CHAPTER~1

INTRODUCTION
Gems and Jewellery:
Gems and jewellery form an integral part of Indian tradition. A
legacy passed from one generation to another. The components of
jewellery include not only traditional gold but also diamond,
platinum accompanied by a variety of precious and semiprecious
stones.
The Indian gems and jewellery sector is expected to grow at a
AG! of around "# per cent during $%"" & $%"#, on the bac' of
increasing government e(orts and incentives coupled with private
sector initiatives.
)an'ind has been captivated by gems and jewellery from time
immemorial. India has given the world the *ohinoor and the +ope
diamond, with their associated legends and fables. Today,
gems and jewellery are a global industry with mining of gold,
diamonds and platinum in Africa, !ussia, anada and Australia,
polishing and jewellery manufacturing in ,elgium, -etherlands,
Israel, India, hina and Tur'ey and retailing all over the world.
The industry contributes over ". per cent of our total exports and
employs ".# million people. It is second only to Information
Technology /IT0 related exports and contributes #.1. per cent to
our Gross 2omestic 3roduct /G230. Gold jewellery represents about
4% per cent of the mar'et and the balance comprises studded
diamond and gemstone jewellery. 5hile most of the gold
jewellery manufactured in India is consumed in the domestic
mar'et, a major portion of rough, uncut diamonds produced in
India is processed and exported as polished diamonds and 6nished
diamond jewellery. India is the world7s largest diamond processing
/cutting and polishing0 centre handling over .1 per cent of the
world7s rough diamonds by value.
The gems and jewellery sector is a major foreign exchange earner.
2ue to its importance in India7s foreign trade, the government has
ta'en many initiatives to boost the sector. The government, for
instance, has declared this sector as a thrust area for exports.
2uring the global economic meltdown especially the government
has dealt out many initiatives for the badly8a(ected sector. This
chapter focuses on the various policies and measures that were
ta'en by the government for the gems and jewellery sector.
Objec!"es:
To analy9e the present status of the Indian Gems and
:ewellery ;ector < Analy9e its contribution to the economy.
To critically evaluate the export performance of Indian Gems
And :ewellery sector over the years and its share in the global
trade in Gems And :ewellery
To study about the competitive position of Indian Gems and
:ewellery export.
To analy9e the problems in export promotion of gems and
jewellery.
To analysis the vital steps for improving the Gems < :ewellery
export.
To understand the importance and e(ectiveness of export in
present mar'et situation.
Class!#!ca!$n:
Gems < :ewellery ;ector
1. Polished Diamonds: India is one of the best mar'ets in the
world in the polished diamonds for its world8class =uality of
diamonds as well as ex=uisite cutting s'ills. >ver 4# per cent of
India?s Gems < :ewellery cut and polished diamonds account for
exports. :aipur and ;urat are famous as world class polishing
and designing centers.
2. Gem Stones: This category refers to the stones other than
diamonds@ these stones come under two basic categories that
are precious stones and ;emi precious stones. There is a huge
demand for these gemstones especially of ;apphire, Amerald
and !uby. India?s exports of gems have crossed .%%%%%% carats
this year.
3. Gold and Jewellery: This category represents the gold and
:ewellery, which is used in the manufacturing of various
ornaments. Indian is the country that is the largest consumer of
gold in the world@ in the year $%%1 gold consumption in India
was 4.% tons ##B up from the last year.
4. Synthetic Stones: ;ynthetic diamond is diamond produced
through chemical or physical processes in a laboratory. Ci'e
naturally occurring diamond it is composed of a three8
dimensional carbon crystal. ;ynthetic diamonds are also called
cultured diamonds. ;ynthetic diamond is not the same as
diamond imitation, which can be made of other material. This is
an upcoming mar'et in India.
Jaipur: "City o Colored Gems"
:aipur is India7s second important gems and jewellery
exporting centre and the 6rst for sales to foreign tourists. 5ith a
history dating bac' to more than two and a half centuries, the
famed Indian Gems ity of :aipur is still a hotspot in Gems ?n?
:ewellery.
Drom tradition8bound manual processing of colored gems and
the manufacture of specialised jewellery li'e )ina'ari, the long
passage to a modern gems and jewellery sector has been a
diEcult and rather slow transition, but :aipur has endeavoured to
'eep pace with changing times. It has been a double challenge 8
living up to past glory, while moving ahead in modern times to
meet growing global competition. ;o what :aipur o(ers now is
actually a glorious synthesis of the ancient and the contemporary.
:aipur had not only been the main colored gems processing centre
of India, but also a global centre because most of the world supply
of cut and polished emerald Fowed out from this gems city.
,esides emeralds, :aipur has been processing the whole rainbow of
colored gems, as well as pearls. The traditional processing wor'
underta'en here with outstanding s'ill includes cutting and
polishing of over a hundred species of colored gemstones, both
natural and synthetic, carving, bead8ma'ing, stringing,
manufacture of objets d7art and 6ne jewellery. A local Gstad
/master cutter0 has performed the rare feast of cutting "H%% tiniest
emeralds, totally weighing a single caratI
Share o !ndia"s Gem and Jewellery Sector

CHAPTER~%
INDIAN GE&' AND JE(E))ER*: CURRENT 'TATU'
India has been one of the most important countries for the
production of Gems and :ewellery. >ne of the highlights is the
production of ;tudded :ewellery. ;tudded :ewellery trading in India
is age old as it is established by the fact that in "J.% A.2., sources
report the employment of more than J%,%%% wor'ers in the Aluru
mines, where they dug and washed the precious stones. Today
though India has almost no raw ;tudded :ewellery left within her
own soil still we produce 1%B of the 5orld gems in terms of
=uantity and H.B in terms of value. India is the original country
which discovered gems and initiated gem craft. The gems
produced here gave birth to a fabulous industry and global trade.
