Print edition : March 24, 2006

The gold trade is booming in Kerala, but traditional goldsmiths are quitting in droves.

R. KRISHNAKUMAR In Thrissur

Traditional goldsmiths at work, in Thiruvananthapuram.-C. RATHEESH KUMAR

THRISSUR is an unlikely jewellery hub. In a country purported to be the world's largest consumer of gold, Kerala, a State with a mere 3.1 per cent of its population, accounts for 15 to 20 per cent of its gold sales. It is in the central district of Thrissur that a major portion of the estimated 1,000 kg of jewellery sold in the State every day is crafted.

The town's peaceful suburbs belie its most famous cottage industry: jewellery-making. Its goldsmiths boast of a tradition spanning several centuries, from the days when pepper and other spices were exchanged for the metal from Roman and Arab traders. Thrissur produces a minimum of 300 kg of gold jewellery a day, according to estimates provided by representatives of the Kerala Jewellery Manufacturers' Association.

But a new horde of ornament-makers has been growing in Thrissur (as in the rest of India) from the early 1990s, complementing an abundance of retail outlets, an explosion of slick jewellery advertisements, a fund of new designs and promotional offers by international organisations promoting gold. Paradoxically, as this new tribe was growing, increasing numbers of highly skilled second- or third-generation goldsmiths were forced to seek jobs as drivers, painters, construction workers, brick-makers and hotel employees.

At Sankarankulangara, a quiet corner in Thrissur, customers have long since stopped coming to Palani Achari, a goldsmith who has received commendation from the President for his exquisite craftsmanship and whose ancestors served as official ornament-makers for the Travancore royal family. "This is perhaps the best period to be in the gold business in India and the worst to be a goldsmith," he said. He is too old to seek a new trade and is forced to live on a "providential" government welfare scheme that provides him a pension of Rs.15 a day.

Rajappan Achari, official gold assayer to the Customs Department and a trusted name among goldsmiths in Thiruvananthapuram, said over 90 per cent of the ornaments sold from his shop were bought from wholesale dealers from Thrissur. He said: "I had a lot of business in the city until 15 years ago and the ornaments I sold were made under my personal supervision. Today, my son is a mere shopkeeper and does not know to make a single piece of jewellery. Many fellow goldsmiths have closed shop. Within a few years, the entire class of goldsmiths and their skills are going to be wiped out."

The plight of traditional goldsmiths began with the liberalisation in the gold sector, especially with three policy changes since 1990 - the repeal of the Gold Control Act, introduction of provisions relating to gold in the Foreign Exchange Regulation Act, 1973, and the grant of permission to non-resident Indians (NRIs) to bring in up to 5 kg (subsequently raised to 10 kg) of gold on payment of a small duty (Rs.220 per 10 gram) in foreign exchange.

As the controls were removed, there was plentiful supply of legal gold in the country. Anyone could invest in a business in gold unlike earlier when only certified goldsmiths and traders could make an easy entry into the trade. "It took us a long time to understand that through these changes the Central government was throwing traditional goldsmiths to the wolves," said R.S. Mony, a member of the Kerala Gold Workers Union.

In Kerala, this dramatic change coincided with the large-scale fall in income in agriculture (especially rubber and spices), the beginning of a trend of reverse migration of NRI Keralites from West Asia, and a sharp fall in income from the liquor trade following a government ban on the sale of arrack.

The deregulated gold trade offered ambitious businesspersons from all these sectors a comparatively risk-free and profitable option for investment. It attracted wage-earners too. "At the end of the day, even if the business did not prosper, we were sure to have our gold safely in our hands," said Roy Thattil, a post-1990 wholesale manufacturer. Initially, local goldsmiths too sought to find a grand opportunity. The new investors had no option but to depend on their traditional skills; the demand in Kerala was still for traditional designs of which they alone were master craftsmen; and more investors only meant more work and more remuneration, they thought.

Bangle cutting in progress at a jewellery unit in Thrissur.-K.K. MUSTAFAH

But within a decade the rules of the game changed dramatically for the traditional sector. As the number of avant-garde jewellers multiplied beyond imagination, there was only one mantra for success. T.S. Kalyanaraman, managing director of a leading chain of neo-jewelleries, summed it up: "Narrow your margin of profit, ensure the quality of gold and increase the volume of trade and turnover. Then, blow your own trumpet."

This new success formula meant that jewellers had to offer an amazing variety of innovative designs, divert an incredible part of their turnover to open more outlets and launch high-profile advertising and promotional campaigns, and cut production costs dramatically. The price of gold being decided at the international level, reducing costs meant cutting costs on labour and production methods. It meant the mechanisation of the mundane chores, quality-sensitisation and faster production techniques. It meant cutting down "wastage" (of gold) during jewellery making and the introduction of cheaper labour.

