that there are approximately 3 to 4 lakh retail outlets in India. These are primarily run by family-owned businesses and organised retail accounts for only a small proportion. It is estimated that most retail shops have less than 5 employees. Jewellery retail has a strong presence in the metros.
Value chain of the Jewellery Fabrication segment:
In this section, we will reiterate and further detail the value chain in the Jewellery Fabrication segment to set the context for the section on skill requirements and gaps in this segment. Jewellery fabrication segment much more organized than the CPD segment in India. The value chain within the Jewellery Fabrication segment can be represented as follows:
The process of setting of stones can be done either in wax or in metal. In units where wax setting is done, the setting operation is done immediately after the waxing process. It is followed by the casting process and then by the grinding & assembly process. In units where metal setting is done, the waxing process is followed by the casting process, then by the grinding and assembly process and then by the metal setting process. The constituents of the value chain are as explained below
Design:In this phase, designs are made either as per an order placed by a customer or based on trends seen in the market. Designs are made on paper or using CAD, which is the trend nowadays.Designs are then validated with the customer, samples are made, re-validated with the customer and the design is finalised. Designs may also be made without an order and thus no validation with the customer is required. When designing jewellery it is very important to be aware of and keep in mind aspects such as the taste / requirements of the wearer / the person placing the order, how the pieces of the jewellery being designed will work / fit together both in appearance and also physically, the size and type of stones and what sort of design will best compliment them, what metals to use so as to bring out the stone colour more prominently, etc.
Manufacturing: The manufacturing process comprises of a set of 6 activities. Model making refers to making an exact replica of the final product this will then serve as the master for further process i.e. mould making. A mould is made using the master moulds have the shape of the piece of jewellery to be manufactured cut into a rubber block. A mould is made for each element of the jewellery piece. Moulds may be made manually, or by using processes such as rapid prototyping/CAM. In the waxing stage, wax is injected into the mould by holding the mould on a waxing machine wax replicas of the final product are thus made. A wax tree, which is an assembly of wax replicas on a wax sprue is then formed. The wax tree is the input to the casting process, in which, using investment powder, flasks and furnaces gold products take the same shape as the wax replicas on the wax tree. Thus, a corresponding gold tree is formed at the end of the casting process. Individual gold products are then separated, and grinding is done to make individual finished gold pieces (e.g. one of the pieces of a bracelet). These pieces are then assembled by soldering (e.g. to make the complete bracelet). Diamonds or coloured stones are then set in the gold (in cases where wax setting is used, the diamonds / coloured stones are set earlier in the wax itself and then followed by the casting process). Jewellery embedded with stones is then given a final finishing/polishing to obtain the final product.
Export / Retail:Gold jewellery / stone studded jewellery is exported / retained for domestic use. India currently exports a small proportion of gold jewellery, and most of the jewellery produced is consumed in the domestic market. Also, the domestic market primarily consists of plain gold jewellery which accounts for about 80% of the domestic jewellery market. Jewellery manufacturers who only obtain manufactured jewellery from jewellery manufacturers are also present in India. At the same time, jewellery manufacturers also have their individual retail outlets.
The following figure illustrates the profile of people employed in the jewellery fabrication segment.
The profile is similar to that of persons employed in the CPD segment, but in the case of jewellery fabrication segment more graduates and educated persons are seen. Setting, especially metal setting, is considered the activity requiring the significant skill. The time taken to start working independently for the operation of setting is anywhere between 8 to 10 months12. The activities of model making, design and retail can be considered at the next level in the skill pyramid and the time taken to start working independently is typically 6 to 8 months. The activities of grinding and assembly/finishing and polishing can be considered at the next in order of decreasing complexity, and the time taken to start working independently for these is typically 2 to 3 months. Waxing does not require very high end skills and is much lower in terms of complexity. Casting is mainly carried out by machines with manual intervention limited to loading, unloading, etc.
Some of the emerging trends in human resource and skill requirements in the gems and jewellery industry in India are as below13:
Emerging trends in human resource requirements:
Emerging trends in human resource requirements: In the Gems and Jewellery industry in India, technology is not expected to completely take over manual work and no major shift from manual to automated is expected; at the same time, the increased use of technology is expected to reduce the need for certain types of personnel engaged in this industry. The following examples exemplify the same:
- A typical example is the case of model makers - with the advent of CAM model making or model making by rapid prototyping, the need for model makers is expected to drastically reduce in the future companies are already finding model makers to be redundant
- Similarly, the advent of planning machines and software has reduced the need for manual planners.