India has emerged as one of the fastest growing economies in
the world after having recorded an annual average growth rate of
4B during the last H years. The gems and jewellery sector has
been one of the fastest8growing sectors in India in the past few
years. The sector is highly export8oriented, labour8intensive and a
major contributor to the foreign exchange earnings@ therefore, the
Indian government has declared the sector as a thrust area for
export promotion. India is the largest consumer of gold and
accounts for over $%B of the total world gold consumption. India is
also one of the largest diamond processor in the world and its
artisans have speciali9ed s'ills in processing small diamonds
/below one carat0@ in fact, the Indian craftsmen have achieved
excellence in cutting and polishing small diamonds.
India possesses world7s most competitive gems and jewellery
mar'et due to its low cost of production and availability of s'illed
labor. As per our new research report #!ndian Gems and
Jewellery $ar%et &orecast to 2'13(, highly s'illed and low cost
manpower, along with strong government support in the form of
incentives and establishment of ;AKs, have been the major drivers
for the Indian gems and jewellery mar'et. 3resently, although,
Indian mar'et is highly fragmented, it is rapidly transforming into
an organi9ed sector.
urrently, the industry is growing at a tremendous rate on the
bac' of growing demand and increasing consumer preference.
5ith various government e(orts and incentives coupled with
private sector initiatives, Indian gems and jewellery sector is
expected to grow at a AG! of around "#B during $%"" 8 $%"#. At
present, Indian gems and jewellery mar'et is dominated by the
unorgani9ed sector@ however, the trend is set to change in near
future due to the growing acceptance of branded jewellery mar'et.
As per our research report, with its consumption pegged at nearly
$HB in $%%4, India remains world7s largest gold consumer and this
share is expected to grow further.
#!ndian Gems and Jewellery $ar%et &orecast to 2'13(
provides strategic insight into the gems and jewellery mar'et in
India. ,y analy9ing past and future aspects of the mar'et, the
report highlights the potential growth areas in the mar'et and
provides an overview on the mar'et for gems and jewellery in the
country. It also evaluates emerging trends in the concerned
industry. Additionally, the report provides intensive detail analysis
of various segments under gems and jewellery industry.
,esides, our report covers the industry forecast and analysis
based on various macro8 and microeconomic factors, sector and
industry speci6c databases, and our in8house statistical, and
analytical model. This model ta'es into account the past and
current trends in an economy, and more speci6cally in an industry,
to bring out an objective mar'et analysis. ompetitive landscape is
also discussed in report to present clients a general overview of
the mar'et structure and growth prospects.
India exports were worth $HJ"4 )illion G;2 in Debruary of $%"$.
Axports amount to $$B of India7s G23. Gems and jewelry
constitute the single largest export item, accounting for "J percent
of exports. India is also leading exporter of textile goods,
engineering goods, chemicals, leather manufactures and services.
India7s main export partners are Auropean Gnion, Gnited ;tates,
Gnited Arab Amirates and hina
1+1 Im,$ran ,ar!c!,ans
The industry is dominated by family jewellers, who constitute
nearly LJ per cent of the mar'et. >rganised players such as Tata,
with its Tanish= brand and Gitanjali have entered the mar'et with
branded jewellery which has a four per cent mar'et share. The
2epartment of !evenue under the )inistry of Dinance is
responsible for the tax administration of this sector. The entral
,oard of Axcise and ustoms, through its 6eld formations spread
across the country, is the main executive authority for collection
of revenue. The 2irector General of Doreign Trade under the
)inistry of ommerce implements various Axport promotion
schemes.
The Gems and :ewellery Axport 3romotion ouncil /G:A30 is the
apex body of the industry set8up in "LJJ. It is primarily involved in
promoting the Indian gems and jewellery products in the
international mar'et. It also acts as trade facilitator, a nodal
agency for diamond certi6cation and organises training and
research for the industry.
1+% Ind-sry 'r-c-re:
The gold processing industry has around ".,%%% players, with only
4% having revenues over G;2 . million. India is also home to
around H.%,%%% goldsmiths, "%%,%%% gold jewellers along with
J,%%% diamond processing players and 4,%%% diamond jewellers.
The value chain of gems and jewellery industry can be
represented in the following manner.
The gems and jewellery industry in India is greatly dominated by
the unorganised players, but with the growing economy and
increasing income levels, the organised segment and retailing of
branded jewellery is fast catching up in the currently fragmented
mar'et which is worth G;M "J billion and shows huge potential for
growth in the future. The centre of trade in India?s Gems and
:ewellery industry is )umbai. )ost imports of gold and rough
diamond arrives in )umbai. +owever, most of the processing of
diamonds ta'es place in Gujarat.
Indian gems and jewellery sector is expected to grow at a
compound annual growth rate /AG!0 of around "# per cent during
$%""8$%"#, as per a !->; report titled ?Indian Gems and
:ewellery )ar'et Dorecast to $%"#?.
;hipments of gems and jewellery constitute "H per cent of India?s
total exports, and employ #.H million wor'ers, with the )iddle Aast
ta'ing most of the mar'et.
1.3 )ey !ndustry Components:
DiamondsN urrently India is the major polishing and cutting hub
for diamonds. India is also the third largest consumer of polished
diamonds. The surge of urbani9ation and rapidly growing middle
class in India has led Indian consumerism to new heights,
particularly in the diamond jewellery sector. Avery "" out of "$
diamonds sold around the world are processed in India regardless
of the place they are mined.
