Suddenly the Indian jewellery market is being re-discovered. A disastrous first outing, attempting to lure the Indian gold jewellery consumer to the studded variety, flopped miserably a couple of years ago. Now, the diamond industry heavyweights are back with renewed vigour. Probably taking inspiration from King Bruce and the spider.

As Nirupa Bhatt manager (India), Argyle Diamonds, says, "We expect that the gold craze will be replicated in studded jewellery as well." Argyle is making a determined attempt by lending more than just a hand to local jewellery manufacturers. For the first time, this Australian corporate has thought it fit to try and address the domestic markets. Going beyond their efforts in the US with their IADC (Indo-Argyle Diamond Council), they have joined hands with the likes of Inter Gold of B.Arunkumar & Co and Sparkles of Poddar & Co to market their `occasion range of jewellery'.

De Beers, controlling more than 70 per cent of the sale of roughs, has also embarked on a massive media blitz to convert India, from merely being the largest diamond cutting and polishing centre, to become one of the emerging markets for consumption of studded jewellery. As De Beers chairman, Nicky Oppenheimer said earlier in the year, "We look at India, rather than China, as the emerging centre for consumption of diamonds." Once more, the mythical and elusive Indian middle-class is being relentlessly pursued.

Thus, the Indian consumer finds himself/herself at the crossroads, just as the voter did prior to the elections. Consequently, the Indian jewellery industry (plain and studded) suddenly finds itself in the midst of intense activity. Till last month, with gold prices languishing near 20-year lows in the international markets in dollar terms at around $251-255 per ounce, the Indian buyer was being wooed like never before.

The price-elastic nature of the bullion demand surprisingly did not emerge at these low levels. Probably, the buyer psychology of deferring purchases in a falling market was at play. As such, the traditional jewellers resorted to new gimmicks like gold lottery schemes on a largescale. The studded jewellery segment, on the other hand, was all set to capture the imagination of the Indian buyer on the back of De Beers' advertising blitzkrieg unleashed on the unsuspecting buyer. But, can the fragmented Indian bullion markets bear the strain of this combined assault? Will all this mean increased consumption of gold from India? Will the studded jewellery segment merely replace plain gold jewellery? Or, will it add to the already large Indian appetite for gold?

Consider the following:
Despite a small drop during 1998, the Indian appetite for gold remains undiminished. A record 1997, when Indian gold imports were 708 tonnes, was followed by import of 660 tonnes in 1998 in spite of higher duty imposed. The OGL import scheme has made import of gold generally legitimate. But the traditional jeweller has now resorted to various gimmicks even as branding of jewellery is making its presence felt particularly in the cities. In early 1999, the Gold Club was revived and a gold festival on the lines of the Dubai gold festival was held in Mumbai. A gold lottery scheme followed with allurements of winning a jackpot of 18 kg of gold.

Following the success of this gold festival, gold jewellers from the medium segment and those who were are not part of the Gold Club have now unleashed another festival on the Mumbai buyer. This ongoing festival is to culminate on January 26, 2000. And, the jackpot is a whopping 35 kg of gold. Eligibility is purchase of jewellery worth at least Rs 2,500 at a time. Advertisements on the local TV channels are attracting buyers’ attention day-n-night. The longer duration is to cash in on the low price during the off season, in the run up to the marriage and festive season. Another such festival was unleashed in Chennai last week.

Simultaneously, studded jewellery exporters are back in the fray. A couple of years ago many exporters had ventured into the domestic markets, only to find that buyers were not exactly ready for the shift from plain jewellery to the studded variety. In fact, quite a few of them closed down shop on finding the domestic market too hard to penetrate. This had caused even the GJEPC chairman, Pravin Shankar Pandya, to exclaim, "India is a gold country. The scope for studded jewellery is very limited." In the last year alone, many big names either closed shop or scaled down their activity.

But with De Beers on an aggressive campaign trail, some of the exporters may be back in the fray.
De Beers' promotional plan for 1999 includes:
(a) Diamond Vivah (marriage) jewellery.
(b) Diamond Sampatti ring.
(c) Diamonds for the millennium.

Towards this end, De Beers held a design competition with the winning design to be commercially marketed from October onwards. De Beers is also to contribute to the advertising effort of individual jewellers. Perhaps, Oppenheimer gave the conglomerate the direction it lacked in India. Instead of satellite TV, now the Shadows campaign is visible on Doordarshan, that too in many languages.

However, Indian diamantaires are skeptical about the success of the campaign. They reiterate that studded jewellery has limited scope here. They further believe that even De Beers realises it and is just going through the motions. However, the conglomerate seems confident that it will be able to replicate its US, Japanese and Korean success stories in India as well.

Observers are also wary of the attempt to bulldoze sale of jewellery (both plain and studded) via the media blitz. They feel that with no proper facility for assaying and hallmarking is in place, the gullible buyer may be duped by some unscrupulous elements taking advantage of the awareness created by the advertising blitzkrieg.

But things are not as bleak as they appear to be on the quality front. Already Titans with their Tanishq jewellery have emphasised the need for quality jewellery (purity of gold). Their TV advertisement brings home the point. They have (probably a first for India) highlighted the use of the Karatmeter to test the purity of gold utilised in jewellery making. Although the gadget is not fool-proof, it could be a pointer for buyers.

Moreover, with hedging and gold deposit schemes being introduced by banks, the need for assaying and hallmarking is much felt. Steps are being taken towards setting up such centres.

In the meantime, the remainder of 1999 will see the Indian customer being wooed with new sops and schemes. It remains to be seen whether India remains a gold country or shifts to studded jewellery as well in a big way. That will be the determinant for the studded jewellery segment in the country. It will also provide a pointer to domestic demand for diamonds at large.

Rising gold prices have thrown a spanner in the wheels. Shops wear a deserted look. If the consumer does not return, then all the schemes and money pumped in may go down the drain. But, jewellers argue that a rise in gold prices could also be perceived positively: more value for money.

Thus, if India becomes an emerging market for consumption of diamonds, it will hasten the recovery process for the global diamond industry.

India is thus the litmus test for the diamond industry and for its recovery process.