2.

RESEARCH METHODOLGY

2.1.1 STATEMENT OF THE PROBLEM

WHAT IS A RESEARCH PROBLEM ?

Generally speaking a research problem is a situation that needs a solution and for which there are possible solutions. If a situation has no possible solutions then it makes little or no sense expending resources researching it. A research problem may be described as a discrepancy between what is and what ought to be. It may be also described as the gap in knowledge that needs to be filled.

WHAT IS A PROBLEM STATEMENT ?

A problem statement is the description of an issue currently existing which needs to be addressed. It provides the context for the research study and generates the questions which the research aims to answer. The statement of the problem is the focal point of any research. A good problem statement is just one sentence
* A problem statement is a clear description of the issue(s), it includes a vision, issue statement, and method used to solve the problem.. * Vision - what does the world look like if we solve the problem? * Issue Statement - one or two sentences that describe the problem using specific issues. It is not a "lack of a solution" statement. For example, our problem is that we don't have an ERP system. * Method - the process that will get followed to solve the problem.

HOW TO GET STARTED The 5 'W's - Who, What, Where, When and Why - is a great tool that helps get pertinent information out for discussion. Who - Who does the problem affect? Specific groups, organizations, customers, etc. What - What are the boundaries of the problem, e.g. organizational, work flow, geographic, customer, segments, etc. - What is the issue? - What is the impact of the issue? - What impact is the issue causing? - What will happen when it is solved ? - What would happen if we didnt solve the problem?

When - When does the issue occur? - When does it need to be fixed? Where - Where is the issue occurring? Only in certain locations, processes, products, etc. Why - Why is it important that we fix the problem? - What impact does it have on the business or customer? - What impact does it have on all stakeholders, e.g. employees, suppliers, customers, shareholders, etc. Each of the answers will help to zero in on the specific issue(s) and frame
the Issue Statement. Your problem statement should be solveable. That is, it should take a reasonable amount of time to formulate, try and deploy a potential solution.

PROBLEM STATEMENT We want our COMPANY products to go to production(manufacturing) seamlessly and organized sales , without defects, where everyone is aware and informed of the outcomes and status. (Vision) Today we have more and more players with latest designs and technologies . If we ignore this problem; resources will need to increase to handle the cascading problems, and we may miss critical customer satisfaction which could result in loss of revenue, that will further damage to our quality reputation. And brand image in the market(Issue Statement) We will use the descriptive research methodology to help us improve our business processes. (Method) CONCLUSION A problem well stated is half solved. And the better the clarity around what the company is attempting to fix, the more efficient they'll be in solving the problem, the solution will better 'resolve' the issues, and the company can get back to executing the business operations The research expertise with the help of management in defining problem statements and keeping company on track to deliver results.

2.1.2

SCOPE OF THE STUDY

An attempt

is

made

to understand

the

functioning of

all the

departments and the work culture of the organization with special reference to kashvi jewels ,a growing company in the jewelry sector The report is mainly on the organization practices adopted in KASHVI and to understand the current practices and make the suggestions for its improvement To identify the customer's views regarding quality , designs and trends availability The study is intended at obtaining suggestions from customers about the product

2.1.2

OBJECTIVES OF THE STUDY The purpose of the study is to get an integrated understanding of the organization

Functionality(departments)- To study the working of all the functional departments in the company like accounting , sales , purcshases Detailed analysis of KASHVI JEWELS To know the details of Kashvi jewels pvt ltd - organizational structure, existing strategies, work culture which would help in assessing the strengths and weaknesses of the organization. Increasing Operational Efficiency To identify the limitations and areas of improvements to provide the suitable suggestions and means of improvements for the efficient and successful future operations of the organization. To gain a Deeper insight of the jewelry sector regarding latest trends and developments. Global developments , trends , benchmarks and practices come into sight when we are performing a study for the company and the sector as well which is a important part of growing Indian economy

2.1.3

MANAGERIAL USEFULLNESS OF STUDY

(a) This study can assist the management in decision making process. (b) This study gives information about the competitors in the industry to the management. This study can help management to innovate new ideas regarding products and services That are adopted by other palyers which can further fulfill the need of the existing as well as the potential customers and enhance business growth (d) This study provides the comparative analysis of major players in jewelry sector to the management. This study gives information about the competitors in the Industry, their present approach, Strategies for business management

(e) This study gives a SWOT analysis of the organization to the management that help management position itself in the market as a growing player

(f) Through questionnaire and data analysis we get to know about the different opinions of employees working in KJPL i.e what they think about the brand.