Diamond
India is the world7s largest diamond cutting and polishing centre in
the
world. ;urat is India7s diamond processing hub, contributing over
4% per cent of the country7s diamond processing industry with
annual revenue of around G;M "#.%# billion. India is the world7s
largest diamond cutting and polishing centre in the world. It
accounts for J% per cent value share, 4$ per cent by carats and L.
per cent share of the world mar'et by number of pieces. It is the
third largest consumer of polished diamonds after the G; and
:apan. The world7s largest diamond mar'et has recently opened in
)umbai. The ,harat 2iamond ,ourse /,2,0 is spread over $%
acres, with eight towers of
nine storeys each. The exchange & which has $,.%% oEces, four
wal'in vaults, $H,.%% safe deposit boxes and a J,$%% s=uare foot
trading Foor set on a $%acre plot is the world7s largest. The
bourse is expected to have an inFow of $%,%%% $.,%%% people a
day and the number is expected to go upto #%,%%% in the pea'
hours. >ver $,%%% security cameras have been installed at the
bourse, designed to match global standar
GoldN The country became a leader in the table of most gold
consuming nations with the consumption amounting to about
"J,%%% tonnes. The other 'ey mar'ets include :apan, hina, Tur'ey,
Italy, G;A and G*. It is also estimated that about J%% tonnes of
gold is used to ma'e jewellery.
Gold Jewellery
India is one of the largest billion mar'ets in the world. It has been
until
now, the undisputed singlelargest Gold bullion consumer. Gold
imports stood at 1#L tonnes during April $%%L)arch $%"%. In the
world oEcial gold holdings ratings, India stood at ""th position
with ..1.1 tonnes of gold reserve as of ;eptember $%"%, as per
the 5orld Gold ouncil /5G0. India is the largest consumer of
gold jewellery in the world, accounting for about $% per cent of
global gold consumption.The 5G expects demand for gold to
remain strong during $%"%. India and hina will continue to provide
the main thrust of demand growth, particularly for gold jewellery
Total identifable demand, tonnes and the gold price
Costume *ewelleryN The Indian costume jewellery mar'et is also
witnessing growth in the international mar'et, as per the Axport
3romotion ouncil for +andicrafts. The industry body further stated
that the Government is also wor'ing towards formulating an
international compliance code for manufacturing costume
jewellery.
Costume *ewellery
The current global costume jewellery and accessories mar'et is
estimated at G;M "J.# billion, of which India only exports around
G;M .# million, thereby, providing a huge opportunity area for the
Indian costume manufacturers.
The Indian costume jewellery mar'et is also witnessing growth in
the international mar'et, as per the Axport 3romotion ouncil for
+andicrafts. The industry body further stated that the Government
is also wor'ing towards formulating an international compliance
code for manufacturing costume jewellery. The current global
costume jewellery and accessories mar'et is estimated at G;M
"J.# billion, of which India only exports around G;M .# million,
thereby, providing a huge opportunity area for the Indian costume
manufacturers.
Platinum *ewellery mar%et: According to 3latinum Guild
International /India0 statistics, from about "$ retail outlets where
platinum jewellery was available in $%%%$%%", it is now available
in over #%% outlets. The platinum jewellery sales are expected to
expand to more than ",%%% showrooms in the next $# years.
Ceading platinum jewellery manufacturers in India have been
targeting consumers in the age group of $%H% years with high
disposable income. 3latinum jewellery items of various si9es, types
and weight are available with almost with every midsi9e jewellery
ma'er and seller in tierI and tierII cities in India.
Platinum *ewellery
1.4 +rends and Patterns:
+,-./ 1:
/0port Perormance o Gems and Jewellery in !ndia or the year
12''232'114
5/,6 S,./S 7S8 $!..!9:
2''232''; 11;<<.2
2'';32''= 12>1'.'
2''=32''> 1'3<2.;
2''>32'1' 1<234.<
2'1'32'11 1>231.2
Source: C$!/ 6eport
C?,6+31
/0port Perormance o Gems and Jewellery in !ndia or the year
12''232'114
!:+/6P6/+,+!9:3
The above table and chart shows the export performance of gems
and jewellery in India for the period $%%J8$%"". The export was
highest in the year $%"%8$%""/i.e0 "LJ#".J G; M )illion while
compared to other year. +ence there was a continuously increases
of gems and jewellery export performance in India.
+,-./ 2 :
Growth 6ate or /0port Perormance o Gems and Jewellery
in !ndia 12''232'114
5/,6 S,./S 7S8 $!..!9:
2''232''; '
2'';32''= >.=
2''=32''> 1>.=
2''>32'1' <'.>2
2'1'32'11 2<.<;
C?,6+32
Growth 6ate or /0port Perormance o Gems and Jewellery in
!ndia 12''232'114
!:+/6P6/+,+!9:3
The above table and chart shows the growth rate for Axport
performance of Gems and :ewellery in India. There was an upward
and downward movement in the Axport performance. In the year
$%%L8$%"% the growth rate was .%.LJ and later in the year $%"%8
$%"" it shows the decreasing growth rate /i.e.0 $...1.
+,-./ 3 :
+rend Pro*ected or /0port Perormance o Gems and
Jewellery in !ndia 12'1132'124
5/,6 S,./S 7S8 $!..!9:
2'1132'12 1>2''.;>
2'1232'13 2144=.<2
2'1332'14 232>2.2<
2'1432'1< 2<143.>=
2'1<32'12 22>>1.;1
CHART-3
Trend Projected for Export Performance of Gems and Jewellery
(2!!-2!"#
!:+/6P6/+,+!9:8
The above table and chart shows the trend movement of gems and
jewellery for the period $%""8$%"J. The trend value which shows
highest in the year $%".8$%"J /i.e.0 G;M $JLL".1" while compared
to other years. +ence there will be a continuous increasing of the
export performance of gems and jewellery in India.
