Friday, August 14, 2009

Indian Diamond Industry: "Brighter" Times Ahead

To recount the history of Indian diamond industry would be clichéd and to reel out the list of sobriquets that it has earned for itself and for the country may seem redundant. Nevertheless, to understand the industry, its past and present, is a condition precedent if one is to comprehend, prognosticate and chart the way to the future. As is the case with most other aspects of this nation’s history, the lines distinguishing fact from fiction are blurred in the case of diamond industry as well. To add to this, the enormous amount of literature available on this topic may resemble a researcher’s paradise or nightmare depending upon his or her ability to process data and to put forth meaningful, relevant and usable information. Hence, lapses in mentioning important facts or inaccuracies in presentation are to be presumed inadvertent and may be attributed to paucity of time (if such a thing as time exists). Since this article is meant to give a low down, a brief one at that, on the present state of affairs, both through the patent and non-patent route, one has invested efforts in identifying key players, Indian and non-Indian. A thorough competitive analysis would have been possible had there been a useful Indian patent database. The USPTO and the Big patents Indian database have been relied upon.
Most historians agree that the recorded history of diamond traces its roots to India 30 centuries back, when diamonds were valued for their ability to refract light. Ancient Indian scriptures too mention the use of diamonds. According to De Beers, until 1725, India was the only source of diamonds in the world. Most of us must have heard of the famed Koh-I-Noor and Hope diamonds. (Interestingly, as a kid I remember having read that Koh-I-Noor is the Sun jewel of the legendary hero of Mahabharata, Karna which passed into several hands over aeons to finally become the Koh-I-Noor. It is believed that this jewel before becoming the Koh-I-Noor was possessed for a brief while by Nadir Shah, Allaudin Khilji and Maharaja Ranjit Singh before moving into British hands.) In the “Second voyage of Sinbad”, India has been referred to as the “Valley of Diamonds”. Cut to 2008, Indian rough diamonds account for a miniscule 0.1% of world production, with the industry focussing its energies on diamond processing instead. However, it should be pointed out that a certain section of the industry is optimistic that India still has a large number of diamond reserves and could once again become a significant producer with a few initiatives in prospecting. This belief is further emboldened by the fact that the country’s mining statutes were amended in 1994 to allow foreign investment. Of course this would lead us to the issue of “Conflict diamonds”, which I shall desist from delving into since it is not strictly within the scope of this article. For those interested in understanding the issue better, details are available here.
Coming back to processing, diamond cutting and polishing comprise processing with India being the world’s largest processing centre, with a million processors handling over 57% of the world’s rough diamonds by value. It is of course common knowledge that Mumbai and Surat are the major processing centres, which we shall see, is reflected in the patents as well. Diamonds constituted 64% of $17.1 billion worth exports by the Indian gems and jewellery industry in 2006-07. Cut and polished diamonds formed 10.5% of the total exports from India. One could go on with the number-crunching, but what is it that these figures communicate to the reader? Is everything hunky dory with this “radiant” industry”? If yes, is the industry doing something to sustain the momentum so that it reaches the very top of the market? Where do patents come into the picture?
From dominating the market for moderately big diamonds, India has moved into the market for big diamonds. The former was earlier Israel’s forte and the latter is Belgium’s playground with India making deep inroads in this segment.There’s one factor which could upset India’s apple cart and this factor we better not ignore-China. Low labour costs and skilled workmanship propel Indian exports; however China holds the key to becoming the market leader- both cheap and quality labour combined with expertise in technology. China uses automatic machines with India relying on archaic semi-automatic machines. Though China isn’t a force to reckon with in the diamond industry, it wont be long before it catches up. In fact, the Chinese have already mastered the art of making small diamonds. Further, Indian industry relies heavily on exports for its revenues, whereas the Chinese domestic market is absurdly enormous thanks to increased spending power of the Chinese. This explains why major players, including India, are setting up shop in China.
In the light of these developments, it is heartening to note that Indian industry is becoming more tech-savvy. The Indian Diamond Institute has been strategically set up at Surat to promote research and development and to assist the industry. It must be understood that in most places diamond cutting and polishing are professions which certain families have practiced for generations together and may fall under “traditional knowledge” as well. Like most forms of traditional knowledge, skilled artisans in this industry are in short supply which further strengthens the case for increased reliance on improved technology. (This does not, however, mean that steps to preserve and promote traditional skills must be neglected). According to an article in the Economic Times, the Indian diamond industry is making rapid strides in the area of technology. It says, the industry now boasts of:
“a software that maps inclusions and flaws in diamonds, equipment that generate cutting solutions with estimated yields, green lasers that doesn’t leave pronounced burn marks on the diamonds, hi-tech diamond calculator for gauging the light, lustre and fire of the stones and fully automatic polishing machines.”
It has been reported that the industry investment is to the tune of Rs.700-1000 crores in just a few years. Some of the big players, who shall feature in the patents as well, are Israel-based Sarin Technologies Limited and OGI Systems Limited, India-based Sahajanand Technologies, Bombay Mill Manufacturing, Lexus group, Dimexon Diamond Limited etc. Consequently, one felt that a patent search was warranted to understand if this enhanced emphasis on technology has translated into increased IP protection. As mentioned earlier, I relied on Big Patents for information and the figures are as follows:
Number of Indian patents Issued: 88
Number of Indian Patentees: 18
Number of non-Indian Patentees: 70
By Indian patentees, one refers to home-grown industries and entities of Indian-origin. Among Indian patentees, Arvindbhai Lavjibhai Patel features prominently with 5 patents to his credit, most of which are on laser diamond sawing machine. One is not sure if this Arvindbhai Lavjibhai Patel is the Arvindbhai Patel of Surat-based Sahajanand Technologies since the patent makes no mention of Sahajanand Technologies. M/s. Shairu Gems of Mumbai are next with 2 patents to their credit. The rest of the patents are distributed among National Mineral Development Corporation, Premkumar Kothari, Venus Jewels and 7 others.(Premkumar kothari, it appears, heads Fine Jewellery, which also has a couple of US patents to its credit.)
Among non-Indian patentees, Gersan Establishment from Liechtenstein leads the pack with 9 patents, followed by Element Six of USA with 8 patents. Homeomi Brains from Japan has 5 patents to its credit with 3 from De Beers, the South African behemoth whose star is on the wane. Carnegie Institution of Washington too has 4 patents followed by 3 of Diamond Innovations, 2 each of Gemological Institute of America, Intel Corporation and General Electric Company. These players are followed by 30 other players with a patent each, most of who are from the US, Belgium, Japan and Israel.
It must be understood that of these patents, a few concern the use of diamond in tool making industries and other such applications. So strictly speaking they may not contribute to our understanding of the technological advancements in the diamond processing industry, but may still be of use to know the demand for diamonds in non-conventional applications. Surprisingly, some of these patents sound like business method patents. I reiterate that this inference may not be accurate since it is the product of a cursory perusal and not a meticulous analysis. In addition to these patents, it was reported that the Gitanjali group of India has applied for 25 patents in diamond cutting.
Next, one decided to search for US patents in diamonds by Indian applicants and the search threw up the following results:
Number of US patents by Indian Applicants: 6
Of these five are held by Fine Jewellery owned by Prem kothari and one by Council for Scientific and Industrial Research (CSIR).
These figures indicate that Indian players are becoming increasingly conscious of the edge which comes with technology. One hopes that this “enlightened” approach pervades and percolates to drive the Indian industry to “dazzling” heights.
Posted by J. Sai Deepak at 6:35 PM 1 comments Links to this post

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