(g) The reference to various literature , websites and other sources of information Has been instrumental in providing the management about the current issues,

New developments and the practical global practices that can be studied and Explored and analyzed to make management more effective and customer Supportive and friendly.

2.1.4

DESCRIPTIVE RESEARCH - DESIGN The report is based on the information & data gathered from the industry on the subject matter. For this, various meetings, interactions & interviews were held with the concerned persons. For gathering information a proforma was devised and necessary information was obtained through personal visits & interaction. This was a time bound assignment; the emphasis was made on personal Visits & interactions.

FACTS AND FINDINGS The work schedule consists of a whole business day The industry does pay attention towards the advertising of its products in media The industry does have sufficient amount of promotional policies, clear cut long term marketing strategies and product positioning. There is a need to concentrate on the various marketing management techniques like branding, trade marking, costing and pricing techniques and various marketing methods. Interaction of the industry with other jewelry sector associations for the information exchange etc. Entrepreneurship and motivation training programs for the workers/employees.

CONCLUSIONS As the company does have sufficient amount of promotional policies, clear cut long term marketing strategies and product positioning has to be the focus , this may result as a bigger advantage for the company since the BRAND MANAGEMENT has to be taken into consideration to establish in the market and even the company has been growing for the previous two years since its incorporation supports the

fact. Hence it is better to find out more newer innovative for a larger market share in the sector.

2.1.5 DATA COLLECTION METHODS Quantitative and Qualitative Data collection methods The Quantitative data collection methods, rely on random sampling and structured data collection instruments that fit diverse experiences into predetermined response categories. They produce results that are easy to summarize, compare, and generalize. Typical quantitative data collection strategies include:

Experiments/ trials. Observing and recording well-defined events (e.g., counting the number of customers waiting in queue at specified time of the day). Obtaining relevant data from management information systems. Administering surveys with closed-ended questions (e.g., face-to face and telephone interviews, questionnaires etc).

Interviews

In a structured interview,the researcher asks a standard set of questions and nothing more. Face -to -face interviews have a distinct advantage of enabling the researcher to establish rapport with potential partiocipants and therefor gain their cooperation.These interviews yield highest response rates in survey research.They also allow the researcher to clarify ambiguous answers and when appropriate, seek follow-up information. Disadvantages include impractical when large samples are involved time consuming and expensive. Telephone interviews are less time consuming and less expensive and the researcher has ready access to anyone on the planet who hasa telephone.Disadvantages are that the response rate is not as high as the face-to- face interview but cosiderably higher than the mailed questionnaire.The sample may be biased to the extent that people without phones are part of the population about whom the researcher wants to draw inferences. Computer Assisted Personal Interviewing (CAPI): is a form of personal interviewing, but instead of completing a questionnaire, the interviewer brings along a laptop or hand-held computer to enter the information directly into the database. This method saves time involved in processing the data, as well as saving the interviewer from carrying around hundreds of questionnaires. However, this type of data collection method can be expensive to set up and requires that interviewers have computer and typing skills.

Questionnaires

Questionnaires can be sent to a large number of people and saves the researcher time and money.People are more truthful while responding to the questionnaires regarding controversial issues in particular due to the fact that their responses are anonymous. But they also have drawbacks.Majority of the people who receive questionnaires don't return them and those who do might not be representative of the originally selected sample.

