Diamond Cutting Industries

Project Report
On
“Diamond Cutting Industries”
Submitted to
International Academy of Management,
Bangalore
Submitted By
Pawan.S.Sahni
Under the Guidance of
Sir. B.Srinivasan
International Academy of Management
Bangalore
Cop yright © IAME 2 00 8

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2008-2010
CERTIFICATE
This is to certify that the Project entitled “Diamond
Cutting Industries” submitted by “Mr. Pawan Sahni” is
in partial fulfillment of the requirements for the Award of
the PGPM-0810 from International Academy of
Management & Entrepreneurship and is a bonafide record
of the work done by him/her/them at International
Academy of Management, Bangalore during the academic
year 2008-2010.
Place: Bangalore Project Guide
Date:

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Sir.B.Srinivasan
DECLARATION
To,
International Academy of Management,
Bangalore.
Respected Sir,
We the undersigned, hereby declare that the

work entitled “Diamond Cutting Industries” developed
and submitted by me/us is my/our original work. The
system presented herein is developed by me/us
independently and has not been duplicated from any
other source.

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I/We understand that any such copying is
liable to be punished in any way the University deem fit.
Place: Bangalore
Date: Pawan.S.
Sahni
ACKNOWLEDGEMENT
We wish to express my/our sincere thanks to the honorable

Dean.Sir.B.Srinivasan, International Academy of Management,
Bangalore for providing me/us varieties of opportunities,
infrastructural facilities and inspiration to gather professional
knowledge and material without which it would have been
impossible to complete this hard task.
I/We take this opportunity to express our deep gratitude and

whole hearted thanks to my/our project guide Sir B.Srinivasan
for his/her guidance throughout this work. I/We am/are very
much thankful to him/her for his/her kindness, encouragement
and the valuable time, which he/she has devoted to me/us.

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I/We wish to thanks all those, who have helped me/us in
my/our way or the others in bringing out this project
successful.
Pawan.S.
Sahni
DIAMOND
CUTTING
INDUSTRIES

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By-
Pawan.S.Sahni
PGPM-
0810-15
INDEX
• OVERVIEW

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• DIAMOND HISTORY
• GOVERNMENT INITIATIVES
• EXPORTS
• ASSOCIATES
• BENEFITS
• 4C’S OF DIAMOND
• DOMESTIC MARKET
• CHOICE OF CUT
• DIAMOND ROUTES & CENTRES
• GROWING DIAMONDS
• SWOT ANALYSIS
• ENTREPRENUAL INNOVATION IN SURAT
• DIAMOND FSCTS
• CONCLUSION
• BIBLOGRAPHY

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OVERVIEW
• Diamond is a precious stone and is regarded as a symbol of
love. It is valued by its four major characteristics, which are
its essential constituents and are often dubbed as‘four Cs’
of the diamond. These are cut, clarity, carat and colors
• Indian jewelry was made scrupulously by hand and was

traditionally crafted by family jewelers skilled in a particular
style.
• Large exports directed to the establishment of factories,

prepared with the latest modern machinery. It is the newest
methods in the manufacturing process that were employed.
• India`s artisans along with their traditional skills dominated

contemporary techniques to provide the world with jewelry
that conformed to international standards. There is a new
generation of young designers dominating the world market,
apart from a host of established houses that design the
fashion jewelry.
• The Surat diamond industry is worth Rs 800,000 million and

constitutes more than half of the total diamond exports from
India. It employs more than 700,000 workers from across
the country. Over 2,500,000 people are associated with the
trade, indirectly.
• The industry earns 90 per cent of its revenue through

export of the finished products.

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• Today across India there are several jewelry design
institutes, encouraging fresh ideas and talent.
An in trodu ction t o the f lourishin g diamon d

indus try in S ura t
South Africa is precisely the country that majority people would

associate with the diamond industry. But business centers in the
other parts of the world are catching up fast and steady. Surat is
one of them---this little known Indian industrial hub is fast
emerging as a big player in the world diamond arena.
Indian diamond companies of course took the
advantage of the cheap labor; but it was not all. The other factor
that contributed to this enormous success is the traditional
expertise. Like the orthodox Jewish communities that helped earn
Antwerp its name in the world diamond circuit, it is the close knit
religious community called the Palanpuri Jains, who remain the
main author of Surat's success story in the trade of diamond
jewelries.
But how did it all begin? Let's take a glimpse on
its past, discuss the present business trends and analyze what
are on the cards for this emerging diamond hub?
Sur at diamo nd ind ust ry: T he pa st
You can find the mention of the city of Surat even in the Indian
epics and ancient scriptures. The British and Portuguese
influence turned the city of Surat into an important port city and a
vital business hub.
In the turn of 20th century, the city started its journey to become

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the nerve center of the diamond industry in the country.
According to the local lore the initial set up was based on the
expertise of the East African diamond cutters who were brought
to the Indian shores in the early years of the past century.
However, the real twist in the success story of Surat actually
came in the 1970's when the Indian diamond dealers started
importing low-quality gemstones, and exporting them to the U.S.
after turning them into dazzling pieces with their unmatched
cutting and polishing skills.
The past few years saw a steep decline in the diamond
processing industry in Mumbai---the traditional diamond hub in
India and this acted as the additional boon for the Surat diamond
industry. Surge in the economic and infrastructural degradation
over the past few years forced several Mumbai based small as
well as big diamond Houses to shift their bases in the neighboring
Surat.
And all these have eventually contributed to the making of
present Surat---the world's largest diamond processing centre.
Sur at diamo nd ind ust ry: T he pre se nt

Surat has left its mark of excellence in all the three
departments of the business--- manufacturing, importing and the
export of processed diamonds.
So how big is it actually? Let's try to find the answer from the
following statistics.
* The city contributes to more than 80% of the Indian annual
export amounting to Rs 70,000 crore.
Every 9 out of 10 diamonds you get to see in the plush stores in
the big cities all over the world is cut and polished in India and 75

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% of all these diamonds owe their sheen to the Surat Diamond
industry.
* Over 1.5 million people are engaged in the diamond jewelry
industry of Surat.
Sur at diamo nd ind ust ry: Wh at it hol ds for the futu re ?