CHAPTER~.
&AJOR E/PORTER' AND I&PORTER' O0 INDIAN
GE&' AND JE(E))ER*
&AJOR E/PORT' 0RO& INDIA1
&AJOR E/PORTER' IN INDIA1
&AJOR P)A*ER' O0 THE (OR)D
$,J96 C9$P/+!+96 !: +?/ G.9-,.
$,6)/+ 1
CHAPTER~2
E/PORT PER0OR&ANCE O0 INDIAN GE&' AND
JE(E))ER*
GE&' 3 JE(E))ER* 'ECTOR IN INDIA
Gems and jewellery play a signi6cant role in Indian customs and
traditions, ma'ing this sector integral to the economy and one of
the fastest growing industries in the country.
5orldwide, the gems and jewellery industry has been growing at a
good pace and is currently estimated at over G;M "#% billion. In
India, it accounts for nearly $% per cent of total Indian exports. It
provides employment to ".# million people directly and indirectly.
Apart from being the world7s largest diamond processing /cutting
and polishing0 country with an 4% per cent share in world mar'et
India7s favorable trade policies have made India the hub for gems
and jewellery.
Ceading ,randed jewellery is the new mantra in the mar'et, having
rapidly ac=uired a niche over the past few years. Increasing
purchasing power and disposable incomes of India7s middle class
has resulted in consumption growth of this industry by about ""
per cent in the 6ve8year period preceding $%%J8%1. Add to that the
insatiable Indian craving for gems and jewellery, and the demand
will s'yroc'et to G;M $% billion by $%"% and G;M #% billion in $%".,
according to industry experts.
India7s gems and jewellery industry has been allowed ." per cent
foreign direct investments by the government in single brand retail
stores attracting both global and domestic players to this sector.
The burgeoning retail industry in India is instrumental in
innovatively mar'eting and branding diamonds and traditional
jewellery, ma'ing inroads in this sector and contributing to the
nation7s economy. According to a report released by Technopa'
Advisors on hanging !etail Candscape in India, the jewellery and
watches mar'et is pegged at about G;M "#..$ billion. It is
expected to register a "$ per cent growth by $%"$, touching G;M
$#..H billion.
India7s economic boom in the country has translated into a large
consumer mar'et for jewellery and other luxury products, o(ering
a lucrative opportunity for major brands to ma'e their foray into
the Indian mar'et and establish their presence. Axperts believe
that by $%"#, India will become the biggest consumer of jewellery.
The history of the Indian gem and jewellery, a M#%8billion industry,
began and Fourished in the two leading ;tates of )aharashtra and
Gujarat. Axports from the industry fetched M"1." billion in $%%J8%1
against M"J.JH billion in $%%.8%J, showing a growth of $J per cent.
,ut in past " year we have seen some decline due to recession.
The journey of a diamond is said to begin with mining of roughs
followed by sourcing them by trading 6rms after which they trade
it with the processors who then process the rough diamonds to
manufacture cut and polished diamonds which then end with the
trade of the polished diamonds.
&AR4ET 'HARE O0 GE&' 3 JE(E))ER*
Carge mar'et for Gems < :ewellery with domestic sales of
over M"% billion.
HB of the global Gems and :ewellery mar'et.
Axports of over G; M"... billion@ over "4B of India7s exports.
According to recent statistics of the Gems < :ewellery Axport
3romotion ouncil /G:A30, India?s exports of gems <
jewellery /G:0 aggregated !s. 1<;=;.'> Crores
/G;M3><=.24million0 during the month ,pril3$ay3 '=.
India is the largest consumer of gold jewellery in the world.
Accounts for about $%B of world consumption.
India is the largest diamond cutting and polishing centre in
the world, i.e., J%B value share, 4.B volume share and L$B
share of the world mar'et by number of pieces.
The Indian domestic diamond jewellery mar'et was estimated
at around !s. 1J billion during $%%..
hina ran's sixth in the world in terms of diamond jewellery
retail value, ahead of India which is in seventh place. India
ran's third in terms of diamond value, while hina holds the
seventh position
Ind!a $ de"el$, jewellery !nd-sry: a 5l$bal mar6e
India has o(ered technical support and s'ill8training help to top
diamond and gold producing African nations, including ;outh
Africa, to develop their gem and jewellery industry. India believes it
would be bene6cial for the African nations, the largest producers of
rough diamonds and gold, as well as India, which is its biggest
consumer.
/mployment
Almost the entire gold and diamond sold or processed in India is
imported. +aving futuristic arrangements and agreements with top
diamond and gold producing nations will help this crucial sector to
thrive. The aim is to ma'e India a global hub for diamond mar'et.
Africa alone accounted for nearly .% per cent of the world?s total
diamond production@ India was speci6cally loo'ing at ;outh Africa,
,otswana, Ghana, -amibia and Angola for rough diamonds. )ost
of the rough diamonds came from Antwerp in ,elgium, but now
major suppliers had shown 'een interest in supplying uncut stones
directly to Indian companies.
Diamond imports
India?s diamond imports in $%%J8%1 stood at ML billion, while that
of gold was M"" billion. Interestingly, India is the largest diamond
cutting and polishing centre in the world. India is also the world?s
top gold consumer, accounting for about $% per cent of global
demand at 4%% tons annually.