Qualitative data collection methods play an important role in impact evaluation by providing information useful to understand the processes behind observed results and assess changes in peoples perceptions of their well-being.Further more qualitative methods can be used to improve the quality of survey-based quantitative evaluations by helping generate evaluation hypothesis; strengthening the design of survey questionnaires and expanding or clarifying quantitative evaluation findings. These methods are characterized by the following attributes:

they tend to be open-ended and have less structured protocols (i.e., researchers may change the data collection strategy by adding, refining, or dropping techniques or informants) they rely more heavily on interactive interviews; respondents may be interviewed several times to follow up on a particular issue, clarify concepts or check the reliability of data they use triangulation to increase the credibility of their findings (i.e., researchers rely on multiple data collection methods to check the authenticity of their results) generally their findings are not generalizable to any specific population, rather each case study produces a single piece of evidence that can be used to seek general patterns among different studies of the same issue

Regardless of the kinds of data involved,data collection in a qualitative study takes a great deal of time.The researcher needs to record any potentially useful data thououghly,accurately, and systematically,using field notes,sketches,audiotapes,photographs and other suitable means.The data collection methods must observe the ethical principles of research. The qualitative methods most commonly used in evaluation can be classified in three broad categories:

indepth interview observation methods document review

2.1.6 LIMITATIONS OF THE STUDY Limitations are the constraints that are faced by the researcher during the research. In this context few limitations that are faced by the researcher are as follows.
Time applied is considered inadequate to conduct such survey

Time constraints as I had only six weeks to complete my study. The study was limited to Kashvi jewels private ltd that makes project area limited to the particular domain of KJPL does not reflect the entire industry know-how

The study is restricted to limited set of Customers of KJPL due to time constraints. Hence it may not reflect the satisfaction of the entire customer-base Some of the respondents were non co-operative Findings of the study would be influenced only by personal experience of-Respondents (including staff-HR , management and customers) Introduction of new trends and changes in technology of the product over a period of time will affect the preference of customers. Hence, it can't.generalized for a long period The data, information have been collected from the limited number of respondents that does not specify the whole industry

CURRENT (KEY) ISSUES OF THE SECTOR Unorganised Sector The gems and jewellery sector in India is unorganised and fragmented. Around 90% of the players operate in the unorganised sector mostly in family-run operations. The nature of the sector prevents it from achieving economies of scale. Also, being largely unorganised, the sector mainly uses labour-intensive and indigenous technology that affects their growth prospects. Further, the sector finds it difficult to enhance their global competitiveness due to difficulties in adopting technologies as a result of inadequate financial capital and high labour costs per unit. Threat from China Currently, China is the second-largest diamond processing centre in the world after India; however, it is slowly catching up and is threatening to displace the Indian gems and jewellery sector from its dominant position in the world. The labour cost in China is the lowest, just like in India; however, the gap between the two countries is narrowing slowly. Besides, the Chinese economy is growing rapidly and is creating a demand for gems and jewellery in the domestic market. Further, many diamond manufacturers from Belgium and Israel are setting up manufacturing plants in China. India also faces threat from China in terms of technology adoption, which allows China to process diamonds at a more competitive price. Predominance of the US market The Indian gems and jewellery sector is pre-dominently dependent on the US markets, which is its top export destination. The growth of gems and jewellery sector is heavily dependent on the

growth of demand in the US market. However, the recent appreciation of the rupee vis--vis the US dollar and a slowdown of the US economy have aggravated the concerns for the sector. All these factors necessitate Indias venture into other geographical locations. During FY07, the exports to the US market registered a growth of 14% over exports of FY06; however, owing to the slowdown in the US economy, the exports grew only 1.15% in FY08 over the previous year. In the current situation the heavy dependence on the US market has affected the exporters as they are facing a drop in orders and delayed payments. Exchange Rate/Currency Risk The gems and jewellery sector is affected by the rupee/dollar exchange rate because it is exportoriented. Any volatility in the exchange rates affects the margins of the players. For instance, the recent appreciation in the rupee against the dollar had made the exports of gems and jewellery less competitive in its key export destinations.