Traditionally Surat diamond industry dealt only with lower-
quality diamonds. But with the growth and expansion in the
market, the character of the Surat diamond industry has changed
dramatically:
* Today, top quality, expensive stones are cut in Surat that can
give a run for their money to those cut in Antwerp, New York and
Tel Aviv.
* As opposed to the traditional, family run small cutting and
polishing units, today's workshops are larger and professionally
managed, keeping to international industrial standards.
* Most of the companies are smart enough to set up branches in
the cities like Antwerp and Tel Aviv, so that the local workers
can absorb the tricks of the trade.
* With exposure to a highly lucrative diamond market, both
abroad and back home, and with every support from the
Government, Surat---as believed by the trade analysts-is soon
to replace the Belgium's Hasidim as the global leader in diamond
industry.
* On a global scale, the Surat based companies are coming up
with thousands of diamond retail stores that are expected to
herald a worldwide cut in the diamond prices for years to come.

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Wh at y ou ca n get in Sur at ?
The Surat diamond industry is mainly based on imported rough

uncut diamonds, which earn their distinguished sheen and shine
in the hands of expert cutters.
These brilliant diamonds are used along with gold and
other precious and semi precious gemstones to craft out
exquisite jewelries that can be the reason of envy for any
gemstone collector. Be it an engagement ring or the bangle, a
necklace or earrings, the jewelry wardrobe of any fashionable
lady in the whole world is never complete without the Surat
diamond jewelries.
And as said earlier, because of the low production costs, you can
get them really cheaper than those you will get in the countries
like Israel or Belgium.
Dia mon d Hist or y

The Greek word "Adamas" meaning unconquerable and
indestructible is the root word of diamond. Diamonds have been
sought the world over, fought over, worshipped and used to cast
love spells.
For the last 3000 to 4000 years, diamonds have held special
magic for Kings, Queens and their subjects. Diamonds have stood
for wealth, power, love, spirit and magical powers. Kings in olden
days would wear into battle heavy leather breast plates studded
with diamonds and other precious stones. It was believed that
diamonds were fragments of stars and the teardrops of the Gods.
The diamonds possessed magical qualities of the Gods and held

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powers far beyond the understanding of the common man.
Because of these beliefs, the warriors stayed clear of the Kings
and others who were fortunate to have the magical diamonds in
their breast plates.
Until the 15thCentury only Kings wore diamonds as a symbol of

strength, courage and invincibility. Over the centuries, the
diamond acquired its unique status as the ultimate gift of love. It
was said that cupids' arrows were tipped with diamonds that have
a magic that nothing else can equal.
Since the creation of diamonds they have been associated with

romance and legend. The Greeks believed the fire in the diamond
reflected the constant flame of love.
For millions of people around the world, the mystery and magic,
the beauty and romance shining out from a simple solitaire says
all the heart feels but words can not express. It wasn't until 1477
when Archduke Maximilian of Austria gave a diamond ring to
Mary of Burgundy, that the diamond engagement ring was
introduced. Placing the ring on the third finger of the left hand
dates back to the early Egyptian belief that the Vena Amors, vein
of love, runs directly from the heart to the tip of the third finger.
The first river-bed (alluvial) diamonds were probably discovered

in India, in around 800 B.C. The volcanic source of these
diamonds was never discovered, but the alluvial deposits were
rich enough to supply most of the world's diamonds until the
eighteenth century, when dwindling Indian supplies probably
spurred the exploration that led to the discovery of diamonds in
Brazil, which became the next important diamond source.

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Beginning in l866, South Africa's massive diamond deposits were
discovered, and a world-wide diamond rush was on. The South
African diamond output was unraveled until major deposits were
found in Siberian permafrost in l954. And currently Western
Canada is the site of the world's newest diamond rush.
Throughout much of history, diamonds were mined from the sand

and gravel surrounding rivers. But in South Africa in 1870
diamond was found in the earth far from a river source, and the
practice of dry-digging for diamonds was born. More
sophisticated mining techniques allowed deeper subterranean
digging, as well as more efficient river (and, most recently,
marine) mining, than ever before.
Expo rts
Diamonds from Surat are exported to a lot of countries all over
the world. Exports are routed through exporters based in
Mumbai. It is mandatory that exporters of diamonds should be
registered with the Gem and Jewelry Export Promotion Council
located in Mumbai.
Diamonds and stones of different sizes and shapes are exported

to countries like the United States of America, Switzerland, Hong
Kong, Thailand, Japan and Belgium. United States of America,
Switzerland and Japan are the primary consumer markets for
diamonds.
• According to the figures released by the GJEPC, exports

recorded a 22.27 per cent growth touching US$ 20.88 billion

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in 2007-08 as against US$ 17.08 billion last fiscal. Diamonds
made a significant contribution to this.
• Diamonds accounted for 70.59 per cent of the total exports
• Gold jewellery accounted for 26.91 per cent
• Colored gem stones and others accounted for 1.32 per cent
and 1.16 per cent respectively.
• The 2008-09 fiscal also started on a positive note, with the

gems and jewellery exports rising by nearly 17 per cent to
US$ 9.05 billion during April-August 2008, compared to US$
7.74 billion in the corresponding period last year.
Significantly, rough diamond exports stood at US$ 386 million
while cut and polished diamond exports increased by 22 per
cent to US$ 6.5 billion.
Go ve rnm ent
Initi ativ es
• The Indian government also provided an impetus to the
booming gems and jewellery industry with favorable foreign
trade policies for this sector:
• In 2004-05 the government lowered import duty on platinum

from US$ 13.82 per 10 gm to US$ 5.03 and exempted rough
colored precious gems stones from customs duty at the first
stage itself, instead of claiming reimbursements later.

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• Rough, semi-precious stones are already exempt, a move
aimed at further promoting the exports of studded jewellery
and platinum jewellery.
• Duty-free import of consumables for metals other than gold

and platinum up to 2 per cent of freight on board value of
exports.
• Duty-free import entitlement for rejected jewellery up to 2

per cent of freight on board (f.o.b) value of exports.
• Import of gold of 18 carat and above under the replenishment

scheme.
• Setting up of SEZs and gems and jewellery parks to promote

investment in the sector.
• In May 2007, the government abolished import duty on

polished diamonds.
As so ciati on s
There are various institutions associated with the diamond
industry based in Surat which act as governing bodies in
deciding policies and other matters related to this industry. The
Surat Hira Bourse or SHB in Surat, which was instituted in the
year 1994 helps in the promotion of international trade. The
Indian Diamond Institute located in Surat provides quality