The result? In the five years since 2000, a sharp division became evident in the gold business in the State. Over 70 per cent of the jewellery sales came to be handled by six big business groups, all of them established after the 1990s. Some of them set up their own exclusive manufacturing units (in some cases in Tamil Nadu's Coimbatore district) and advertising agencies. The rest of the business, crumbs so to say, came to be divided among the majority of medium and small outlets struggling to stay afloat.

Interestingly, the gold trade also saw the rise of an all-new class of urbane middlemen contractors who found a lucrative business opportunity in ensuring that jewelleries across the State got a steady supply of products on credit. They began to describe themselves pointedly as "jewellery manufacturers" (in sharp contrast to "goldsmiths" or "jewellery workers").

Indeed, they ensured a constant supply of raw materials, fresh designs and labour. They introduced machines and trained and gave jobs to an army of unemployed men (and now, for the first time in Kerala, women too) to mass-produce jewellery in sweatshops across the State (especially in Thrissur district) where wages and working conditions are a secret and workers get to learn only part of the techniques of jewellery-making. There are allegations about the use of child labour under the pretext of sustaining family traditions and of long hours of work, and unhealthy work atmosphere.

Middlemen contractors also acted as wholesale agents for a steady supply of ornaments made in other States, which now account for 40 per cent of the sales in Kerala, according to leading jewellers. Once they were assured of a perpetual demand for non-Kerala jewellery in the State, a few of them also began to import contract workers from West Bengal to craft North Indian ornaments. Some of them, such as Rafi Antony, president of the Kerala Jewellery Manufacturers' Association, today employ nearly 500 traditional Bengali goldsmiths, renowned for their special skills. Kabir Hussein and Ajay Kumar Bera, migrant workers under him in the early 1990s, are now sub-contractors with over a 100 people each in their pay roll.

According to Rafi, Bengali craftsmen get more wages than local workers because there is an increasing demand for their skills. Hussein claimed he is able to manage an income of nearly Rs.15,000 a month and pay his workers salaries ranging from Rs.2,000 to Rs.8,000. "Local workers are paid less, about Rs.1,000 to Rs.1,500 a week. In many other sectors in Kerala, workers would get at least Rs.250 as wages a day. But such a wage structure is no longer possible in jewellery-manufacturing in Kerala. That is perhaps why goldsmiths are seeking jobs elsewhere," Rafi said.

Traditional goldsmiths, increasingly out of business, say the "jewel factory workers" lack the skill to make a complete piece of jewellery all on their own. "They are not goldsmiths but metal cutters, wire-makers, polishing artists" is a common, derisive refrain.

But newcomers are having the last laugh. A leading jewellery group owner said: "No one cares whether a trendy piece of jewellery is made by a single craftsman over seven days or a hundred ones in half a day. The people who succeed are those who can invest more in order to buy more stock, employ more and gain maximum profit through mass production. Goldsmiths are unwilling to accept new methods of production or the need to cut margins. Traditional methods cannot keep pace with the faster needs of the market. It is a fiercely competitive market that makes any investment by them too small to increase their volume of sales to a profitable level. The trend everywhere is towards concentration of the business in a few hands."

Said 64-year-old V.P. Unni, an employee goldsmith: "It is not difficult to see why the skills of the local goldsmiths have become irrelevant to big business. We have lost touch with the customers. Several tiers of profit-seekers have come in between."

Such an onrush of outsiders into the gold business within a span of 15 years has had a devastating impact on the social security customs ingrained in the craft and caste traditions of goldsmiths. But, despite the amazing volume of gold trade in the State, the plight of traditional goldsmiths have so far not figured in the State government's scheme of things. Traditional gold workers are increasingly being forced to seek other employment options or to work for low wages for the new class of manufacturers. In recent years, several cases of suicides among goldsmiths and small jewellery owners have been reported. Many small shops have closed down.

According to gold workers' union representatives, there has been no initiative so far in the State to fix wages and other service conditions for goldsmiths and the government has left the door open for their exploitation. They have merely been included along with tree climbers, shoemakers, potters and gunny-bag collectors in the Kerala Artisans and Skilled Workers Welfare Fund scheme that has meagre provisions for provident fund, gratuity, ex gratia and funeral allowances.

"It is the new face of colonialism," says Balasubramanian, a young goldsmith in Thiruvananthapuram. "First they pretended to be our friends. Then they created divisions among us. Then they made us fight among ourselves. Now they are the rulers, the big traders, the about-to-be owners of shopping malls and gold souks."

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