In a modern, air-conditioned office away from the dusty roads where traffic swerves around camel-driven carts, Gagan Choudhary squints at an emerald through a spectroscope: like most of the green stones sent to his laboratory these days, it would turn out to be not quite what it seems.
"It's like detective work," he says. "Every stone is different. Some are so sophisticated that we spend at least two hours on an emerald."
As deputy director and head tester at Gem Testing Laboratory in Jaipur, Choudhary sifts through thousands of coloured stones each year, determining whether they are natural, laboratory-created, or treated with resin and injected with colour to give a false brilliance. He finds that nearly 95 per cent of emeralds, 99 per cent of rubies and at least half of the sapphires tested are, in one way or another, unnatural.
Amid soaring prices in the global marketplace for top-quality coloured stones, Jaipur's gem cutters have increasingly found themselves outbid for supplies by better-financed rivals. Some are turning to subterfuge to compensate the shortfall.
For centuries, Jaipur attracted the world's best gems to be cut, polished and mounted, a tradition harking back to the early 18th century under the rule of Maharaja Sawai Jai Singh II. A dedicated patron of the arts, he drew the best artisans from all over India to craft jewelled sword hilts, earrings and even ankle bracelets for the royal elephants.
But that heritage is now under threat from a combination of shifting market forces and new competitors, notably in China and Thailand. In an expanding market for coloured gems, fuelled by the wealth of emerging economies and now worth an estimated $10 billion a year, Jaipur's craft industry is being muscled aside by big companies that can effectively control supply and prices with their financial and marketing firepower.
"There's a shift in global power," says Alexander Mees, a coloured gem expert at JPMorgan Cazenove. "The market is fragmented and less mature than diamonds, so we're likely to see more large companies as consumer preferences rise."
Gemfields, for example, based in London and 48 per cent owned by the private equity group Pallinghurst, controls 28 per cent of the world's supply of emeralds through its Kagem mine in Zambia. It markets its gemstones through the luxury brand Fabergé, which Pallinghurst merged into it in January. Marketing efforts by giants like Gemfields have sent prices soaring, often to levels beyond the reach of some Jaipur's businesses.
Traditionally, Jaipur's gem buyers procured stones directly and individually from miners and rough-stone dealers. Now, obliged to compete at auction, they are having to band together to bid jointly against bigger rivals - and still ending up as under-bidders for the better quality stones.
"We don't want Jaipur's 300-year-old gem business to disappear," says Rajiv Jain, former chairman of India's Gem and Jewellery Export Council.
Local media last year reported a "crisis of confidence" in Jaipur after a string of scandals in the city's legendary Johri Bazaar, where resin-coated gems were allegedly sold as untreated. Choudhary says the number of gems sent by wary buyers for testing had soared in the past year.
Chitan Sharma, head of a family jewellery business that used to include celebrity clients, says profit had been halved by the financial crisis in Europe - particularly in Spain, which used to be an important market - and the high price of gold. China has risen as a serious competitor, setting up cutting centres and manufacturing facilities, and buying stones in bulk to take advantage of economies of scale. Bangkok and Hong Kong have also developed as important stone-cutting hubs, while mining countries like Tanzania are increasingly developing local cutting expertise to capture value-added revenue.
The Indian government granted a license to Rio Tinto in 2011 to mine diamonds in Madhya Pradesh, and the local government gave the green light to start development in 2012. Rio Tinto began exploring for diamonds in Madhya Pradesh in 2001 and discovered diamond-bearing lamproites, or volcanic rocks, in the Bundelkhand region of the state in 2004 - the first new find in India in more than 40 years. "In the future - who knows? - new stones may be discovered," Jain says. "And as long as there are women on the face of this earth, there will be demand. I'm an optimist. Jaipur will become stronger. But we have to fight every day."
©2013 The New York Times