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training to artisans and workers in cutting and polishing
diamonds. The Diamond Industrial Park in Surat is one of a kind,
which houses around 1000 units in its premises out of which
around 340 firms are operational as of now. The Surat
Diamonds Cutters Association is an organization, which supports
and negotiates with the government for the benefit of the
diamond manufacturers.
Ben efits
The diamond industry in Surat is not categorized under the

small-scale industry in spite of this being a cottage industry
comprising mainly skilled artisans. The Government of Gujarat
though has been offering a lot of beneficial incentives to this
industry from its inception. Incentives offered by the Government
include promotion of trade by exemption
Dom est ic ma rk et
With the boom in the Indian economy, there is a sharp increase in
the demand for diamond-studded jewellery in the country. A lot
of manufacturers of diamond stones across Surat are now
planning on expanding into making of diamond studded gold
jewellery. Artisans who have been cutting and polishing diamonds

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are now being trained in jewellery making thereby widening their
employment prospects. With more and more diamond cutting and
polishing units being set up in China and other African countries,
Surat is no longer a monopoly in this field. This fact has
furthered the cause of workers shifting over to the more
lucrative field of jewellery making.
In spite of the threat –

The quality of diamonds finished in China and other African
countries has been improving tremendously of late. This has cast
a dark cloud over the diamond-manufacturing units in Surat.
Being tenacious, the diamond merchants of this state have yet
again bounced back training their artisans in diamond studded
jewellery making, captivating the local market. They sparkle
through the clouds even as they invent means to stabilize their
international presence. The diamond manufacturers and the
artisans have thus advanced further in their field sustaining their
profits even as they glitter in various stores in India
The 4C s of Di amo nds (plu s one)
Cost

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The most important "C" you have to think about is COST. You've
probably heard the "salary guideline" of spending about two
month’s salary on a diamond engagement ring. While it may be
helpful to know what the industry is suggesting, that is probably
not the best way to decide how much to spend on an engagement
ring.
If you earn $30,000 a month, you can probably save 4 months

salary easier than someone who is earning $1,000 a month can
save 1 month's salary. And it's important to know what your
fiancé thinks of the matter. Every person has their own
preference and communication in this matter is important.
How much does each "c" affect cost?
Let's take a typical Diamond and change the various properties to
see how it affects the price:
Carat
The size of a diamond has the biggest impact on its price. The
metric carat, which equals 0.20 gram, is the standard unit of
weight for diamonds and most other gems. If other factors are
equal, the more a stone weighs, the more valuable it will be.
Gemological laboratories measure carat weight when the diamond
is loose (unmounted).

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While it is possible to estimate the weight of a mounted
diamond, the lab uses ultrasensitive scales to achieve an exact
weight, measured 3 decimal places, although the third decimal
place is not usually mentioned at the retail level.
Here are several ways to express 1 carat:
* 1 ct.
* 200 milligrams
* 1/5 gram
* 100 points
* 4 grainer (not often used in retail environment)
Prices of diamonds are expressed in the trade as a price per

carat. When we say that the Carat Weight has the biggest impact
on the price of a diamond, not only is that true for the overall
price of the stone, it is also true for the unit price per carat.
That's why a 2 carat diamond is more than double the price of a 1
carat diamond.
Example:
Diamond "A" = 0.25 carats and costs $1,000 per carat.

$1,000 x 0.25ct = $250/stone.
Diamond "B" = 0.50 carats and costs $1,250 per carat.
$1,250 x 0.50ct = $625/stone.
It is important to understand that when you compare two

diamonds of the same shape, the one having a larger carat weight
does not always translate to the larger looking stone. Dimensions
play an important role in the diamond's appearance.

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Large tables may reduce the brilliance of a Round Brilliant Cut,
however they also do make a diamond appear larger than it is.
Some people are more concerned with the "loss of beauty" while
others are happy that their diamond seems "bigger".
Another aspect in how a diamond is cut can affect the size

appearance. If the Diamond's "girdle" is too wide, this can make a
stone with a higher carat weight look smaller with no benefit to
its appearance. That is because the diameter of the diamond is
widest at the girdle and "hiding" weight there does not
significantly alter the behavior of the light entering the diamond.
Keep in mind that finger size is an important consideration as

well. Small fingers will make a diamond appear larger.
It is very common for people to disregard the other C's in favor

of getting the biggest possible stone they have budgeted for.
Although SIZE DOES MATTER, we feel it is just as important for
the quality of the stone to be great.
Some people may feel it is more impressive to wear a 2 carat

diamond than a 1 carat diamond. But that's not necessarily true. A
Ferrari may not be as big a car as an Oldsmobile, but most would
consider it more impressive. What's most important if you are
buying a Diamond for someone else is that you know what their
preference is.

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Ho w "big" i s a c ara t?
Here's a simple trick to "understand" the meaning of a carat in
realistic terms. Simply take a ruler and look at the table below.
These are some approximate, sample carat-weight to diameter-
widths for popular sizes.
0.25ct. ~ 4.1 mm 0.50 ct. ~ 5.2 mm
0.75 ct. ~ 5.9 mm 1.00 ct. ~ 6.5 mm
How much does "carat weight" affect cost?

The effect of all the different properties of diamond on cost is
discussed in more detail in the cost section. For carat weight,
let's take a typical Diamond through different carat weights to
see by how much it increases in price.
A diamond of G color and SI1 clarity will be in one category of

prices when it is between 0.50 - 0.69 carats. When you take that
same quality Diamond and increase the size to the next price
category, which is the 0.70 - 0.89 carat range, the price increase
will be approximately $1,100 per carat (as of the date this was
written). Increase to the 0.90 - 0.99 carat range, and the price
increase will be approximately another $800 per carat. Increase
to 1.00 - 1.49 carat range and the increase will be approximately
another $800 per carat. If you increase to the 1.50 - 1.99 carat
range, the price increase will be approximately $1,200 per carat.