- It is also expected that the use of auto faceting / polishing machines for CPD's (mainly from Israel) will pick up in the industry (approx. 10-15% of the manufacturing units are expected to possess these machines in the next 10 to 12 years14). At the same time, the industry expects that only about 75-80% of the faceting / polishing will be done on these machines in the next 10 to 12 years since the technology is not yet proven and these machines will be very expensive - the final faceting / polishing will then need to be done manually and faceters / polishers will still be needed. Also, the price of these machines, which will need to be imported from countries like Israel, is expected to be prohibitive especially in the next 5 to 6 years, thus making it unaffordable for smaller sized CPD units to procure these.
- Machines are now available for the grinding / assembly process in jewellery manufacturing since these machines are able to assemble standard / non-complex products such as bracelets, these may replace personnel employed for such products. At the same time, such machines are not expected to replace manual work for complex products such as necklaces
- The use of machines for blocking in CPD manufacturing is expected to reduce the need for manual intervention by more than 80% - human intervention will be required mainly in cases of rough diamonds which have a hole / inclusions within.
- The use of machines for bruiting has already reduced the need for human intervention one person is able to do the job for which earlier almost 20 persons were required.
- Machines for stone setting in jewellery fabrication may be used for standard shapes of stones (eg. round) or machines may be configured for volume-intensive shapes.
- At the same time, though such machines may be used, the nature of the industry is such that designs change frequently thus, though the usage of these machines may increase till 2022, they will not replace manual labour.
- Polishing machines for jewellery fabrication currently are not sophisticated enough for example, they are currently unable to polish the corners in a jewellery design and may be able to accomplish only 20-30% of the final polishing beyond which manual intervention is required. It is expected that the extent of polishing that will be accomplished by these machines will increase with technological advances, but the proportion of such machines used in India will be low.
Participation of women in the workforce: The Gems and Jewellery industry in India currently employs a small percentage of women. At an industry level, the male to female proportion is about 4 to 116. Also, the participation of women in the workforce is mainly on the jewellery fabrication side (functions such as jewellery design, wax setting, polishing, bagging, QC, etc) and it is very low in the CPD segment. This proportion is expected to change going ahead as the jewellery fabrication segment grows further and the CPD segment declines.
Need for additional personnel in the jewellery fabrication segment: A jewellery park is coming up at Icchapur (near Surat) and this park is expected to provide employment to about 3 to 4 lakh persons and start operations in the next 2 to 3 years. Though it is expected that some persons from West Bengal may be hired to work in this jewellery park given their traditional skills background, it is expected that it may be difficult to get trained workforce to work in this jewellery park.
More educated people in the industry: As seen in Table 4, the proportion of people working in this industry and who have studied till below 10th standard is high - it is around 70-75% for the CPD segment and around 40-45% for the jewellery manufacturing segment. Given the overall rise in literacy levels in India, this situation is changing. Given the rising overall literacy rates in India, persons educated only till 10th standard and below are expected to account for only about 10 - 15 % of the workforce by 202217. Employees with additional educational qualifications are also found more open to new ideas and the ability to explore options other than the standard way of doing things. The change is also driven by founders of units appreciating the need for education and its impact on their business - it is observed that the 3rd / 4th generations of founders are much more educated than the founders themselves
Hiring by references / poaching: Small and medium size factories, i.e. factories that employless than 1000 persons and account for over 95% of the number of manufacturing units19 are expected to continue to hire people by references or by poaching from other units - persons trained through institutes like IDI, IIGJ, GII etc, will typically work with large sized players
Move towards the processing of larger sized diamonds requiring lesser people: As covered earlier, India has traditionally been procuring and processing small size diamonds, though this trend is now changing and large size factories have started procuring larger size diamonds. Also, currently the salaries for workmen in this industry are not fixed - the salary earned depends on the type of work done by the workmen (eg. ghaat / taliya / table / aath pail / mathala) the size of the diamond worked on, etc. Also, most of the people employed in the CPD segment are employed on a "per-piece" basis. For example, persons working on ghaat and taliya may earn up to three times that earned by persons working on table, aath pail and mathala, for the same size of diamond. At the same time, the time required to work on ghaat or taliya is about double that required to work on table, aath pail and mathala. With the move towards larger sized diamonds, it is expected that factories, especially the bigger factories, may need lesser people, since larger sized diamonds need lesser number of people to work20.
Recent attrition of human resource: India is the largest manufacturer of cut and polished diamonds in the World. It is estimated that 11 out of 12 finished diamonds are from India. The recession in the second half of 2008 has severely affected the gems and jewellery industry in India not only in terms reduced sales but also in terms of employment. For example, in the Surat cluster for CPD's, due to reduced demand, lack of work, and loss of faith in the industry picking up momentum, approximately 1 lakh people who have moved to alternate jobs in search of livelihood have not returned. With the market picking up again since the last few months, the industry is finding it difficult to get these people back on board, thus creating a shortage of skilled workers for the cluster. Though this is currently a concern, the situation is expected to be back to normal within a year.
