But perceptions and tastes are rapidly changing, particularly amongst the cash-rich Indian middle class which is now clamoring for better and sophisticated designs and quality in keeping with the fashion of the times.

Many old established jewelers in the country are paying greater attention to the changing trends, and are stocking brand jewelry products that are also increasingly influenced by Western styles and designs.  Indeed, a browse through the jewelry shops along New Delhi’s Connaught Place would reveal the emergence of a quaint blending of Western and ethnic Indian designs.

Vinayak C. Mahtani, managing director of the New Delhi-based C + V Mahtani Investments, runs a jewelry production unit in the Patparganj Industrial Area on the outskirts of the Indian capital, and has launched his own brand called “Tejoo”.

Vinayak C. Mahtani, managing director of a jewelry company in India.

“We have three business segments … we have the upper end, the middle segment with designer touch uniqueness such as Zarah and Amani, and the low-end products.  We discern a shift in the taste of middle-class Indians,” Mahtani says in an interview with this correspondent in his Patparganj production unit.

Jewelry, in his view, is not just an investment but also a status symbol for many Indians who, like anywhere else in the world, do not mind flaunting their jewelry collection at weddings and other occasions.

“Jewelry is a ‘must have’ commodity for the average Indian woman for whom it is one of her most desirable items to possess.  People start buying jewelry when they start making money.  Depending on their earning potential, I personally believe that many people like to buy jewelry at least once a year,” says Mahtani.

While Indian consumers continue to make jewelry purchases, they are also increasingly becoming quality conscious as their income levels rise.  Indian consumers with their Wanderlust for destinations in the West and exposure to sophisticated designs abroad, return home with similar demands addressed to the jewelry industry.

“Jewelry purchasing is more than part of the Indian culture.  There is also now the element of fashion which is increasingly playing a key role in their motivation for buying jewelry,” Mahtani contends.

The inevitable comparison between the two giants, India and China, also crops up in the course of the interview.  Chinese consumers have also been buying gold ornaments in recent years as their incomes in China continue to rise.

However, as Mahtani points out, there is a basic difference between Indian and Chinese consumers.  “For the Chinese, jewelry is more of a fashion statement than an investment, as is the case with Indians. China is also converting its foreign exchange reserves into gold bullion, raising prices of gold.  India, on the other hand, is the world’s largest consumer of gold as far as purchases by Indians are concerned.  In China, it is the government purchases that drive up gold prices,” Mahtani argues.

Indian designers are creative enough and can be relied upon to produce intricate new designs that evolve with the changing tastes.  Mahtani says that he gets his “inspiration” from designs he sees at trade fairs, and tries, subsequently, to create his own designs.

Mahtani entrusts his designs to Chinese jewelry subcontractors to create the finished products. But given the proliferating copying of foreign designs in China, was he not taking a risk entrusting his designs to Chinese manufacturers? “We are, of course, risking our designs being copied but this is not our problem.  It does not matter if these designs are copied because that would reflect that we are doing something right,” Mahtani says.

However, he also praises the Chinese “professionalism” and “workmanship”. “The reason why we create our designs in India and have the stone settings done in China is that the workmanship is better and faster in China than in India.  In China, the jewelry industry is professionally run while in India it is mostly family owned,” Mahtani explains.

The rush for gold ornaments becomes obvious when one sees that the middle-class seems to be in a hurry to buy jewelry.  “India’s market conditions are very conducive for strong business growth,” Mahtani avers.

According to research by various institutions and experts on India’s jewelry market, the broad consensus is that Indian consumers are becoming quality and fashion conscious. In the past, Indian consumers would buy gold “because it was just investment which come in handy for a rainy day”.  People were just obsessed with 22 or 24 karat gold, oblivious to fashion designs and quality.  Now, Mahtani points out, Indian consumers, particularly in the urban areas, are buying 14 karat gold jewelry breaking with the past tradition when 22 or 24 karat gold jewelry was the rage.

“Indeed, people are even buying silver-based jewelry with a strong fashion perspective,” Mahtani maintains.

Vikram Khanna, director of New Delhi based Khanna Jewellers is equally bullish about the Indian jewelry market.  “The Delhi market, for example, was not even 50% as big as it is today.  It has swelled to twice its former size in the last seven or eight years,” Khanna observes.

He also points out that business in Northern India had grown much faster than in Southern India which was already a mature market.  “Delhi is the biggest jewelry-selling state in Northern India.  Color stones were ‘in’ some years back.  But precious stones came back and then we went back again to color stones.  Gold jewelry is still popular but the upper and middle class is different in terms of buying lower karat products.  However, because of rising prices, gold is not so popular with the upper and middle class consumers who are buying diamonds,” Khanna says.

Khanna, who buys diamonds at shows in Hong Kong, Basel and elsewhere, and also sells imported jewelry supplied by foreign jewelers, said that he was impressed by the Hong Kong jewelry show which is dominated by Indians and Chinese jewelry companies. “Indians and Chinese are big buyers at the Hong Kong show.  This is the feedback I got when I last attended the Hong Kong show in May,” he recalls.

High-end jewelry sales surge
One of the fastest growing segment is the diamond jewelry.  India’s diamond jewelry industry, estimated at some US$4.41 billion, is getting a strong impetus from upper-end jewelry buyers. Demand for diamond jewelry, priced at US$11,000 and above, has grown at 50% which is more than the 20% growth for jewelry. For jewelers, the upper-end diamond jewelry also promises a much higher margin, besides being increasingly preferred by consumers.

Gitanjali Gems which sells diamond jewelry priced at US$11,000 or above, has seen a surge in its sales of this segment last year. Its high-end jewelry jumped 15%, up from 5% of its total sales in the past.  The disposal income of middle-class Indians has sharply risen.  Diamond jewelry is increasingly seen as an investment.

High-end jewelry sales are expected to grow by as much as 50%, according to some experts.  Marriages in India become an occasion for buying high-end diamond jewelry. “Giving away expensive diamond-studded jewelry to the bride has become a norm these days,” says a Mumbay-based jeweler whose clientele base consists of upper middle-class families.

But it is not just big cities such as Mumbai and Delhi that witness such lavish spending. The so-called “second tier” cities of Ahmedabad, Surat, Pune, Nagpur, Hyderabad, Gurgaon, Amritsar, etc. have seen a strong growth in demand.  Indeed, this is prompting many jewelry companies open design galleries at their stores.

According to India’s Gem and Jewellery Export Promotion Council (GJEPC), there has been a strong demand in India for diamonds.  But Sanjay Kothari, the GJEPC’s marketing convenor, believes the real growth comes from the medium-range jewelry in the price range from US$2,200 to 11,000. 

The demand is attributed to a strong economy, pay increases, a booming agricultural sector and rising gold prices.