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Col or
The color of a diamond has the second biggest impact on its

price, after carat weight. Did you know that diamonds come in
every color of the rainbow?
When discussing the topic of color in diamonds, you need to

differentiate between mostly "colorless" diamonds and "fancy
color" diamonds.
Grading "colorless" diamonds involves deciding how closely a

stone's body color approaches colorlessness. Most diamonds
have at least a trace of yellow or brown body color. The reason
colorlessness is most highly valued is that diamonds in these
ranges act like prisms, separating white light passing through it
into a wide spectrum of colors. The more transparent the
diamond, the wider the spectrum of colors. Chemical "impurities"
in the diamond will filter out some of the colors which in turn
reduce the "fire" effect when light bounces back out of the
diamond and into your eyes. Other than "fancy colors". Colorless
diamonds tend to be more valuable. Rare colors such as blue,
pink, purple, or red tend to be very expensive...and very
beautiful.
If a diamond does not have enough color to be called fancy, then

it is graded in a scale of colors ranging from Colorless to Light

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Yellow, "D" through "Z". A diamond with a "D" color is considered
to be colorless. If the color is more intense than "Z", it is
considered fancy. A fancy yellow diamond fetches a higher price
than a light yellow diamond.
The Laboratories only grade diamonds which are unmounted, or

"loose", and they do so under special light. Once a loose diamond
is mounted on a ring, even the trained professional cannot always
tell the difference between, say a "D" color and an "E" or "F"
color diamond!
Color D E F G H I J K L M N O P Q R S T U V W X Y Z Fancy
Scale Colorless Near Colorless Faint Yellow Very Light Yellow
<------Light Yellow------> Color
While it would be nice if technology brought about the ability to

take the guesswork out of grading diamonds, we are not there
yet. In terms of color, Sarin, one of the technology leaders in
gemological equipment, has come out with a device called the
"colorimeter".
The concept of the colorimeter is to be able to reliably judge a
color impartially. Over the years, the device has improved
considerably, however it is not as reliable as the eye yet and
sometimes comes out with unexpected results. The one good
thing is that the results tend to be repeatable. The labs use them
from time to time, but do not rely on them at all. Maybe one day
color grading will be done by a machine, the same way
measurements are.
How much does "color" affect cost?
Let's take a typical diamond through different color grades and

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see how it can affect cost. Let's start with a 1.00 carat diamond
of K color and VS1 clarity. If you move up to an H color, you will
pay approximately an extra $1,700 per carat. Move up to F color,
the increase will be approximately $1,100 per carat. Improve the
color to D and the increase will be approximately $900 per carat.
Clar ity
The clarity of a diamond refers to how clear, or "clean" the

diamond is. The more "clean" the diamond, the higher the price.
Most diamonds have "imperfections" in them. The clarity scale is
a measure of the severity of those imperfections or "inclusions"
as it is known in the trade.
For example, a deep break in a diamond which is not that visible

when you look at the stone face-up, could sometimes have a
greater impact on the clarity of a stone, than a small black crystal
which you can see very clearly face-up.
Cut ting proce ss

It is possible only because the hardness of diamond varies widely
according to the direction in which one is trying to cut or grind.
A simplified round brilliant cut process includes the following

stages:
• Sawing the rough stone.

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• Table setting where one facet is created. The table facet is
then used to attach the stone into a dope.
• Bruiting the girdle.
• Blocking 4 main pavilion facets.
• Transferring to another dope. This is done to rotate the
stone.
• Blocking 4 main crown facets.
• Cutting and polishing all pavilion facets.
• Transferring to another dope.
• Cutting and polishing all crown facets.
This is just one, although fairly common way of creating a round

brilliant cut. The actual process also includes many more stages
depending on the size and quality of the rough. For example,
bigger stones are first scanned to get the 3-dimensional shape,
which is then used to find the optimal usage. The scanning may
be repeated after each stage and bruiting may be done in several
steps, each bringing the girdle closer to the final shape.
Ch oi ce of Cut
The choice of diamond cut is often decided by the original shape
of the rough stone, location of internal flaws or inclusions, the
preservation of carat weight, and popularity of certain shapes
amongst consumers. The cutter must consider each of these
variables before proceeding.
Most gem-quality diamond crystals are octahedral in their rough

state (see material properties of diamond). These crystals are
usually cut into round brilliants because it is possible to cut two

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such stones out of one octahedron with minimal loss of weight. If
the crystal is malformed or twinned, or if inclusions are present
at inopportune locations, the diamond is more likely to receive a
fancy cut (a cut other than a round brilliant). This is especially
true in the case of macles, which are flattened twin octahedron
crystals. Round brilliants have certain requisite proportions which
would result in high weight loss, whereas fancy cuts are typically
much more flexible in this regard. Sometimes the cutters
compromise and accept lesser proportions and symmetry in order
to avoid inclusions or to preserve carat weight, since the per-
carat price of diamond is much higher when the stone is over one
carat (200 mg).
While the round brilliant cut is considered standard for diamond,

with its shape and proportions nearly constant, the choice of
fancy cut is influenced heavily by fashion. For example, the step
cut baguette—which accentuates a diamond's luster, whiteness,
and clarity but downplays its fire—was all the rage during the Art
Deco period, whereas the mixed Princess cut—which accentuates
a diamond's fire and brilliance rather than its luster—is currently
gaining popularity. The princess cut is also popular
amongst diamond cutters: of all the cuts, it wastes the least of
the original crystal. Older diamonds cut before ca. 1900 were cut
in "primitive" versions of the modern round brilliant, such as the
rose cut and old mine cut (see History section). Although there is
a market for antique stones, many are recut into modern brilliants
to increase their marketability. There is also increasing demand
for diamonds to be cut in older styles for the purpose of repairing
or reproducing antique jewelry.

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The size of a diamond may also be a factor. Very small (< 0.02
carats (4 mg)) diamonds—known as stars—are usually given
simplified cuts (i.e., with fewer facets), but as cutting and
polishing technology has improved this is not necessarily always
the case. This is because a full-cut brilliant of such small size
would appear milky to the human eye, owing to its inability to
resolve the stone's dispersive fire. Conversely, very large
diamonds are usually given fancy cuts with many extra facets.
Conventional round brilliant or fancy cuts do not scale up
satisfactorily, so the extra facets are needed to ensure there are
no "dead spots". Because large diamonds are less likely to be set
in jewelry, their cuts are considered for how well they display
the diamonds' properties from a wide range of viewing directions;
in the case of more moderate-sized diamonds, the cuts are
considered primarily for their face-up appeal.
Fan cy cuts
Even with modern techniques, the cutting and polishing of a
diamond crystal always results in a dramatic loss of weight;
rarely is it less than 50%. The round brilliant cut is preferred
when the crystal is an octahedron, as often two stones may be
cut from one such crystal. Oddly shaped crystals such as macles
are more likely to be cut in a fancy cut—that is, a cut other than
the round brilliant—which the particular crystal shape lends itself
to. The prevalence and choice of a particular fancy cut is also
influenced by fashion; generally speaking, these cuts are not held
to the same strict standards as Tolko sky-derived round
brilliants. Most fancy cuts can be grouped into four categories:
modified brilliants, step cuts, mixed cuts, and rose cuts.