High Level of Inventories As the gems and jewellery sector is highly dependent on imports for its raw materials, the players have to maintain a high level of inventory. However, maintaining this inventory becomes difficult for the players during the slack season, as it carries inventory price risk. For instance, due to the current recessionary trends, the demand slumped and inventory piled up much to the chagrin of the players. Decreasing Diamond Reserves The supply of rough diamonds is expected to fall in the near future as the diamond reserves are decreasing. There has been no major diamond reserve discovery since 2003, when reserves were last discovered in the Diavik Diamond Mine in Canada. The reduced supply will push up the prices of rough diamonds, which will further put pressure on margins. Future supply levels are largely dependent on the industrys ability to identify new diamond deposits. Competition from Other Luxury Goods With the increase in disposable income and the change in standard of living, the demand for luxury goods such as perfumes, consumer electronics, leather, automobile, gadgets etc are also increasing. The gems and jewellery sector is experiencing competition from these luxury goods, which is eating into the market share of the sector. Beneficiation in Mining Countries India is facing a threat from the emerging cutting and polishing centres in the diamondproducing countries such as South Africa, Ghana, Angola, Botswana, Namibia etc. The local government is increasingly pressurising the African countries for processing locally-mined materials such as diamonds within the country itself to increase earnings through value addition to the vast natural resources that these countries possess. South Africa has launched a draft Beneficiation Strategy for the minerals industry of South Africa in March 2009. The newlyformed African Diamond Producers Association (ADPA) is advocating establishing a joint policy that would support beneficiation across Africa. This could lead to fewer rough goods being made available on the open market and in creating a threat to the existing diamond processing centres such as India, as new processing centres comes up.

Global Economic Slowdown The global economic slowdown has hit the Indian gems and jewellery sector hard. As the sector was primarily dependent on exports to the US and European countries, the meltdown in these countries affected the gems and jewellery sector to a great extent. The players faced issues relating to inventory build-up and liquidity pressure. A number of diamond units in Gujarat were shut down that rendered thousands of workers jobless. Further, the bank finance, which was largely in dollar terms, also faced a setback due to foreign exchange rate fluctuations. This further added to the woes of the players who were struggling to come out of the global recession. Even though the sector is in the recovery mode, owing to a gradual recovery of global markets, the credit cycle of the sector has changed drastically. The delayed payments from customers have raised the interest outflows for the companies.

Synthetic Diamonds The sector also faces a challenge in the form of integration of synthetic or man-made diamonds. With the advent of technology, it is difficult to differentiate between natural and synthetic diamonds. It may so happen that the synthetic diamonds are passed on as real diamonds and in the long run, this could affect the credibility of the sector. Further, as synthetic diamonds are much cheaper and identical to the man-made diamonds, these diamonds may find a clientele that is a substitute to the natural diamond and may end up eating into the market share of the diamond industry. Issue of Conflict Diamonds India is the largest importer of rough diamonds and a leading player in cutting and polishing of the same, therefore, it runs the risk of dealing with conflict diamonds. Conflict diamonds are those that are mined illegally in African countries such as Angola, Liberia, Sierra Leone and the Democratic Republic of Congo to fund illegal military wars. In spite of the KP certification, there are issues related to fake KP certificate. These fake certificates put diamond importing countries at a risk of dealing in conflict diamonds.