Joint @enture initiati@es
India has also proposed to develop the gem and jewellery industry
of these Africa nations, besides providing s'ill training. Then there
could be joint venture initiatives between the companies and trade
bodies of India and African nations
C7a,er ~ 8
TO 'TUD* THE CO&PETITI9E PO'ITION O0
INDIAN GE&' AND JE(E))ER* E/PORTER'
C$m,e!!"e Ad"ana5e1
The factors leading to the Indian gems and jewellery industry7s
growth are many. A near dominance in diamonds and coloured
stones, manufacturing excellence, forward loo'ing entrepreneurs,
liberalised government policies and an extensive international
mar'eting networ' has helped India establish itself as one of the
leading jewellery centres in the world. )oreover, its high
consumption of gold, steady inFow of silver and growing interest in
platinum enable India to develop the entire range of jewellery, in
plain metal and studded, that caters to the desires of every
mar'et.
India7s competitiveness in gems and jewellery industry can be
assessed as follows
A"a!lab!l!y $# #ac$r c$nd!!$ns
Availability of s'illed manpower is a 'ey strength that has enabled
growth in India7s gem and jewellery sector. India has a large pool of
s'illed artisans with vast traditional 'nowledge and expertise in
jewellery ma'ing. It also has the largest resource pool in diamond
cutting and processing. India also has a good blend of technically
trained designers who are well8versed in latest $2 and #2 design
software.
India has a comparative advantage in terms of cost as well. It has one
of the lowest costs in diamond cutting 8 the cost per carat for
cutting diamond was G;M "% in India in $%%H as compared to G;M "1
in hina and G;M ".% in G;A. This ma'es diamonds sourced from
India much more pro6table. Dor example, diamond jewellery, which
costs between G;M J% and G;M L%, can be sold in the overseas
mar'et for G;M "4%.
Cow cost s'illed labour coupled with advanced technical capabilities
provides the right platform for the Indian gems and jewellery sector
to grow and become globally competitive.
0ra5mened sr-c-re and !nense c$m,e!!$n #$sers !nn$"a!$n
The fragmented nature of the industry, and gradual emergence of
the organised sector, including global players, has increased the
competitive pressures within the gems and jewellery sector in
India. In this scenario, companies are experimenting di(erent
strategies to maintain and increase mar'et share. ompanies are
innovating in design, retail format, networ' and branding, to
remain competitive. Axamples includeN
O 2esignN
8 5ith exclusive designs and guaranteed product =uality, Tanish=
has positioned itself as a reputed jewellery brand in the country.
8 2i(erent companies are pac'aging their designs in the form of
exclusive collections to di(erentiate themselves and
build brand e=uity.
O !etail format, networ'
8 Inter Gold, a diamond studded gold jewelry brand, is planning
to open a chain of J% stores across the country.
8 In order to increase product visibility, Gili struc' alliances with
several leading lifestyle and department stores to display their
trendy range of products.
8 Gili has placed its catalogue on its web site to encourage
-!Is to buy gifts online for friends and family in India.
8 Aven organised retail chains are promoting gems and jewellery
sales through their outlets.
8 ,ig ,a9aar is launching a Gold section.
8 ;upermar'ets li'e Cifestyle and ;hoppers ;top have jewellery
outlets.
Increasing competition in the industry has ensured that 6rms
wor' towards increasing their productivity and innovation, thereby
improving overall capability levels within the industry
&a@ouraAle dem a nd conditions
)any socio8economic factors inFuence the high demand for gems
and jewellery in India. The main driver of demand in India is still
the investment factor 8 gold and gold jewellery is regarded as
investment, as they can be easily converted to cash either
through sale or for guarantying loans.
hanging consumer demographics are, however, leading to
di(erent demand drivers, which promise future growth potential for
the industry.
.arBe tarBet consumer Aase and risinB income le@els:
India population is nearly $# per cent of the global population and
is one of
the most attractive consumer mar'ets in the world today. Income
levels across population segments have been growing in India.
5hile the growth of the consuming class, de6ned as those with an
annual income of G;M L4%0 or above, is driving overall demand for
consumer
products, the signi6cant trend for the gems and jewellery sector is
the
emergence of a signi6cant population of high net worth individuals
/+-Is0, who have the capability to invest more than G;M " million.
Though the number of +-Is is small in India, they are growing at the
rate of around "H.J per cent compared to around H8J per cent in
the case of other countries as exhibited in the graph. -AA! )I;+
survey, $%%$ has predicted that there will "H%,%%% households with
income greater than G;M %.$$ million and $.%,%%% households with
income between G;M %."" million to G;M %.$$ million in $%"%. This
segment of rich and super rich people is also one of the fastest
growing segment in India.
Another positive aspect for the industry is that +-Is are
increasingly loo'ing at alternative investment options /other than
,an's, !eal Astate or
A=uity0. :ewellery, particularly gold, has been traditionally a value
storage mechanism in India. Therefore growth in investment
options by +-Is can lead them to loo' at increased jewellery
purchases.
ChanBinB liestyles
Grban consumers in India have become more exposed to western
lifestyles, primarily through overseas travel. This has led to increased
preference for products and designs that are
popular abroad. Dor example, there is a shift towards preference for
machine made jewellery over the traditional handcrafted jewellery.
2emand for branded jewellery has also been
increasing, as the =uality, reliability and wearability of the jewellery is
becoming important.
5ith these emerging trends, the demand for branded jewellery is
further expected to increase. There is also an increasing demand for
diamonds, coloured gems, synthetic stones and other gems.