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India has a long history of diamond mining and several diamonds,
including the Kohinoor, were produced here. In fact, till 1725,
India was the only producer of diamonds in the world. The
Golconda mines were world-famous and even today; a Golconda
diamond fetches a very high price in the international market.
Dia mon d Rout es an d

Cente rs
Indian diamonds reached Venice by two Mediterranean routes:

the southern route was by way of Aden, Ethiopia, and Egypt, and
the northern route was through Arabia, Persia, Armenia, and
Turkey. Then, thanks to the Portuguese discovery of the direct
sea route to India, Antwerp flourished as a diamond center, as
the city was well-situated to receive vast supplies of rough from
Lisbon as well as from Venice.

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After Spanish attacks on Antwerp in1585, many diamond cutters
relocated to Amsterdam. And the Netherlands, with its liberal
civil policies, attracted diamond craftsmen (including many Jews)
who were fleeing religious persecution in Spain, Portugal,
Germany and Poland.
In the late1600's, as the English fortified their interest in India,

which was still the world's central diamond source, London
became an important cutting center. Later, London became the
primary world market of diamond rough.
Today, there are cutting centers all over the world, most notably
in Belgium, India, Israel, South Africa, and the USA.
Eighty percent of the diamonds mined annually are used in

industry; 4 times that production is grown synthetically for
industry - that's a total of over 500 million carats or 100 metric
tons. Diamond is a fundamental industrial material that affects our
daily lives. Because diamond is the hardest substance, it is used
to cut, grind, and polish most hard substances. It fashions stones,
ceramics, metals, and concrete, as well as eyeglasses, gems, and
computer chips. Its growing specialty-uses include blades, some
used in critical surgery; specialty windows; and heat spreaders.
And of course diamond phonograph needles reproduced music for
50 years.
A diamond cutting tool shapes the armature of a generator.
Diamond has three primary roles in industry: it is used as a

cutting tool, it is imbedded in another material and used as a tool
or abrasive, and it is turned to powder or paste for grinding and
polishing. Diamond is selected for such use where its hardness
and resistance to abrasion - its long working life and fast cutting
action - outweigh its costs. Moreover, diamond's resistance to

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wear enables it to cut reproducibly time after time, a requirement
of automated production. Diamond machining tools for turning,
milling, and boring are preferred where finely finished surfaces
of high precision are needed. Diamond is used for machining a
wide variety of plastics, glasses, and metals, shaping products
such as the drums for copying machines, polygon mirrors in laser
printers, and aluminum-alloy pistons in automobile engines.
However, diamond cannot be used for machining alloys of iron.
Under intense machining conditions the diamond abrades very
quickly against some materials, apparently because of a high-
temperature reaction between iron and carbon.
The device used by GE to synthesize diamond was termed a belt

device because tungsten carbide rams were driven into a cavity
contained by a doubly-tapered carbide cylinder, contained in turn
by a steel jacket - termed a belt. Between the rams is a cylinder
of graphite - a furnace - containing the material to be raised to
high temperature and pressure. Around the furnace assembly and
between the anvils and belt is a compressible material to contain
the pressure and accept the deformation; it has traditionally been
a natural clay called "pipestone clay" for its alternative use in
tobacco pipes. A hydraulic press, capable of perhaps 50 tons,
drives the rams into the belt cavity, amplifying the force at the
interior to high pressure. An electrical current is passed between
the rams and through the conductive graphite, which heats in
response; the clay acts as a thermal insulator as well as a
container for pressure.
Research Using Diamonds

Because of their transparency, thermal conductivity, or surface
properties, diamonds are used in many research instruments as
windows. An application of exceptional value in mineral and
material science is a small device that generates extremely great
pressures in the space between two diamonds - the diamond

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anvil cell. These devices are used in experiments on the nature
of planetary interiors and dense matter, from mimicking Earth's
core to producing solid hydrogen.
Alvin Van Valkenburg, pictured here in 1963, was a pioneer in

using the diamond anvil cell to study materials at high pressure at
the National Bureau of Standards, Washington DC.
The mechanics of creating high pressure are simple, involving

just an application of force onto a small area, but extreme
pressure will not be achieved without a material of supreme
hardness, incompressibility, and strength - such as diamond.
Most materials, steel for example, will deform or break before
reaching pressures that exist deep within Earth. Tungsten
carbide is better, but diamond is best. By polishing the ends off
two fine round brilliant diamonds to a width of a millimeter or so,
and carefully and accurately squeezing them together, pressures
comparable to the center of Earth - 4,500,000 atmospheres - can
be achieved. At these pressures hydrogen transforms into a
metal - a state that might exist deep within Jupiter. Research on
planetary interiors and dense matter has been advanced greatly
by the use of diamond anvil cells, using lasers, optics, and x-rays
to probe these small samples to reveal their mysteries.
Diamond Handling Heat, Friction and Light

Hardness is not the only superlative property of diamond that
makes it important in industry and technology--its extraordinary
thermal conductivity, low-friction surface, and optical
transparency put diamond into cutting-edge applications. Many
new products, like compact electronic devices, windows for
optical devices in demanding environments, and "no-wear"
bearings, such as in the space shuttle, utilize diamond. For these
applications, a synthetic form leads the way. This is CVD, so-
named for the growth technique chemical vapor deposition.