India GDP Composition Sector Wise The Gross Domestic Product or GDP is the indicator of the performance of an economy. According to the estimates of 2011, India's GDP is $1.209 trillion and this is slated to make improvement in the coming times. It is estimated that India's GDP will grow by 6.5% in the year 2012. In 2011 the country's GDP was 9%; the slowdown that has been witnessed this year in the estimates is largely due to the slowdown witnessed by the agriculture and the industrial sectors. A look at the India GDP composition sector wise throws up some interesting figures. The agriculture sector contributed 17.2%; industry contributed 29.1% while the service sector had a contribution of 52.7% according to 2011 estimates. Sectors contributing to India's GDP India is a vast country, so the sectors contributing to the country's GDP is also big in numbers. Various sectors falling under the India GDP composition includes food processing, transportation equipment, petroleum, textiles, software, agriculture, mining, machinery, chemicals, steel, cement and many others. India's GDP Statistics GDP: $1.209 trillion (2011 Estimate) GDP Growth: 6.7% (2011) Agriculture: 17.2% Industry: 29.1% Services: 53.7% Inflation: 7.8% (2011 Estimate) Labor force: 523.5 million (2011 Estimate) GDP CONTRIBUTION of Gems and Jewellery Sector India has emerged as one of the key players in the gems and jeweler y sector on account of its traditional strength in craftsmanship and its reasonable share in global business. Gems and jewelery (G&J) is one of Indias niche sectors which accounted for 12 per cent of the countrys me r c h a n d i s e e x p o r t s i n 2 0 1 1 - 1 2 . This sector consists of three segments, viz., diamonds; gold jewelery; and colored gemstones and other items. The major markets for G&J exports are the United States, Hong Kong, UAE, Belgium, Israel, Japan, Thailand and the United Kingdom. The United States is the largest market accounting for about 30 per cent of exports from this sector.In 2011-12, there was deceleration in the rate of growth of exports from the G&J sector. This d e c e l e r a t i o n wa s d u e t o t h e r e d u c t i o n i n t h e t r a d i n g a c t i v i t i e s i n d i a mo n d s f r o m b o n d e d warehouses. Besides, the United States terminated the duty-free treatment under the General Scheme of Preferences (GSP) for precious metals (other than silver) and articles of jewellery and parts from India from July 1, 2007, on the ground that this article was exported in quantities exceeding the applicable competitive need limitation in 2006.

As a result, the basic import duty o f 5 . 5 p e r c e n t i s n o w a p p l i c a b l e in the United States on the Indian precious metals a n d jewellery. However, there has been a revival of exports of gems and jewellery in the first half of the current fiscal with a rate of growth in excess of 20 per cent. The revival was partly on account of the extensive policy support provided to the sector under the Foreign Trade Policy (2010-11). Thesteps including introduction of fiscal measures like abolition of import duty on cut and polished diamonds, reduction of import duty on un-worked corals and rough synthetic stones from 30 to10 per cent and various trade facilitations

Opportunities for the Sector Entering New Markets The US has been the major market for Indian gems and jewellery sector over the years. However, with the current global slowdown, the dependence on the US market has affected the Indian gems and jewellery sector tremendously. The sector is exploring new locations to diversify business and to minimise the risk. Russia, Middle East and China are few of the emerging destinations that are witnessing an increase in jewellery demand. The Indian gems and jewellery players can tap these countries to diversify and increase their business. Cutting and Polishing of Large-Sized Diamonds India is one of the leading diamond processing centres of the world. Indias vast, low cost and extremely skilled workforce provides it with a competitive edge over other countries. However, it is predominantly involved in cutting and polishing of small-sized diamonds, which weigh less than one carat. India's cut and polished diamond exports have a high global share in terms of number of pieces; however, in terms of value the share is much lower. By moving up the value

chain and processing larger stones India can further increase its value share in total exports. Large diamonds are less commonly found in nature, therefore, the price of a diamond rises exponentially with its size. Indian exporters who have dominance in processing of small stones have already started moving into cutting of large and medium size stones. For moving up the value chain, the industry should try forward and backward integration. Hence strategic alliances with producers of roughs and retailers of jewellery could lead to higher market share. Given Indias low cost and skill labours, there exists an opportunity for processing large stones, which will provide the players with higher margins as well as rise in realisations on capex. Value Addition There exists a huge opportunity for Indian players to do value addition to the processed diamonds and to export diamondstudded jewellery. India is already a leader in processing smallsized diamonds and it also has inherent capabilities of manufacturing hand-crafted jewellery. Further, with its dominance in processing small diamonds, India has an advantage of manufacturing affordable diamond jewellery for the world market. Jewellery Retail The Indian retail sector is growing rapidly. This provides an excellent opportunity for the Indian players to manufacture and sell their jewellery through the retail channels that are fast catching up in the Indian markets. Further, this move will also provide an organised structure to the largely unorganised gems and jewellery sector and lead to further growth of the sector.