Tradition / Practice
5ith the growing awareness and inFuence of the west, the Indian
consumers are becoming highly demanding and sophisticated, re=uiring
better =uality of products and services. This puts pressure on the
players to consistently improve their product and service =uality
levels, thereby improving the overall competitiveness of the industry.
Presence o related and supportinB industries
India has a large number of institutions to support the designing and
development of gems and jewellery in India. Parious institutes across
the country o(er diploma courses in jewellery designing. ;ome of the
institutes o(ering these courses are -IDT /)umbai0, Indian 2iamond
Institute /;urat0, :ewellery 2esign < Training Institute /-oida0, The
Gemmological Institute of India /)umbai0 etc.
These courses provide inputs and training on the di(erent 'inds of
stones, colour schemes in jewellery, design themes, presentation and
framing, designing individual jewellery pieces, men7s jewellery, costume
jewellery, jewellery costing among other information.
These institutes provide a regular supply of trained manpower with
the re=uired s'ills and 'nowledge and thus help the industry to
grow and become competitive.
SC9+ ,:,.5S!S 9& !:D!,: G/$S ,:D J/C/../65
!:D7S+65 :
'ren57s
India may leverage its traditional craft8s'ills, low8cost labour, and
fabrication techni=ues in some of the jewellery products /such as
processing of small8si9ed diamonds0, and replicate such
advantages in the production of other products, and thereby
become a global player across the gems and jewellery segments.
(ea6nesses
7norBanised Sector 8 ,eing an unorgani9ed sector hampers the
ability of Indian gems and jewellery Industry to emerge as a world8
class supplier. According to a DII study, the gold processing
industry has around ".,%%% players, with only around 4% units
having revenues over G; M . million. India is also home to around
H,.%,%%% goldsmiths, over "%%,%%% gold jewellers, along with about
J,%%% diamond8 processing players and 4,%%% diamond jewellers.
.ow .e@el o +echnoloBy aAsorption N Gtili9ation of hi8tech,
speedy and eEcient machinery and software has led to the
gradual replacement of traditional Q manual methods of polishing,
manufacturing and designing of jewellery.
>nly few proactive players in the Indian jewellery industry are
always on the loo'out for better technology for their units.
+owever, such technology absorption is relatively low with other
jewellery manufacturer.
Cor% S%ill De@elopment N Absorption of technology may not be
helpful, without a proper blend of manual labour with machinery,
to provide ethnicity to the end8products. Gsage of semi8s'illed and
uns'illed wor'force in operation of such high end machines may
result in signi6cant under8 utili9ation of the machinery Q
technology, and may, at times, cause losses in operations. ;'ill
development is therefore very essential for proper reclassi6cation
of the wor'men in this industry.
6DD and Product De@elopmentN Another major challenge faced
by the industry is the low level of !<2 intensity, and facilities for
underta'ing !<2 and product development.
?allmar%inB o Jewellery N 2ue to insuEcient number of
certi6cation centres, it is diEcult to ma'e +allmar'ing of gold
jewellery mandatory across the country. At present, there are over
"%% ,I;8recognised assaying and hallmar'ing centres in India,
which are centered around Tier & " and Tier& $ cities.
O,,$r-n!!es
;'ill 2evelopment
Absorption of new technology
Ta'ing advantages of gold prices
6esearch and De@elopmentN 3roper !<2 solutions would help in
improving product =uality, reducing wastage, introducing new
designs and concepts, and innovation in supply chain management
and mar'eting. The gap between hi8end machines and uns'illed
labour can also be reduced with innovative !<2 solutions.
-randinB o JewelleryN According to an estimate by the Indian
,rand A=uity Doundation /I,AD0, the mar'et for branded jewellery is
expected to reach G; M $.$ billion by $%"%. ;ome of the jewellery
brands in India are 2e,eers, 27damas, Tanish=, >y9terbay, and
Gili. In order to gain mar'et share, branded jewellers may have to
come up with designs that customers want, and win the trust and
con6dence of consumers by hallmar'ing and demonstrating the
purity of the gold used by them.
Anhancing visibility through continuous participation in
International Axhibitions
!ncreasinB e0ports o Bold *ewellery8 India stands at no. H in
gold import which counts to 1..B of the world .
T7reas
/conomic slowdown and 6ecession8 There had been a loss in
jewellery export mar'et due to recession and global economic
slowdown. 2uring $%%18 %4, there was growth in export of gems
and jewellery by $#B, over the previous year. The growth trend
continued even in $%%48%L during which the exports showed a
growth of HHB over the previous year. +owever, during the period
April8 ;eptember $%%L8"%, due to economic slowdown, the demand
for gems and jewellery shran', which resulted in export slowdown
for India.
Dollowing the economic slowdown, asset price devaluations, job
losses and decrease in disposable income have happened, along
with escalation in gold prices, which have changed the
consumption pattern of gems and jewellery. Durther, the economic
slowdown has also a(ected the consumer buying pattern, with
growing demand for single8line jewellery, low8carat jewellery, and
gems8studded jewellery.
6ise in Prices 8 3rices of gold has been witnessing steep increase,
since the last few years, which has been changing the buying
pattern of consumers. 2uring the period 2ecember $%%4 8
2ecember $%%L, the price of gold per ten grams, has increased
from !s "#,HH. to !s "J,41%, showing an increase of $JB.
PossiAle +hreats rom China and rom 9ther Countries 8
hina may emerge as a rival in the longterm, mainly because of
the availability of cheap labour, growing domestic demand, and
also the improvement in the =uality of wor'manship in the country.
It may be added that increasing number of gold processing units
are setting up their facilities in hina.