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Various products are composed of or coated with CVD diamond.
They include heat spreaders, cutting tools, windows, and
bearings used in the space shuttle.
At present the major commercial application for CVD diamond is

in thermal management, where diamond heat-spreaders conduct
byproduct heat away from a device. The material can be grown
with a thermal conductivity close to that of the best natural and
high-pressure synthetic diamonds used until now as heat
spreaders. Thousands of suitable heat spreaders can be cut from
a single wafer of CVD diamond, making for efficient use. A CVD
diamond coating on an object can be polished to yield an
extremely smooth diamond surface, ideal for high precision and
low friction, such as is needed for precision bearings. CVD
diamond wafers with high optical transparency are excellent for
viewing a wide portion of the electromagnetic spectrum in
environments with extreme temperature, corrosiveness, or
radiation.
Gr owin g Di am ond s
Diamond was discovered to be carbon in 1796, and it took more
than 150 years from that time until a method of diamond
synthesis was invented. The secret was pursued by many
scientists but not unlocked until the s1950s, when diamond was
synthesized almost simultaneously by Swedish and American

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researchers. Pressures of over 55,000 atmospheres and 1400C,
plus molten iron to facilitate the change from graphite to
diamond, were necessary. Now some 80 tons of synthetic
diamonds are produced annually by General Electric, De Beers,
and many others for industrial firms.
Herbert Strong and J. E. Cheney worked on GE's then new

1,000-ton press, capable of achieving experimental pressures of
100,000 atmospheres, in 1955. The GE team used the press to
grow diamonds prior to the announcement of diamond synthesis
on February 15, 1955.
From the time Smithson Tennant showed that diamond was

carbon, experimenters tried to synthesize diamond from graphite
or lamp black. Attempts over the next 150 years were all
fruitless, although the trend toward experiments at high pressure
and temperature were in the right direction. The invention of
tungsten carbide in the 1930s provided a material that could
achieve the pressure containment necessary for growing
diamond. Experiments in the 1940s by Harvard professor Percy
Bridgman were unsuccessful, but finally in the early 1950s two
teams succeeded. The first was led by Balthazar von Platen, at
the Allmanna Svenska Elektriska Aktiebolaget (ASEA) Laboratory
in Stockholm, Sweden, in 1953, but this initial success was not
publicized or published. Thus, on February 15, 1955, the General
Electric team of Francis Bundy, Tracy Hall, Herbert Strong, and
Robert Wentorf claimed credit for the first reproducible
transformation of graphite to diamond. GE went on to become the
largest producer of synthetic diamond; De Beers follows, with
many other manufacturers also contributing to the annual output
of synthesized diamonds.
Into the Future of Diamonds and Gems

As methods for growing diamond, both at high pressure and by
chemical vapor deposition, improve, and as science finds ways to

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take advantage of diamond's properties, the potential applications
of diamond's superlative properties appear boundless. From
super electronics, to indomitable optical windows, to
unscratchable surfaces - maybe the next watch bezel - diamond
is an obvious choice.
Managing heat, particularly in electronics, with large layers of

CVD diamond is a rapidly expanding field. One of the most
imaginative of these is the three-dimensional multi-chip module,
which holds out the promise of an extremely powerful
supercomputer. To gain speed, electronics need to be as compact
as possible, concentrating waste heat as well. By stacking
sandwiches of electronics and CVD diamond, a supercomputer
could be made small and cool enough to function. Diamond
windows for infrared devices are under development and should
find their way into the tough environment of laser-guided smart
bombs and more constructive uses in industry as well. The use of
diamonds as radiation detectors, light emitters in electronic
displays, and coatings to make surfaces indomitable or
unwettable are being researched now. Beyond their imprint as a
tool, diamonds will be showing up in more and more products in
the future, probably in your home electronics, appliances, and
automobiles.
However, today diamonds are mined only at Panna in the Indian

state of Madhya Pradesh by the National Mining Development
Corporation. The Panna mines too were shut for the last two
years at the behest of the Supreme Court which issued an order
to ban mining activities in forest land. In August this year, the
Supreme Court lifted its ban and mining will now restart at Panna.
Even though India does not contribute much to the world market
in terms of rough diamonds -- India exported rough diamonds

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worth only US$ 566 million in 2007-08 -- it is the world leader
in cutting and polishing of diamonds, with exports worth US$
14.18 billion in 2007-08.
Most of the processing of diamonds takes place in Surat in

Gujarat and in Jaipur, Rajasthan, where over a million artisans cut
and polish rough diamonds into beautiful stones.
STRENGTHS
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• Diamond has three primary roles in industry: it is used as a
cutting tool, it is imbedded in another material and used as a
tool or abrasive, and it is turned to powder or paste for
grinding and polishing. Diamond is selected for such use
where its hardness and resistance to abrasion - it’s long
working life and fast cutting action - outweigh its costs.
Moreover, diamond's resistance to wear enables it to cut
reproducibly time after time, a requirement of automated
production. Diamond machining tools for turning, milling,
and boring are preferred where finely finished surfaces of
high precision are needed.
• Diamond is used for machining a wide variety of plastics,

glasses, and metals, shaping products such as the drums for
copying machines, polygon mirrors in laser printers, and
aluminum-alloy pistons in automobile engines.
• The Diamond industry in Surat is the largest user of laser

machines in India. Apart from this, the diamond factories in
Surat also extensively use modern equipments like polishing
machines, which are semi automatic and automatic and
diamond planners, which are computerized.
• Diamonds from Surat are exported to a lot of countries all

over the world. Exports are routed through exporters based
in Mumbai.

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WEAKNESSES
• Diamond cannot be used for machining alloys of iron. Under

intense machining conditions the diamond abrades very
quickly against some materials, apparently because of a
high-temperature reaction between iron and carbon.
• High domestic interest rates compared to elsewhere
• Small firms lacking technological/ export information

expertise.
• Low productivity compared to labor in china, Thailand and

Sri Lanka.
• As the major raw material requirements need to be

imported, companies normally stock huge quantities of
inventory resulting high inventory carrying costs.

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OPPORTUNITIES
• It is believed that almost 90 per cent of the small diamonds
obtained in different mines in Africa and purchased by many
traders in the European nations, is being sent to Surat for
cutting and polishing.
• Workers
One third of the population of Surat is a part of the
flourishing diamond industry. Population of Surat thrives on
diamond and textile related job opportunities. Apart from
this, a lot of people from all over India have found
employment in the diamond field here. There are a total of
10000 diamond processing units in the city of Surat
employing around fifteen lakh people. New initiatives by the
government of Gujarat aim at training diamond cutters in
jewellery making thereby providing them with a wider scope
in this industry.
• New markets in Europe & Latin America
• Growing demand in south Asian & Far East countries.
• Removal gold control act

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THREATS
• Diamond exporters are feeling the heat of the US meltdown.
With the demand gone down not only in the international
market, but in the domestic market as well, more orders are
being cancelled every day.
• The diamond industry in Canada's Far North is vulnerable

to smugglers looking to import "blood diamonds" or launder
the proceeds of organized crime syndicates and terrorist
organizations, newly released federal documents say.
• A boom in diamond mining during the past decade has

rapidly turned Canada into the third-biggest producer in the
world and created jobs in the North, especially in the
Northwest Territories, home to the country's biggest mines.
However, Canadian authorities warn the fledgling industry
could become a vehicle for money laundering.
• "Diamonds have been, and continue to be, a main source of

currency for both terrorist organizations and organized
crime," states a briefing note prepared by Citizenship and
Immigration Canada in April.
• "Conflict/blood diamonds are used to fund rebel operations,

purchase arms, and other illicit activities (drugs). They are
portable, high value and cannot be detected by any type of
screening method,”