Outsourcing Hub India can become an outsourcing hub for designing and manufacturing jewellery. There is an increased trend of outsourcing designing and manufacturing of jewellery from India by global retail players such as Wal-mart and JC Penny. The players in the sector can tap this opportunity to diversify business, reduce risk and increase revenues. Outlook The outlook for the gem and jewellery sector is positive. On account of the global recovery, the Indian gems and jewellery sector is also on a recovery mode. In December 2009, the exports from the sector grew by 45.35% as compared with the same period in 2008. According to GJEPC, the players received good orders for Christmas in 2009, which indicates a gradual recovery for the sector. The positive trend is expected to continue, as major economies are showing signs of recovery, which is resulting in fresh orders for the sector. Further, the gems and jewellery sector is also expected to grow in the domestic market, going forward. As the per capita consumption of jewellery is low in India, there exists an attractive opportunity to tap the domestic market.

RESEARCH METHODOLOGY Meaning of Research: Research is common refers to a search for knowledge once can also define research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of science investigation Marketing Research: Marketing Research is the systematic gathering, recording objective search and analyzing of valid and reliable information relating to the marketing of goods and services. Several factors have contributed to the growth of marketing research: (a) To know the potential area for manufacturer where the goods could be marketed (b) To understand buyer behavior Research Design Research Design specifies the methods and procedures for conducting a particular research. Research design can be grouped into three categories: Exploratory research: Discovery of ideas and relationship among variables Descriptive study: Research wants to know certain group characteristics Casual or experimental research: To know cause and effect relationship between two or more variables Method of data collection: A questionnaire used as data collection pool the researcher interviews the research. Research in the questionnaire filled information Primary Data The primary data has been collected by conducting direct interview using structured questionnaire Secondary Data The secondary data are collected from books, journals, company records, internet Analysis Analysis is done on the basis of sample percentage and statistical analysis

Sampling Design The area covered under the study is Krishnagiri District. All elements under consideration in any field of enquiry constitute the population and this study constitute customers of TVS in Krishnagiri District. The population for this study is infinite Sampling Techniques There are two sample techniques. They are probability sampling, non probability sampling. In this study, the research had adopted convenient sampling Sampling Size Sampling size taken from the study is 150 Respondents

REVIEW OF LITERATURE The main purpose of the chapter is to provide a review of literature relating to this study "Of the dozen of categories of human action working, sleeping, mating, hitting, breathing, buying and so forth the one of primary importance to the marketer is buying" 1. "Buyer behavior is all the psychological, social and physical behavior of potential customers as they become aware of , evaluate, purchase, consume, and tell other people about products and services" 2. "At any given time a person may be faced with a number if motives, but that he probably cannot act on all of them at the same time. Therefore, each person has a hierarchy of motives, with the motives arranged in ascending order according to their importance" 1. Wohdgst. E. H., "Do Husbands or Wife's make the purchase decisions" Journal of Marketing, October, 1958pp. 151-158 2. Webster, Fredrick. F, Marketing for manager, 1947p The most urgent motive is outer upon first. Motives representing wants and desire, lower in hierarchy, remain unsatisfied atleast temporarily"

3. "Money, Vanity, Acquisitiveness, Rivalry, Comfort, Adornment cleanliness, Companionship, Collecting, Amusement, Sensual gratification, Construction. Aggrandizement, Mental culture, Affection, Social achievements, Ambitions, Inhavitiveness, Reverance, Romance, Aesthetic tastes, Sex, Limitations, Curiosity, Patriotism and so on" 4. "The behaviour that consumers display in search for, purchasing, using and evaluating products, services and ideas which they expect will satisfy their needs"

