India in the Global Context The size of the global Gems and Jewellery industry was estimated at US $ 146

billion at retail prices in 2005, and is estimated to have recorded US $ 170 billion in sales in 2008. The industry has grown at an average Compounded Annual Growth Rate (CAGR) of 5.2% since 2000. India is one of the eight key world markets, the others being the USA, UK, Middle East, Turkey, Japan, Italy and China. India is the also the largest consumer of gold in the world, and is estimated to hold nearly 16,000 tones of gold, accounting for nearly 12-15% of the worlds cumulative above ground gold stocks. India is also the largest diamond cutting and polishing centre in the world. While a predominant portion of gold jewellery manufactured in India is for domestic consumption, a significant portion of rough, uncut diamonds processed in the form of either polished diamonds or finished diamond jewellery is exported. The manufacturing and processing of Gems and Jewellery is distributed across several countries in the world (i.e., the African continent dominates the mining space of diamonds whereas India is the dominant player in diamond processing). Apart from being a major market, India primarily forms a part of the polishing and jewellery manufacturing part of the industrys value chain in addition to increasing traction in the organized retail of jewellery.

Jewellery Industry in Hong Kong

Hong Kong's jewellery industry is dominated by the precious jewellery sector. Its development has been facilitated by the expansion of the local market, including sales to tourists. Jewellery production in Hong Kong encompasses a wide range of medium- to high-priced products. Hong Kong manufacturers are good at producing small stones fashion jewellery. Hong Kong is leading in the production of pure gold items, and has long been recognized as a major centre for the production of jade jewellery. It has also evolved into a leading trading and distribution centre for pearls in recent years. Although high value-added processes are still retained in Hong Kong, manufacturing processes are increasingly shifted to the Chinese mainland, mainly to Shenzhen and Panyu, by means of building factories or outsourcing. Meanwhile, more manufacturers have made use of computer-aided design to shorten the time cycle for product development. Under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), the mainland has given all products of Hong Kong origin, including jewellery, tariff-free treatment starting from 1 January 2006.
Industry Features*

Hong Kong's jewellery industry can be broadly classified into two sectors: jewellery made of precious metal and imitation jewellery. In terms of value, some 86% of Hong Kong's total exports of jewellery are made of precious material. Hong Kong's jewellery industry is known for its flexibility in accommodating customer needs. Production of fine jewellery encompasses a wide range of medium to high-priced products. The most popular product category is gem-set jewellery,

particularly diamonds set in 14K or 18K and yellow/white gold. Hong Kong manufacturers are good at producing small stones jewellery with elements of contemporary fashion. Their gem-setting skills and design capability are competitive compared with world-class European manufacturers. Hong Kong has a highly skilled and productive labor force capable of handling small orders and making elaborate designs at reasonable prices. The overall technology level of the precious jewellery industry is perceived by manufacturers to be above competitors like Thailand but below the world leaders such as Italy and Japan. Most notably, Hong Kong is leading in the production of gold items. Although high value-added processes are still retained in Hong Kong, manufacturing processes are increasingly shifted to the Chinese mainland, mainly to Shenzhen and Panyu. Hong Kong has long been recognized as a leading centre for the production of jade jewellery. Major items are bangles, rings and pendants. Hong Kong has also evolved into a leading trading and distribution centre for pearls in recent years, partly due to the fast emerging Chinese and South Sea pearl industry and the recent decline of the Tahitian pearl industry.
Performance of Hong Kong's Jewellery Exports^

Despite the global economic slowdown, Hong Kongs exports of precious jewellery remained resilient in recent years. Yet after expanding by 35% in 2011, export growth moderated to 14% in 2012. While prices of precious metals and stones have surged, exports in volume terms actually registered only a mild increase. The US and the EU remained Hong Kongs dominant markets for precious jewellery, accounting for some 47% in 2012. But their market shares have decreased from some 57% in 2010, as sales (in value terms) to these two markets have been slower than average. By contrast, Hong Kongs exports of precious jewellery to India saw remarkable expansion these years, growing by 531% and

101% in 2011 and 2012 respectively, amid Indias emergence as a jewellery producer which subcontracts to the Chinese mainland. Besides, exports of precious jewellery to UAE also saw impressive growth of 48% and 85% in 2011 and 2012 respectively, as UAE has developed into a diamond hub for the region. On the other hand, Hong Kongs exports of pearls, gem-stones and rough diamonds dropped 8% in 2012, after strong growth of 31% in 2011. Hong Kong's jewellery exporters are facing intensifying competition from suppliers in the Chinese mainland and other countries, particularly India and Thailand. This, together with the price fluctuation of precious metals, diamonds, precious stones and materials, has somewhat trimmed down their profit margins. Yet, compared with other industries, jewellery makers are already in a better position to pass cost increases onto buyers and end users if they are caused by price surges of precious materials, which make up the most part of a jewellery article's value. On the other hand, overseas retailers and importers often press Hong Kong suppliers for extended credits, exchange for unsold items, shorter delivery lead time and better designs. The impact of the RMB's appreciation on the precious jewellery industry is modest compared with other industries because mainland content only accounts for a relatively small part of a jewellery article's value, compared with costs of precious materials, which are primarily imported into the mainland for export processing. On the other hand, Chinese governments policy on encouraging consumption will continue to shore up the purchasing power and import appetite of Chinese residents, and facilitate the sales of jewellery articles to the mainland, as well as retail sales in Hong Kong contributed by Chinese visitors.

Hong Kong is the world's second largest exporter of imitation jewellery after the Chinese mainland. In 2012, total exports of imitation jewellery amounted to

HK$8.9 billion. Unlike fine jewellery, imitation jewellery is rarely domestic-made but re-exported from origins outside Hong Kong, notably the Chinese mainland, which accounts for 93% of all exports from Hong Kong. In 2012, exports of imitation jewellery dropped 1%, after increasing by 7% in 2011.