Other trends: Some other trends include:
- It is seen that freelancers are working in the design function and employers do not employ all their designers on-rolls.
- A small proportion of diamond assorters are also being employed on contractual basis.
- Currently a very small proportion (about 5%) of workmen in the CPD segment are registered - this trend is expected to change, though very marginally, with an increased level of organization in this segment.
- It is perceived that there may be a requirement for some new personnel like health and safety officers in the manufacturing units - currently only large units employ such personnel. It needs to be noted that the above mentioned posts are not large in number.
- The level of corporatization in this industry is expected to increase, especially in the jewellery fabrication segment
In the current scenario, skills in the Gems and Jewellery industry in India are limited to the particular function being performed by the workmen - for example, cutters generally remain cutters throughout their career in this industry. Multi-skilling is a trend that is now being seen - more and more large sized companies expect their workmen to be able to work on all aspects of the trade. Larger sized manufacturing units have already started moving away from this traditional setup, and personnel working in these units work across all the processes in the overall manufacturing process.
Need to address issues in current training:
There are certain issues associated with the training institutes that are currently in place. Some are as highlighted below:
- Training institutes currently offer courses which are typically expensive (for example, the cost of a diamond diploma course which is for around 3.5 months is about Rs. 55,000, while the cost of short term courses for 2 weeks to 1 month range from Rs. 25,000 to Rs. 35,000. Hence, personnel working at the workmen level who come from the lower strata of society, are unable to afford these courses, and personnel getting certified from these institutes mainly work at the middle management level.
- The yearly out-turn of trained personnel from these institutes is low. For example, only about 25 to 30 persons ready for the CPD segment pass out of a particular institute each year.
- Companies that nominate their personnel for these courses are generally large sized companies; the training needs for personnel working in small sized companies thus go unaddressed.
- Criteria for admission for international training institutes include a 10 + 2 qualification plus the knowledge of the English language, since the course curriculum is taught in English. Most personnel working at the workmen level are minimally educated and do not understand English - thus, they will not qualify for these courses and will be unable to attend such programs.
In all, even though there are training institutes, there exists scope to broaden the scale and scope of training - in terms of skill sets and number of persons trained. Additional institutes care expected to come up, but the extent to which the above parameters will be addressed remains to be seen. This will be critical in bridging skill gaps going ahead.
Move to coloured gemstones / plain gold jewellery / non-precious jewellery:
The Gems and Jewellery industry in India has achieved saturation in terms of the work done in the cut and polished diamonds segment - margins are reducing and there is increased competition from countries such as China. The availability of rough diamonds is also expected to be a concern going ahead21 (due to limited availability in mines). It is thus expected that coloured gemstones / plain gold jewellery will pick up further, leading to a corresponding need for persons to work in these areas and thus the corresponding skills. The industry also expects a trend towards the non-precious - for example, silver jewellery, cubic zirconia stones (American diamond), gold plated jewellery, etc. Persons with the requisite skills will be required for working on such products.
Need for training for jewellery fabrication segment:
Given the saturation in the CPD segment and the emphasis on the jewellery fabrication segment, the industry view is that trained personnel in the jewellery fabrication segment will be required and emphasis on training personnel for this field is critical. The current capacity of training institutes to supply trained personnel for the jewellery fabrication segment is limited.
Among the training and skill building focus areas required, the thrust has to be on the jewellery fabrication/setting space
Our estimation of human resource requirement for the Gems and Jewellery industry is driven by the following factors as shown in the figure below. Figure 26: Dimensions influencing growth and human resource requirements of Gems and Jewellery industry Keeping in mind the above dimensions and need for skills therein, it is expected that the Gems and Jewellery industry would has the potential to employ about 8 million persons by 2022. This would mean an incremental human resource requirement of about 4.6 million persons between 2008 and 2022.
In these segments, Jewellery would largely cater to the Indian market with an increasing export component. Based on the profile of human resource employed, the following table presents the incremental demand for persons across various educational levels in the Gems and Jewellery industry.
The human resource requirement across various functions is presented below.
8. States and regions driving human resource requirement in the manufacturing space (fabrication and processing)
The Western Region, comprising of Gujarat and Maharashtra would account for about 60% of the human resource requirement in the manufacturing space and thereby drive the need for skill building. Rajasthan would account for about 10% of the human resource requirement. The Southern Region would be the next major region as indicated in the figure below.
Some of the skill sets which are of specific interest to the Gems and Jewellery industry comprise of jewellery fabrication skills (also referred to as 'setting', and related activities). In the CPD segment, grading and cutting skills will be in demand in the long term. Accordingly, the following table presents the human resource requirements in these skill sets.