5. "Many students have concentration on finding on common factors that more or less determines the buying pattern of consumers" 6. Maslow. A. H., Motivation and Personality, 1954pp. 80-85 7. Carter. W. G., Sales counter crafi.p111 8. Sciffman. Leon. G & Lesline Lazar Khuk, Consumer behaviour pre.Hall, p.4,1978 9. Williams, Trrel.G, Consumer behaviour funds and strategies west pub. Comp.14,82. Various models have been built but basically consumer behaviour can be explained by two approaches, one approach proposer by behaviour that view behavior as a response to a given stimulus. Their basic concern to know how organism responds in a particular way. At the other end of spectrum is the, "cognitive approach" which assumers the buyer to be highly intelligent rational and utility oriented. This explains the "why" and "how" of the purchasing process, the theories of buyer behaviour have been classified into two broad categories: 1.Rational of substantive 2.Emotional or non substantive A buyer is emotional created i.e., the buyer buys on impulse he does not have enough information about the product and does not make any efforts towards economic evaluation of the products usefulness. Some of the basic foundations of impulsive buying behaviour". 10. Philip Kotler, Marketing Management: Analysis planning and control, prentice hall, pp.25-81, 1976. 11. Oxen feldt, Alfred.R, Executives action in marketing Wordsworth pub p.75,1966. " A non rational buyer does not plan his buying it is equally logical to assume that this buying the product and specially a specific brand is random or probabilistic. This means that the buyer is not looking for a particular brand but pickup the brand that is either appealing or available. This is probabilistic switching behaviour"

GLOBAL PRACTICES IN THE SECTOR The global gems and jewellery industry is on way to huge transformation. India has many natural advantages to emerge as Gems & Jewellery hub of the world. India has the largest and the best artisan force for designing and crafting the jewellery in the world. There is considerable scope of value addition in terms of capacity building at the domestic front, quality management and professionalisation. For the average Indian consumer of gold, diamonds and other gemstones - clichs abound gold almost always glitters and diamonds are forever. India leads global consumption of gold at an estimated 850 tons annually, and has emerged as the 6th largest consumer of diamonds in the world The global gems and jewellery industry is on way to huge transformation. India has many natural advantages to emerge as Gems & Jewellery hub of the world. India has the largest and the best artisan force for designing and crafting the jewellery in the world. There is considerable scope of value addition in terms of capacity building at the domestic front, quality management and professionalisation. For the average Indian consumer of gold, diamonds and other gemstones - clichs abound gold almost always glitters and diamonds are forever. India leads global consumption of gold at an estimated 850 tons annually, and has emerged as the 6th largest consumer of diamonds in the world India occupies top position in importing, processing and exporting diamonds. With its cut and polished diamonds, colored gemstones, gold jewellery, pearls, non-gold jewellery and fashion jewellery, India holds nearly 50% of the international market. Gems and jewellery sector contributes nearly 18% in India's aggregate exports. It accounts for nearly 55% of the world's net exports of cut and polished diamonds in value terms, 90% in terms of pieces and 80% in terms of carats. India now processes 85% of the world's polished diamonds, far ahead of other competitors. Every 11 of 12 diamonds sold around the globe are processed in India regardless of where these are mined. India has shifted its trade focus from domestic economy to global markets through liberalized trade policies & lower tariffs. These measures have dramatically improved India's export market over the past 15 years, particularly for diamonds and jewellery. The following are the issues and areas in which FICCI can play a proactive role to support this Industry and seek the assistance from the concerned ministry. A. Diamond industry

At present dollar loans are not available and rupee loans are too expensive. To make matters worse, different banks charge different rates of interest. We should take up this matter with the RBI/finance ministry for regulatory measures. Evaluating other options for financing to diamontaires. Value addition: The margins in the diamond industry are very low and the entire emphasis is on large volumes. We need to devise ways and means of taking the industry up on a value chain. Direct supply of rough from countries such as Angola, Canada and other diamond mining countries. Measures to improve working conditions in manufacturing set ups. Move from unorganized to organized set ups.

