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India as a Jewelry Manufacturing Hub

Posted on Friday, Jan 20th 2006

On my recent trip to India, I had an opportunity to explore a non high-tech outsourcing opportunity.

Some of you may recall my previous article: Digging for Diamonds. Well, I was invited by one of the top jewelry houses in India to explore this opportunity.

Here are some nuggets from my visit:

Just as we learned in the early days of software outsourcing that the design and architecture of a system was best done in the US, in jewelry too, design is best done in the US (or in Europe or Japan). Otherwise, there is too much disconnect between the local market’s taste and that of the Indian consumer. Indian jewelry tends to be heavy and complex, not appropriate to be worn with western clothes.

This will change with greater awareness, but at this point, bulk of the jewelry export from India goes to countries with similar taste, the Arab countries being a major conduit.

There are exceptions in the commodity segments of the market (hearts, crosses, solitaires, studs, etc.) where simple diamond price arbitrage may produce a business opportunity. However, this is a low-margin business, and one with intense competition. Blue Nile has managed to create a big brand in this segment, by becoming the Dell of diamond jewelry.

From the perspective of manufacturing capability and metalwork skills, however, India has a tremendous resource base. Ditto in enamel-based craftsmanship.

Hence, the real opportunity that I see, is to create high-end brands for the western markets, leveraging this enormous skill-base in India.

Margins could be tremendous, judging by the prices of jewelry by Gurhan, Roberto Coin, David Yurman, etc., especially with a branded retailer relationship such as Bergdorf or Neiman Marcus.

The key differentiator, however, would have to be Design.

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