NCAER Report: Counting Everyone Because Everyone Counts

The study commissioned by the GJEPC to The National Council of Applied Economic Research (NCAER) will go a long way in boosting industry’s growth. 

Numbers have a potent power to transform an opinion or assumed truth into fact. For, it’s only through the language of numbers that we can make sense of the size and scale of the world around us.

Vague estimates and back-of-the-envelope calculations may suffice for breakfast conversations, but for a government looking to allocate precious financial resources, its policies must be based on high-quality quantitative and qualitative data to be most effective. India’s miraculous rise to the pinnacle of the global gem and jewellery sector has come despite lacking such important core data for decades.

Colin Shah, Chairman, GJEPC, said “The report has empowered us take decisions and implement projects for the further development of the industry with more clarity and conviction. This would help address the challenges of various identified clusters by providing them the requisite resources and finally make them exportable clusters with the enough capability to generate employment and promote exports which are the major objectives of the Government and industry under the Centre’s Atmanirbhar Bharat programme.”

The need for credible statistics outlining the exact number of clusters, units, and workers employed in the sector, which could be used incisively for promotions and formulating policy, is what prompted the Gem and Jewellery Export Promotion Council (GJEPC) to commission the National Council of Applied Economic Research (NCAER) to conduct a detailed study on India’s gem and jewellery sector.

Below are some edited excerpts from the Executive Summary:

This study provides a comprehensive map of gem and jewellery clusters based on the number of units and workers. The NCAER team also undertook the exercise of workforce mapping and an analysis of the skills and technology gaps in the sector.

The  broad objectives of the NCAER study included a qualitative assessment of government policy measures affecting exports and growth of the sector; an assessment of the contribution of the gem and jewellery sector to the Indian economy in terms of income and employment, through direct and indirect channels; the identification of variables that affect the domestic and international demand for gems and jewellery; and an analysis of India’s manufacturing potential and supply constraints with respect to infrastructure, skill development and the production system along with recommendations to overcome these gaps.

NCAER defined the Cluster as “an agglomeration of a large concentration of workers employed in units performing similar activities, so as to capture the concentration of both units and workers employed.”

The NCAER survey data reveals that in 2019 there were a total of 9.89 lakh units and 42.89 lakh workers in the gem and jewellery sector in India. Since the geographical area of a district can be very vast, the threshold was restricted to at least 1000 gem and jewellery units or a minimum 2,000 workers to be considered as a cluster.

A total of 390 districts are identified as clusters based on the number of units working in the gem and jewellery sector. When classified based on the number of workers engaged, 341 district clusters were found.

Based on the number of workers, the major regional clusters are: Gujarat for diamonds, accounting for 100% of the workers; Rajasthan for gemstones, accounting for 100% of the workers; the East and West regions for hand-made jewellery, accounting for 26% and 20% of the workers, respectively; Rajasthan and the North region for machine-made jewellery, accounting for 40% and 35% of the workers respectively; and the South and North regions for the trade segment, accounting for 34% and 22% of workers, respectively.

A region-wise analysis indicated that the East is the most rural enterprises-based region, accounting for an employment of 42.6% in rural areas, whereas Gujarat, in contrast, has the lowest level of employment of just 3.58% in rural areas.

The average employment per enterprise differs widely among the regions and segments. As compared to an average employment of 4.3 workers per unit in this sector, the Gujarat region has the maximum average of 12.82 workers per unit, followed by Rajasthan, with an average of 6.10 workers per enterprise.

The study found that the gem and jewellery sector needs skilled manpower and superior technology in order to diversify its activities as per the increasing demand, as well as to stay export-competitive and increase its share in the gross value added of the economy. The sector also needs to upgrade its products technologically in order to increase its surplus share index, and consequently its world market share.

A regional analysis shows that according to the latest available data, Gujarat, West and South are the top performing regions in the gem and jewellery sector.

The report also points out that the share of the gems and jewellery sector in the value of output of manufacturing is 2.3% as compared to corresponding figures of 1% for leather and 1.8% for apparel. Textiles, as a whole, account for a share of 8.4%. However, the output multiplier for the gem and jewellery sector is 4.0308, which is much higher than the corresponding figures of 2.1689 and 2.4687 for the leather and textiles sectors, respectively.

The employment multiplier for the gem and jewellery sector is 3.9105, meaning that for one new job created in the sector, a total of almost four jobs are created in the economy.

Recommended Policy Measures:

Linkages to the Economy: The gem and jewellery sector has high backward linkages as compared to the other major sectors of the economy such as leather and textiles. This sector needs Government intervention and assistance in skill and technology upgradation for its further development and growth.

Clusters: A large section of the clusters fall under the medium to micro range of units, and the potential categories need special attention so that they do not fall by the wayside. These small units cannot undertake brand creation by themselves. For instance, the handmade jewellery manufactured in India is unique and should be promoted in a big way by the Government.

Skill and Technology: Given that the skill gap component of the technology gap is significantly high, skill development should also be a priority, and the industry should ensure the availability of infrastructure to provide vocational training to students/artisans over the next few years. The focus on skilling and technology (by segments and regions) and thereby, the establishment of mega clusters should be based on these findings.

Domestic and International Economic importance: The focus on specific segments should be based on their performance in the domestic and international markets.

Funding efforts must focus on the segments of cutting and polishing of diamonds, synthetic stones, and gold and silver jewellery as they had the highest trade competitive index values in 2017 and 2018.

Attention Areas:

Supply Chain Bottlenecks: Should be removed by reducing restrictions on the supplies of inputs like gold.

Impact of Major Policies: An analysis of the impact of demonetisation on the gem and jewellery sector, addressing the delay in obtaining refunds under the GST scheme, ensuring quality control including the nationwide implementation of hallmarking, and ensuring easy financing options for enterprises in the sector.

Awareness and Brand Creation: It is imperative to undertake an awareness drive in the sector, as lack of awareness about some very helpful schemes/policies hinders optimal performance. This would also aid in creating a special brand for Indian jewellery and promote it in a big way in the international markets.

Collaboration Between Stakeholders: The gem and jewellery sector would also benefit from collaboration between industry and knowledge partners, for consultations with regard to policy-making and highlighting of issues that are important for all stakeholders. Universities and other research institutions can help in promoting innovation and capacity building, and increasing awareness among the enterprises about the schemes and facilities available.

NIC Codes: Given the relative importance of the gem and jewellery sector it is time that it got its due and was assigned a broad 3-digit NIC code at the least, covering all the major product segments separately.

G&J Census: Finally, conducting a Gem and Jewellery Census will lead to a more exact and clear-cut identification of the clusters, segments, and beneficiaries, which, in turn, will facilitate the efficient implementation of policies, thereby helping make India a leading gem and jewellery manufacturing and trading hub in the world.

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