B. Jewellery industry

Going up the value chain. Promoting brand India all over the world. Promoting Indian retail brands. Joint retail initiatives and cooperative retail. BIS/Certification of jewellery to be mandatory in the interest of the consumer. Set up export targets to 50% yoy and work towards achievement of this target.

C. Gold/Bullion

Availability of gold loan products to be made available to domestic manufacturers. All exporters should be allowed to import gold freely. Easy availability of gold for retailers against stocks.

Other practices

Survey of the gold retailing sector with regards to matters such as Gold consumption patterns, trade practices, trade profiles, regional differences. GOLBAL parameters of Hallmarking, Gold and purity of gold, essaying centers. Improvement in the ways gold is marketed in India. Branding and Branded jewellery introduction in the world Use of technology in manufacturing and production. HR practices to transforms traditional management. Promote jewellery as a category Enhance image of the industry over the whole world Manage a portfolio of markets Professionalize and transform family owned businesses Enhance talent supply Reduce financing cost Identify new products and consumer segments

1.4.1 Competition information of the Gems and Jewellery Sector

Industry standards, certification, and hallmarking: By and large, the Gems and Jewellery industry in India has been indifferent to the adoption and establishment of formal or informal industry standards. However, as the industry has grown and more and more businesses have started transacting on a global basis, a need has arisen for establishing standards. However, in India, one of the largest markets for precious jewellery, quality standards are conspicuous by their absence. Hallmarking is restricted to a minor portion of sales, with the bulk of the consumers unaware of the exact caratage of the jewellery they buy. It is expected that the industry will see an increasing level of adoption of hallmarking in gold and certification in gemstones and this is critical to its competitiveness.

Processing of larger size diamonds: The Indian Gems and Jewellery industry has been built on polishing lower size and quality stones. Looking forward, since India already enjoys domination in the world CPD market in general, and for smaller-sized diamonds in particular, the scope for significant increase in market share and growth in the traditional small-size diamond exports is limited. Industry leaders are now seeking further growth through processing of larger size stones, and manufacture of diamond jewellery. Indian industry can now increasingly process the full range of sizes and qualities of stones utilising not only a cheap and abundant workforce, but also advanced technologies. Future growth is likely to be largely driven by the cutting and polishing of medium and large stones (currently dominated by Belgium and Israel), with consequently higher unit realisations. The Indian Gems and Jewellery GJ industry is already reporting increased growth in the larger-size segment. Export data from the GJEPC also reports a gradual shift in Indian exports to higher value segments, reflected in higher per carat realisations. Larger-sizes command higher per carat realisations and profits.

Availability of labour at competitive wages: Labour is a critical component in the value chain of the Gems and Jewellery sector. Labour in India, as compared to other countries, is cheap, and India thus stands at an advantage over its global competitors in this industry. Availability

of skilled manpower is a key strength that has enabled growth in Indias Gems and Jewellery sector. India has a large pool of skilled artisans with vast traditional knowledge and expertise in jewellery making. It also has the largest resource pool in diamond cutting and processing. India also has a good blend of technically trained designers who are well-versed in latest 2D and 3D design software. India also has one of the lowest costs in diamond cutting.

Government Support: The Indian Government has supported the Indian Gems and Jewellery sector with policies such as waiver of customs duties on the import of rough diamonds, permission for personal carriage of jewellery through Hyderabad and Jaipur Airport as well, in addition to Delhi, Mumbai, Kolkatta, Chenai and Bangalore, establishment of Gems and Jewellery SEZs, etc. This continued support is critical to the competitiveness of this industry.

Figure 15: Drivers of competitiveness of the Gems and Jewellery Sector

Sources of competitive advantage Industry standards, certification and hallmarking Processing of larger size diamonds Availability of labour at competitive wages Government Support C - Critical

Segments Diamond Processing C C C C C C Jewellery Fabrication C