Common Facility Centres or a level playing field?
It’s high time every manufacturer whether big, medium or small, gets equal opportunity to perform. Irrespective of the scale at which they operate, regardless of the manpower they hold or even, notwithstanding the capital at disposal. It may sound like a utopian idea but with the series of Common Facility Centres (CFCs) mushrooming across India, starting from Gujarat and moving on to the various other clusters of India, soon it is going to be the reality. Updating on the status of the upcoming CFCs in India, team Floroscent explains how CFCs will organise the supporting industry, uplift the karigars and yes, give equal opportunity to all.
Latest technology and high-end machines are no more the privilege of jewellery giants. Now anyone, whether a small workshop owner or a big jewellery brand, can access to the best of technologies. Thanks to the series of CFCs surfacing across India, more and more manufacturers can now avail of the best designing and manufacturing equipment and with time, it will only get better as a number of jewellery clusters are earmarked for the next phase of development.
Surat, Jaipur, Rajkot, Ahmedabad, Mumbai, Kolkata, Thrissur, Chennai, Madurai, Coimbatore and Hyderabad, to name a few, are important jewellery clusters that form the backbone of the gems and jewellery industry. But the unorganised nature of the GJ industry, rising competition from international markets (for the diamond sector), issue of quality, purity and finish (in gold industry) and also, low level of education and lack of technical know-how amongst the traditional artisans, are all collectively hampering the rapid growth of the industry. All this has resulted into low productivity and also, affected the quality of the finished goods produced. To take the industry to the next level, setting up of Common facility Centres was the natural next step.
It’s raining CFCs
Taking note of the concern areas, the government and the industry have joined hands to establish CFCs in different jewellery clusters of India. The Gem and Jewellery Export Promotion Council (GJEPC) has planned to set up CFCs in 13 identified clusters with the support of the Ministry of Commerce and Industry. So far, the commerce ministry has sanctioned four CFCs (Ratna Abhushan Suvidha Kendra) in Gujarat in phase-1 namely Visnagar, Amreli, Palanpur and Ahmedabad, under the special scheme of 12th five-year plan at a total cost of Rs. 16.15 crore (US$ 2.52 million); of which the CFCs at Visnagar, Palanpur and Amreli have already been inaugurated.
According to the GJEPC, the next CFC will be established in Ratnagiri. The Council is also coming up with CFCs in Navsari, Bhavnagar Junagadh, Ahmedabad for diamond and Rajkot location for jewellery in Gujarat. There are plans to set up more CFCs outside Gujarat in cities like Thrissur, Coimbatore, Delhi, Jaipur, Hyderabad and Kolkata.
Pramod Agrawal, Chairman, GJEPC, said that the establishment of CFCs in the key jewellery clusters of India would greatly help to transfer the technological advancement benefit to the needy small manufacturers and artisans. “The CFCs will provide the training to existing artisans to upgrade their skill, which in turn will acquire global recognition for best quality products and ensure that the new generation is exposed to the latest available technology and industry environment. The government is willing to give grants for more CFCs in the future,” he shared.
A facility for progressive self-sufficiency
The CFCs are aimed at building social capital to strengthen the collective action, which will provide the spill-over effects of the economies of scale, credit facilitation, technology upgradation, brand building and marketing. Besides, it motivates the members and new entrants to come forward to develop their business, help them to cut their operational costs, improve product quality, increase the yield and reduce the investment.
According to Colin Shah, vice chairman, GJEPC, CFC is envisioned to act as a catalyst for the industry. “Setting up of CFCs will increase productivity and quality of small and medium players and karigars, who are the backbone of our industry but could not afford to buy high-tech machines for manufacturing of gems and jewellery. The capital expenditure gets reduced on account of common facilities being made available here,” he added.
For Nirmal Kumar Bardiya, regional chairman (Rajasthan), GJEPC, CFCs become a motivating factor to commence a business as well as a cost saving tool to any existing gem and jewellery manufacturer. “The ultimate benefit of any industry or business is sustainability in the long run and profit making. In this regard, CFCs score big as it serves as a great tool in cutting down the cost of the supporting industry. Thus, it is a strategic move that will benefit new as well as existing manufacturers of the GJ industry,” he opined.
Experts believe that setting up of CFCs is the need of the hour and are relevant to the requirements of micro and small enterprises (MSMEs) who are generally not in a position to infuse large capital due to their limited capital base and inadequate domain expertise.
Highlighting the key concern areas of a small and medium enterprise, Kirit Bhansali, co-convener, Diamond Panel, GJEPC, said, “Collectively through CFCs, the micro and small enterprises can attain the desired goal of being competitive in the present global scenario. These enterprises face several challenges including high production cost, low productivity of scarce manufacturing resources, inefficient layout of resources, uncertainty in supply of raw materials, exchange rate fluctuations, fluctuation of raw material prices, high transaction cost in procurement of input resources as well as marketing of final product, poor logistics infrastructure, etc.”
He goes on to add that “Setting up of CFCs would be of huge benefit to small and medium diamond manufacturing units located in towns and interiors, since most of these units are operating with old and outdated technology and cannot afford to install state-of-the-art equipment. This has resulted in lower productivity and affected quality to an extent,” he pointed out.
Sabyasachi Ray, executive director, GJEPC, seconds Bhansali by underlining the significance of CFC in today’s environment has become paramount as a majority of the jewellery manufacturers in India are MSME. “The small and medium manufacturing units lack facilities, which are available only with high-tech companies. With the help of a CFC, small and medium manufacturing units and artisans will have access to latest machinery and tools and this will increase their productivity. This way, they don’t have to invest crores of rupees on setting up a factory or procuring costly machinery. Different companies can share the facilities provided at CFCs by paying just the operational costs,” he explained.