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• Blood diamonds, sometimes known as "conflict" diamonds,
are typically mined in African countries racked by civil war
and used to finance rebel or government forces.
• China posing threat to the Indian diamond industry. Cheap

labour, better infrastructure, usage of advanced technology
and business friendly policies adopted over years by the
Chinese government, have made it a super economic force
in governing the world trade, causing great threat for Indian
market.
• China, Sri Lanka and Thailand's entry in small diamond

segment
• Infrastructural bottlenecks, frequent changes in exim

policies, irregular supply of gold.
• Over dependence on single-channel supply chain. Decisions

of De Beers and Argyle's terms for renewing their supply
contract

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So what’s going to happen to the global industry in
the next couple of years?
• It’s going to be interesting to hear the views of many of the

speakers at the two-day International Mines to Market
conference organized by India’s Gem & Jewellery Export
Promotion Council (GJEPC) that is slated to take place in
Mumbai on April 26th and 27th.
• Setting the ball rolling will be GJEPC chairman Sanjay

Kothari and Hemant Shah, the convener of the GJEPC’s
promotion, marketing and business development panel. Then
there’s Gareth Penny, managing director of the De Beers
group and Steve Hodgson, managing director of Rio Tinto
diamonds, who are going to speak on ‘Rough Producers’
Strategies for the Immediate Future’. Along with them are
Ponatshego Kedikilwe and Buyelwa Sonjica, the ministers of
minerals and energy of Botswana and South Africa
respectively, speaking on the whole issue of beneficiation
and what it means for the diamond industry.
• Looking at the issue of development and what the diamond

industry can do to improve the lot of the many impoverished
artisanal diggers, predominantly in West Africa, as well as

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the prevention of horrific conflicts and human rights abuse,
are the Botswana government’s deputy secretary for
minerals, energy and water, Kago Moshashane and Martin
Rapaport of the eponymous firm.
• The dilemmas before diamond manufacturing centre’s are

going to be expounded on by Kaushik Mehta of Eurostar,
Samuel Schnitzler of M. Schnitzler, Ketan Parikh of
Mahendra Brothers and R. Gopalan from the Indian
government’s National Manufacturing Competitive Council.
• And talking about synthetic diamonds, discussing the basic

issue of whether they are a threat or opportunity for the
diamond industry are Ronnie Vander linden of Diamex and
Stephan Fischer of the World Diamond Council.
• ABN Amro’s global head of the diamond and jewellery

division Loet Kniphorst and the State Bank of India’s
chairman O.P. Bhatt, both powerhouses of diamond finance,
are going to air their views on the future while Ahmed bin
Sulayem, COO of the Dubai Multi Commodities Centre
(DMCC) will join Anoop Mehta of the Bharat Diamond
Bourse to discuss ‘Emerging Trading Hubs: The Future Map
of the Diamond Industry’.
And finally, to discuss the issues at the very end of the

pipeline, speaking on ‘Retail Markets: Revitalizing the
Established; Introducing the New’ are J.C. Penny executive
vice president of fine jewellery Beryl Raff, Sunil Mittal,
chairman of the Bharti group that has entered into a joint
venture with Wal-Mart and Bhaskar Bhatt of Titan, India’s
leading watch and jewellery brand.

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Entrep ren euria l Inn ov ati on at
Sur at
Innovation as a part of entrepreneurship was proposed by

Schumpeter more than six decades ago. He pointed out that the
essence of entrepreneurship is innovation. Schumpeter specified
five areas of innovation by entrepreneurs: (i) product, (ii)
process, (iii) market (iv) supply source, and (v) industry
organization. Entrepreneurial innovation, however, in an industry
of cottage & small scale type can be grouped under four broad
areas and revolve around major functions (marketing, operations,
finance & personnel) of an enterprise. The study attempted to
identify innovations by diamond processing industry in Gujarat in
these four major types of innovation and the industry organization
innovation as suggested by Schumpeter.
Thus the theoretical framework to study innovation in Diamond

processing industry in Gujarat was developed on following five

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broad areas:
Op er ati on s I nn ovati on : This include the product, the process,

the raw material (supply source) and R&D innovation.
Mar keti ng In nov atio n: This relates not only identifying &
targeting the new markets or market segments, but also new
marketing strategies employed in existing markets. Marketing
innovations are so varied and situation specific, that their
success apparently depends primarily on the entrepreneur's
ability to perceive the total situation, rather than on any universal
principles. Marketing innovations are so closely associated with
entrepreneurship, that they do not consider these as innovations,
but as a part of the 'routine' job.
Orga niz atio nal In nov atio n : This comprise of innovations

related to organizational structure, recruiting & developing
people and making them fit in the structure of the enterprise as
also innovativeness in the work culture developed. Thus,
innovations related to structure, culture and human resources can
be included under this area of entrepreneurial innovation.
Bou nd ar y Man ag em ent Inn ov ati on : Considering the fact that

finance innovations are related largely to the arrangement of
financial resources from outside, the same along with innovations
related to management and sometimes manipulation of external
agencies including government is combined under this area.
Indu stry organi zati on in no vati on : This pertains to managing

co-existence of various operators in the same industry and
innovativeness in making the whole industry growth remarkably.

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Diamond Facts
• The largest Diamond ever found:

-- Cullinan at 3,106 carats.
• What is the hardest natural substance on Earth?

-- The Diamond.
• 80% of the world's diamonds are not suitable for

Jewelry.

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• Is a Diamond Indestructible?
-- No. The fact that Diamonds are a hard
substance refers to their ability to withstand
scratching. But that is different than toughness,
which refers to the ability to withstand breaking or
cleavage.
• How old are most diamonds which are found in

nature?
-- 1 billion to 3 billion years, by most accounts.
• How do diamonds reach us?