!ncreased $ar%et Presence o other Jewellery N )ar'et of gold
jewellery is also eaten in a big way by other jewellery li'e platinum
, diamond , silver , arti6cial jewellery , pearls , precious stones etc.
C7a,er ~ :
APPRAI'ING GO9ERN&ENT 'CHE&E' 0OR
PRO&OTION O0 GE&' AND JE(E))ER*
G$"ernmen re5-la!$ns and s-,,$r
The Government of India /G>I0 has been wor'ing to develop
the gems and jewellery industry in India through several
initiatives.
The Indian gems and jewellery export industry had its
modern beginning in the "LJ%s, when the Government of
India introduced the !eplenishment /!A30 license,
allowing an importer to import rough diamonds worth 4%
per cent of the value of his exports. The !A3 license thus
provides the foreign currency needed to purchase rough
to manufacture the relevant type of polished diamonds.
At the outset, a H.per cent customs duty was levied on
rough diamond imports, but this duty was reduced to -IC
in the Gnion ,udget of $%%#8%H.
The ARI) 3olicy for $%%$8%1 contains a special focus on
exports of gems and jewellery through mar'et access
initiative schemes, duty free imports and appropriate
adjustments in value addition norms.
The government has set up various special economic
9ones /;AK0 for gems and jewellery industry with speci6c
incentives provided to units in ;AKs. Gems < jewellery
units in ;AKs and Axport >riented Gnits /A>Gs0 can
receive precious metal, vi9, goldQsilverQplatinum prior to
exports or post exports e=uivalent to value of jewellery
exported. This means that they can bring export
proceeds in 'ind against the present provision of bringing
in cash only.
In order to give a boost to exports of gems and jewellery,
Government too' major policy initiatives during $%%H8%..
!. Cowering import duty on platinum from G;M "$.$ per "%
gms to G;M H.JH.
!!. Axempting rough colored precious gems stones from
customs duty at the 6rst stage itself instead of claiming
reimbursements later.
!!!. !ough semi precious stones are already exempt, aimed
to further increase the exports of studded jewellery and
platinum jewellery.
The policies for this sector announced in the Doreign Trade
3olicy includeN
a4 2uty free re8import entitlement for rejected jewellery up
to $ per cent of Dreight on ,oard /D>,0 value of exports.
A4 Increased duty free import of commercial samples of
jewellery to G;M $$#$.".
c4 Import of gold of "4 carat and above under the
replenishment scheme.
5hile the focus is clearly on export promotion, the liberali9ed
policy regime will help players perform better in the domestic
mar'et as well by improving their overall competitiveness.
T7e Gem 3 Jewellery E;,$r Pr$m$!$n C$-nc!l
;et8up in "LJJ, the G:A3 has over the years e(ectively
moulded the scattered e(orts of individual exporters to ma'e
the gem and jewellery sector a powerful engine driving India?s
export8led growth. This apex body of the gem < jewellery
industry has played a signi6cant role in the evolution of the
Indian gem and jewellery industry to its present stature. G:A3
is continuously wor'ing towards creating a pool of artisans and
designers trained to international standards so as to
consolidate the Indian jewellery industry and establish it as a
prominent global player in the jewellery segment.
5ith strength of J,.%% members? spread all over the country,
the ouncil is primarily involved in introducing the Indian gem
< jewellery products to the international mar'et and promotes
their exports. To achieve this, the ouncil provides mar'et
information to its members regarding foreign trade in=uiries,
trade and tari( regulations, rates of import duties, and
information about jewellery fairs and exhibitions.
The role of G:A3 can be broadly classi6ed under the following
categoriesN
+rade &acilitatorN 8 The ouncil underta'es direct
promotional activities li'e organi9ing joint participation in
international jewellery shows, sending and hosting trade
delegations, and sustained image building exercises
through advertisements abroad, publications and audio8
visuals.
G:A3 also invites countries to explore areas of co8
operation in supply of rough diamonds and rough colored
stones as well as o(ers co8operation in jewellery
manufacturing. The ouncil regularly communicates with
Indian Ambassies, trade bodies and associations in
various countries. And 6nally, G:A3 also organi9es
seminars, buyer8seller meets, symposiums.
,d@isory 6ole: 3 A crucial area of activity of the ouncil
has also been aiding better interaction and
understanding between the trade and the government.
The ouncil ta'es up relevant issues with government
and agencies connected with exports and submit
documents for consideration and inclusion in the ARI)
3olicy. The ouncil also grants membership, registration
certi6cates and performs other roles as per the ARI)
3olicy.
:odal ,Bency or )imAerley Process CertiEcation
Scheme: 3 G:A3 wor's closely with the Government of
India and the trade to implement and oversee the
*imberley 3rocess erti6cation ;cheme. To that e(ect,
the ouncil has been appointed as the -odal Agency in
India under the *imberley 3rocess erti6cation ;cheme.
+raininB and 6esearch: 3 The Gems < :ewellery Axport
3romotion ouncil runs a number of institutes that
provide training in all aspects of manufacture and design
in )umbai, 2elhi, ;urat and :aipur. These training
programs are being conducted to ensure that the Indian
industry achieves the highest levels of technical
excellence.
Faried !nterests: 3 The ouncil also publishes a
number of brochures, statistical boo'lets, trade
directories and a bi8monthly maga9ine 8 ;olitaire
International, which is distributed internationally as well
as to its members.
RO)E O0 E/I& <AN4 IN 'UPPORTING INDIAN GE&' AND
JE(E))ER* INDU'TR*
ARI) ,an' of India see's to create an enabling environment to
promote two8way transfer of technology, trade and
investments and operates a wide range of lending, service and
support programmes. The ,an' has a variety of loan products
to cater to the 6nancing re=uirements of various enterprises.