Boost to karigars
CFCs are a welcome change for the karigars as well and an opportunity for them to perform at their best with the latest technology which are accessible and affordable. Further, CFCs provide skill upgradation training to artisans involved in manufacturing activities to make them aware of the operation and benefits of the state-of-the-art equipment.
“Setting up of CFCs is a great initiative which will boost the confidence of small artisans and also, make them entrepreneurs. With the establishment of the CFCs, the artisans will not only get an opportunity to upgrade their skills but will also get a window to connect with the global export market. If any worker wants to take industry level training, he can do so at the Common Facility Centre with the latest technology,” updated Prem Kothari, chairman, Gems and Jewellery Skill Council of India.
As per K Srinivasan, managing director, Emerald Jewel Industry India Ltd., CFC will enable India to go in for large scale production of jewellery through machines to cater to the global demand. “The skill development process has already started. Then, the next phase would be infrastructure development. Once that is done, jewellery exports will increase. Today, we are not exporting much as we lack the capability to manufacture designs that foreigners want. For that, setting up common a manufacturing facility is the right step, as every jeweller does not have money and other key resources,” he informed.
Cut cost to focus on innovation
Production, costlier training, testing facility laboratory, calibration centre, inspection centres and skill development centre are some of the challenges that any entrepreneurs face today. A lot of them may also get bogged down by this unorganised nature of the supporting industry. This is where a common facility centres factors in. It provides support in the aspects of marketing, production, material testing laboratories, inspection with calibration and skill development training.
Moreover, rather than investing in high-cost, entry machinery, CFCs would serve as centres of expertise that will save manufacturers from devoting time and manpower to lower-level manual tasks and instead, focus on devising and launching innovative products. “Common Facility Centres can introduce valuable capabilities into manufacturing of gems and jewellery. They can help the manufacturers in devising new products and services. They can leverage the latest technology at minimal cost to improve the quality and finish of products. They can create ‘next-best-action-to-take’ road maps to facilitate speedy production and they can ensure efficiencies across the manufacturing company through automated processes and work flows,” notified Vijay Chordia, president, Sitapura Gems and Jewellery Industry Association (SGJIA), Jaipur.
The successful Gujarat model
As per the industry sources, diamond manufacturers in centres other than Surat are lagging behind when it comes to processing diamonds using high-tech technology. As the small players are not in the position to invest lakhs of rupees for installing high-tech machines for diamond polishing and jewellery making that is available at large diamond manufacturers in Surat. Experts said these small centres are the backbone of diamond cutting and processing centre. Around 75 per cent of the small-sized stones are processed in these small centres, having the workforce of more than one lakh.
In Dinesh Navadiya, regional chairman (Gujarat), GJEPC, opinion, CFC in small towns and villages would help transfer of technological advancement to the needy diamond manufacturers. “Common Facility Centre in Gujarat is instrumental for technological and social transformation of the workers and small manufacturers engaged with diamond cutting and polishing activities. Diamond units operating in small centres across the state are using old and out-dated technology, which was used in Surat some 15 years ago. However, the productivity and quality of work are always compromised. Through the common facility centres, we want to provide a platform to diamond manufacturers to make use of high-tech technology and increase their productivity at par with global standards,” he stated.
The first ever CFC for the diamond industry was inaugurated at Visnagar in the month of February, 2017 and it’s in operation since 1st March, 2017 followed by the inauguration of CFC at Palanpur on 10th July, 2017 and the third CFC at Amreli that was inaugurated on March 11, 2018. Out of the Rs. 40 crore allocated for the development of CFCs in Gujarat, the remaining Rs. 34 crore will be allocated to the projects in Navsari, Ahmedabad, Bhavnagar, Botad, Junagadh, Jasdan and Deesa.
Remarkable results have been achieved after setting up of a common facility centre at Visnagar and Palanpur. The total revenue of both the CFCs from July 2017 to December 2017 stood at Rs. 27,10,968 and Rs. 37,73,408 respectively. The production figures in these six months were 497823 at Visnagar and 580861 at Palanpur. During the period, the number of registered beneficiaries (Local and surrounding villages) were 38 and 116 at Visnagar and Palanpur respectively. Moreover, over 100 artisans and operators were trained at the facilities.
Productivity and quality improvement
Product quality is paramount in any industry and the gems and jewellery industry is no exception. Hence, the common inspection-cum-calibration centre becomes a critical support facility available in the CFC. At present, a manufacturer cannot calibre and inspect his product, as the tool alone costs more than his entire project.
The facilities at a CFC are being made available at a reasonable rate, which improves the quality, productivity and yield of the finished products, stated Nirmal Kumar Bardiya. “Having an edge over quality parameter gives an advantage to any manufacturer to meet the existing and forthcoming market competition. The common facility centre encourages the existing members and new entrants by providing these facilities at a very affordable cost, while addressing their quality concerns,” he added.
Quite clearly, CFCs are a successful tool and can play an important role in enhancing the competitiveness of the MSME sector vis-a-vis the gem and jewellery industry. They are uniquely positioned to help manufacturers realise their business strategies, improve quality of the products and increase production. Apart from the benefits of deployment of resources and economies of scale, CFCs helps in weaving the fabric of networking, cooperation and togetherness in the industry and thus, enabling the industry to achieve competitiveness in the long run.