-- They are formed deep within the
Earth's crust, and come to the surface via
Volcanoes. Most diamonds are found in Kimberlite,
which is volcanic rock.
Key C hara cter istic s o f

Dia mon d Pr oc essin g
Indu stry in Guj arat :
1. Most of units are in the cottage & small sector.
2. Labor intensive & not capital intensive - so more

entrepreneurs, more employment

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3. It is neither power-intensive nor polluting,
4. Traditional business approach
5. High level of product innovation
6. Family owned businesses
7. Based on imported raw materials
8. Uses inherited skills of domestic workers
9. Wholly export6 oriented
10. High working capital as high inventories
11. The technology & skill required for cutting and polishing
of diamonds have been largely developed within the country
and at industry's own costs
12. Most of the diamond dealers are inter-connected with

each other and have developed a collective interest in
achieving higher & higher export targets.
13. 95% of active diamond exporters are based in Mumbai

and Surat thus making it possible for the trade to serve the

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varied requirements of the numerous foreign buyers from
different countries
14. Vast manufacturing base and marketing network
15. Large volumes, wide varieties & economical costs
16. Gradual switch over from contract processing to in-

house processing, modern quality control and healthy
working conditions.
17. The professional expertise and venture some spirit of

youngsters resulting into diversification of export markets
18. Varied product mix, consistent assortments, prompt

deliveries and sales on credit, reputation for quality
19. Infrastructure facilities in terms of:
20. Cutting down on export duties on capital equipments,

fully free import of gold and other metals, movement of
imported goods free from sales tax & octroi, exemption of
export profits from income tax and cutting down red tape
procedural delays.
Intrinsi c Orient atio n:

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Many heuristics, as many as ten, can be taken under this
composite factor. Innovations in Gujarat are largely evolving
around self-employment and entrepreneurship. Gujarati
innovator prefers intrinsically viable projects to externally
supported ones. It is noted that the risk reduction strategy
focuses on testing the outcomes in advance, and taking
calculated risks. In matters of external support and
assistance, the Gujarati entrepreneur takes care to develop
his strengths first i.e. he seeks assistance only for a unit
which intrinsically viable and self supporting. Thus one of
the fundamental orientations resulting in unique
entrepreneurial behavior seems to be orientation for
intrinsically satisfying activities.
Or gan ic Gro wth:

The Gujarat model of innovation emphasis organic growth. About
7 of the identified heuristics can be grouped to arrive at this
orientation. It is hardly found in the particular cluster, the
mergers or takeovers of units. This is largely due to culture
clashes envisaged by the entrepreneurs. Values such as family
orientation and community orientations result in this sort of
orientation. The unit holders in Gujarat that are studied here
want to keep a tight family control over their business.
Growth driven by a vision of sharing and community building

Environmental stimuli such as childhood family environment,
easy availability of resources and negative stimulus such as lack
of government support coupled with strong values of family and
community orientations lead to this sort of orientation. The
industry innovation such as harmonious coexistence can be a
result of such orientation. Heuristics pertaining to competition
are grouped to arrive at this particular orientation. 2 strong
heuristics support presence of such orientation. Perseverance,
learning by doing

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Diamond processing is a very traditional and one of the oldest
industries in India. Entrepreneurs have tested feasibility of new
ideas before investing into them through their informal networks.
This strategy to reduce their risks seems to have worked well. It
was observed that many decisions in the enterprise are based on
one’s own experience and poor formal education of the
entrepreneurs support that. It was observed further that since
child hood their family members who are in this particular
business train them and skills are passed on from generation to
generation. Unfortunately not many heuristics were identified in
the cases studied.
However persistence in getting from external sources shows

strength of 0.79 in the decisions made by these entrepreneurs.
Con clus ion :

Gujarat, better known as entrepreneurial hub of India has
enterprise as base of Innovation. The Enterprising behavior
in Gujarat is largely attributed to typical culture of the state.
In the study conducted, Heuristics of the entrepreneurs of

Gujarat especially in Industrial cluster of Surat (South
Gujarat) Diamond processing Industry were identified as
above and can be grouped to arrive at certain
entrepreneurial orientations of Gujarati entrepreneur.
Key entrepreneurial orientations observed are as explained

below with the influence of internal stimuli viz. beliefs,
values, attitudes, learning (Psychological make-up) and
external stimuli mainly environmental factors.

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Bib lio gr aphy
 www.indianmba.com
 www.peerpapers.com
 www.oppapers.com
 www.suratmuncipal.org
 www.highbeam.com
 www.atimes.com
 www.commodityonline.com
 www.iamondworld.net
 www.indianetzone.com

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Project Report

Under the Guidance of

International Academy of Management

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Place: Bangalore Project Guide

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International Academy of Management,

We the undersigned, hereby declare that the

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We wish to express my/our sincere thanks to the honorable

I/We take this opportunity to express our deep gratitude and

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• Indian jewelry was made scrupulously by hand and was

• Large exports directed to the establishment of factories,

• India`s artisans along with their traditional skills dominated

• The Surat diamond industry is worth Rs 800,000 million and

• The industry earns 90 per cent of its revenue through

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An in trodu ction t o the f lourishin g diamon d

South Africa is precisely the country that majority people would

Sur at diamo nd ind ust ry: T he pa st

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Sur at diamo nd ind ust ry: T he pre se nt

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Sur at diamo nd ind ust ry: Wh at it hol ds for the futu re ?

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The Surat diamond industry is mainly based on imported rough

Dia mon d Hist or y

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Until the 15thCentury only Kings wore diamonds as a symbol of

Since the creation of diamonds they have been associated with

The first river-bed (alluvial) diamonds were probably discovered

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Throughout much of history, diamonds were mined from the sand

Diamonds and stones of different sizes and shapes are exported

• According to the figures released by the GJEPC, exports

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• Diamonds accounted for 70.59 per cent of the total exports

• Gold jewellery accounted for 26.91 per cent

• The 2008-09 fiscal also started on a positive note, with the

• In 2004-05 the government lowered import duty on platinum

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• Duty-free import of consumables for metals other than gold

• Duty-free import entitlement for rejected jewellery up to 2

• Import of gold of 18 carat and above under the replenishment

• Setting up of SEZs and gems and jewellery parks to promote

• In May 2007, the government abolished import duty on

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The diamond industry in Surat is not categorized under the

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In spite of the threat –

The 4C s of Di amo nds (plu s one)

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If you earn $30,000 a month, you can probably save 4 months

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Here are several ways to express 1 carat:

Prices of diamonds are expressed in the trade as a price per

Diamond "A" = 0.25 carats and costs $1,000 per carat.

It is important to understand that when you compare two

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