The credit facilities are available for 6nancing at all stages of
export cycle of Indian 6rms. The ,an'7s Cines of redit /C>0,
extended to commercial ban's, 6nancial institutions, regional
development ban's, and entities overseas, serve as a mar'et
entry mechanism to Indian exporters, and provide a safe mode
of non recourse 6nancing option to Indian exporters. Apart
from C>, the ,an' o(ers buyer7s credit and supplier7s credit
for exports on deferred payment terms. These facilities help
companies, especially the ;)As, to o(er competitive credit
terms to the buyers and to explore new geographical mar'ets.
ARI) ,an' has extended supplier7s credit, pre shipment credit,
post shipment credit, and foreign currency pac'ing credit
/D30, to the 6rms engaged in the gems and jewellery sector,
among others. ARI) ,an' has signed an )>G with the Indian
2iamond Institute, which envisages development of human
resources through professional training, and thereby supports
the export e(orts of the industry. ARI) ,an' has provided
grant to I2I for upgrading C!; /Caser !aman ;pectroscopic
)achine0 e=uipment in order for the Institute to provide
training to carry out in8depth study of all types of gems. The
)>G will also enable the institutions to exchange literature,
data, information and research output on the gems and
jewellery industry, and also help in exchange of foreign experts
between the two institutions, in organi9ing their respective
training programmes.
C7a,er ~ =
CHA))ENGE'>CON'TRAINT' O0 GE&' AND
JE(E))ER* E/PORTED 0RO& INDIA
$a*or issues and challenBes o Bems and
*ewellery:
;ince >ctober $%%4, exports of gems and jewellery
products have been witnessing a sharp decline. The
decline was reported to be "J per cent, #H per cent and
$J percent in >ctober, -ovember and 2ecember $%%4.
Dresh orders declined by $% percent in -ovember and
2ecember
The unprecedented crisis and sluggish overseas demand
has forced the industry to cut production by almost $.
per cent resulting in job losses, according to the G:A3.
Dall in consumer demand and build up in inventory
li=uidity problems have led to loss of around two la'h
jobsduring the last six months.
The closing down of units, mostly in Gujarat, has led to a
situation where an estimated two la'h diamond wor'ers
have lost their jobs in ;urat, the hub of gems and
jewellery trade.
Some other important proAlems which are aced Ay
!ndian e0porters are as ollows:
"0 The major problems faced by gem and jewellery exporters
in sourcing their capital re=uirements are as followsN
+igh interest rate being charged by the ban's on export
credit.
;carcity of dollar credit for sourcing of rough diamonds.
!eduction in sanction on extension of credit limits to gem
and jewellery exporters..
$0 7norBanised Sector8 The gems and jewellery sector in
India is unorganised and fragmented. Around L%B of the
players operate in the unorganised sector mostly in family8run
operations.
#0 +hreat rom China8 urrently, hina is the second8largest
diamond processing centre in the world after India@ however, it
is slowly catching up and is threatening to displace the Indian
gems and jewellery sector from its dominant position in the
world.
H0 /0chanBe 6ateGCurrency 6is%8 The gems and jewellery
sector is a(ected by the rupeeQdollar exchange rate because it
is export8oriented. Any volatility in the exchange rates a(ects
the margins of the players.
<4 ?iBh .e@el o !n@entories8 As the gems and jewellery
sector is highly dependent on imports for its raw materials, the
players have to maintain a high level of inventory.
J0 -eneEciation in $ininB Countries8 India is facing a
threat from the emerging cutting and polishing centres in the
diamond8producing countries such as ;outh Africa, Ghana,
Angola, ,otswana, -amibia etc. The local government is
increasingly pressurising the African countries for processing
locally8mined materials such as diamonds within the country
itself to increase earnings through value addition to the vast
natural resources that these countries possess
10 DecreasinB Diamond 6eser@e 8 The supply of rough
diamonds is expected to fall in the near future as the diamond
reserves are decreasing. There has been no major diamond
reserve discovery since $%%#, when reserves were last
discovered in the 2iavi' 2iamond )ine in anada. The reduced
supply will push up the prices of rough diamonds, which will
further put pressure on margins. Duture supply levels are
largely dependent on the industry7s ability to identify new
diamond deposits.
40 Competition rom 9ther .u0ury Goods 8 5ith the
increase in disposable income and the change in standard of
living, the demand for luxury goods such as perfumes,
consumer electronics, leather, automobile, gadgets etc are
also increasing. The gems and jewellery sector is experiencing
competition from these luxury goods, which is eating into the
mar'et share of the sector.
L0 !ssue o ConHict Diamonds 3 India is the largest importer
of rough diamonds and a leading player in cutting and
polishing of the same, therefore, it runs the ris' of dealing with
conFict diamonds. onFict diamonds are those that are mined
illegally in African countries such as Angola, Ciberia, ;ierra
Ceone and the 2emocratic !epublic of ongo to fund illegal
military wars. In spite of the *3 certi6cation, there are issues
related to fa'e *3 certi6cate. These fa'e certi6cates put
diamond importing countries at a ris' of dealing in conFict
diamonds.
1'4 9utsourcinB ?uA 3 India can become an outsourcing hub
for designing and manufacturing jewellery. There is an
increased trend of outsourcing designing and manufacturing of
jewellery from India by global retail players such as 5al8mart
and : 3enny. The players in the sector can tap this opportunity
to diversify business, reduce ris' and increase revenues.
<I<)IOGRAPH*
JOURNA)' 3 NE('PAPER'
Daily newspapers
Financial Express
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