Investment Opportunity>>Gems & Jewelry Sector Overview India has significant reserves of gold, diamond, ruby and other

gemstones. Key states with gemstone reserves and mining potential are Maharashtra, Madhya Pradesh, Orissa, Chattisgarh, Bihar and Andhra Pradesh. Orissa has deposits of ruby and has about 20 varieties of various gemstones such as rhodoline, garnet, aquamarine, etc. Andhra Pradesh has gold and diamond bearing areas, as well as occurrences of semi-precious and abrasive stones spread over different districts. Diamonds are mined only at Panna in Madhya Pradesh by the National Mining Development Corporation. The two major segments of the sector in India are gold jewellery and diamonds. The country is the largest consumer of gold, accounting for more than 20% of the total world gold consumption. Gold jewellery forms around 80% of the Indian jewellery market, with the balance comprising fabricated studded jewellery that includes diamond and gemstone studded jewellery. A predominant portion of the gold jewellery manufactured in India is consumed in the domestic market. India is world's largest cutting and polishing centre for diamonds; the cutting and polishing industry is well supported by government policies and the banking sector with around 50 banks providing nearly USD 3 billion of credit to the Indian diamond industry. It is considered to be diamond polishing and processing capital of the world as its artisans are skilled in processing small-sized diamonds. At present, India exports 95% of the worlds diamonds, according to statistics released by the Gems and Jewellery Export promotion Council (GJEPC). A major portion of the rough, uncut diamonds processed in India is exported, either in the form of polished diamonds or finished diamond jewellery. The size of the Indian gems and jewellery market is was USD 30.1 billion in 2011 and is expected to be USD 45 billion by 2015 on the back of increasing domestic demand. The country is one of the largest exporters of gems and jewellery and the industry is considered to play a vital role in the Indian economy as it is a leading foreign exchange earner. The sector is expected to generate up to USD 35 billion of revenue from exports by the year 2015. The countries where demand is increasing for Indian jewellery include the UAE, the US, Russia, Singapore, Hong Kong, Latin America and China. The sector provides employment to around 1.8 million people. In the next five years, the sector is expected to create additional employment for around 1.1 million people. FDI into the diamond and gold ornaments sector was USD 302 million from April 2000 to April 2011, as per statistics released by the Department of Industrial Policy and Promotion (DIPP), which is part of the Ministry of Commerce and Industry, and is charged with the framing of the countrys FDI policy. The hub of India's jewellery industry is Mumbai that receives the majority of the country's gold and rough diamond imports. Mumbai has a considerable number of modern, semi-automatic factories and laser-cutting units, the majority of which are located in the special economic zone. Most of the diamond processing, though, is undertaken in Gujarat, (primarily in Surat, Bhavnagar, Ahmadabad and Bhuj) and in Rajasthan (Jaipur). Policy and Promotion The government has announced several measures for the promotion of the gems and jewellery sector in the New Foreign Trade Policy (2009-2014), some of the important ones being: allowed.

tification/grading and re-export by the authorized offices/agencies of Gemological Institute of America (GIA) in India or other approved agencies to be permitted. s been increased from USD 2 million to USD 5 million in case of participation in overseas exhibitions. The limit in case of personal carriage as samples for export promotion tours has also been increased from USD 0.1 million to USD 1 million. of days for re-import of unsold items in the case of participation in an exhibition in the US has been increased to 90 days. The government plans to establish diamond bourses in an endeavour to make India an international diamond trading hub. is permitted in the gems and jewellery sector through the automatic route. of operational SEZs in the sector are SEEPZ Special Economic Zone, Mumbai; Manikanchan SEZ, West Bengal; Jaipur SEZ; and Hyderabad Gems SEZ Ltd. Further, formal approval has been given to 13 SEZs in the sector three have got in-principal approval and seven have been notified, as per the SEZ Board of Approval statistics. Major Players The gems and jewellery market essentially comprises sourcing, processing, manufacturing and selling of precious metals and gemstones such as gold, platinum, silver, diamond, ruby, sapphire, among others. This industry is highly unorganised and fragmented with 96% of the total players being family-owned businesses. Currently there are more than 500,000 gems and jewellery players across the country, with the majority being small players. Modern retail players have only 4% to 6% share, which is perhaps one of the lowest when compared to other sectors such as apparel, footwear, books and music. At the same time, India is gaining prominence as an international sourcing destination for highquality designer jewellery. Global companies such as Walmart and JC Penney procure jewellery from India. Some of the major brands in the Indian jewellery segment are Gili, Tanishq, Carbon, Oyzterbay and Trendsmith. The major players in the Indian gems and jewellery retail sector are Reliance Retail, Damas Jewellery, Gitanjali Gems Ltd., Swarovski, Diamond Trading Company, Vardhaman Developers, Dubai-based Joy Alukkas, Viswa and Devji Diamonds and Gold Souk India. Sector Outlook A FICCI-Technopak report estimates that gems and jewellery exports will grow to USD 58 billion by 2015. It also estimates that the domestic market for gems and jewellery will touch USD 35 billion to USD 40 billion by 2015. India has several strengths that have made it a significant force in the global gems and jewellery business. These are: low-cost labour.

-growing gems and jewellery markets. One of the most encouraging trends visible in the Indian gems and jewellery market is that the country is now beginning to move towards branded jewellery and consumers are increasingly

accepting modern retail formats. According to the FICCI-Technopak report, this would act as a catalyst for change and may impact traditional players, who would need to upgrade to keep pace with changing market trends. It is expected that, going forward, traditional players will coexist with modern players this is, in fact, the trend in international markets where independent jewellers still hold significant market share.