EXPORT-IMPORT BANK OF INDIA

OCCASIONAL PAPER NO. 138

INDIAN GEMS AND JEWELLERY:

A SECTOR STUDY

EXIM Bank’s Occasional Paper Series is an attempt to disseminate the findings of

research studies carried out in the Bank. The results of research studies can interest
exporters, policy makers, industrialists, export promotion agencies as well as
researchers. However, views expressed do not necessarily reflect those of the Bank.
While reasonable care has been taken to ensure authenticity of information and data,
EXIM Bank accepts no responsibility for authenticity, accuracy or completeness of such
items.

© Export-Import Bank of India

Published by Quest Publications
February 2010
CONTENTS

Page No.
List of Tables 5
List of Exhibits 7
List of Boxes 9
Executive Summary 11
1. Introduction 30
2. Raw Material Base: Global scenario 32
3. International Trade in Precious Metals, Gems and Jewellery 41
4. Profile of Select Countries 47
5. Status of Precious Metals, Gems and Jewellery Industry in India 61
6. Market Analysis 84
7. Challenges and Strategies 93
Annexure
1. World Gold Demand 108
2. Production of Diamond in the World and in India 109
3. World Exports and Imports (2007) of Select Precious Metals, 110
Gems and Jewellery
4. India’s Major Export Destinations and Import Source Countries 113
of Precious Metals, Gems and Jewellery (2008-09)
5. Members of Kimberley Process 116

Project Team:
Mr. S. Prahalathan, General Manager, Research & Planning Group
Ms. Renuka Vijay, Manager, Research & Planning Group

3
 List of Tables
Table Title Pg. No.
No.

1. Consumer Demand for Gold in the World 31

2. Major Producers of Gold in the World 33
3. Major Producers of Silver in the World 39
4. Major Producers of Gemstones in the World 39
5. Major Producers of Platinum in the World 40
6. Brazil’s Exports of Precious Metals, Gems and Jewellery 48
7. Brazil’s Major Export Destinations and Import Sources of 49
Precious Metals, Gems and Jewellery
8. China’s Exports of Precious Metals, Gems and Jewellery 50
9. China’s Major Export Destinations and Import Sources of 52
Precious Metals, Gems and Jewellery
10. Exports and Imports of Diamonds by Israel 54
11. Israel’s Exports of Precious Metal, Gems and Jewellery 54
12. Israel’s Major Export Destinations and Import Sources of 55
Precious Metals, Gems and Jewellery
13. Italy’s Exports of Precious Metals, Gems and Jewellery 56
14. Italy’s Major Export Destinations and Import Sources of 57
Precious Metals, Gems and Jewellery
15. Malaysia’s Exports of Precious Metals, Gems and Jewellery 58
16. Malaysia’s Major Export Destinations and Import Sources 59
of Precious Metals, Gems and Jewellery
17. Reserves of Gold in India 64
18. Reserves of Gold in India - State-wise 64
19. Trends in Foreign Exchange Reserves of India 66
20. Export and Import of Gold Jewellery by India 68
21. Exports of Gold Jewellery by SEZ/EPZ 69
22. Reserves of Diamond in India 70
23. India’s Exports and Imports of Diamonds 73
24. Reserves and Resources of Select Precious Stones in India 74
25. India’s Exports and Imports of Precious Stones 75
26. India’s Exports and Imports of Platinum 77

5
 Table Title Pg. No.
No.
27. India’s Exports and Imports of Pearls 78
28. India’s Exports and Imports of Silver 79
29. Market Analysis of Articles of Jewellery (HS 7113) 85
30. Market Analysis of Articles of Jewellery (HS 711311) 85
31. Market Analysis of Articles of Jewellery (HS 711319) 86
32. Market Analysis of Articles of Jewellery (HS 711320) 87
33. Market Analysis of Articles of Natural and Cultured Pearls, 88
Precious or Semi-precious Stones (HS 7116)
34. Market Analysis of Articles of Natural and Cultured Pearls, 89
Precious or Semi-precious Stones (HS 711610)
35. Market Analysis of Articles of Natural and Cultured Pearls, 90
Precious or Semi-precious Stones (HS 711620)
36. Market Analysis of Imitation Jewellery (HS 7117) 91
37. Market Analysis of Imitation Jewellery (HS 711711) 91
38. Export Performance of Indian Gems and Jewellery Industry 94
39. Analysis of Major Export Destinations of India for 95
Gems and Jewellery
40. Financial Performance of Companies (April-September 2009-10) 96
41. Production Cost/Net Sales Ratio Across Manufacturing Sector 97

6
 List of Exhibits
No. Title Pg. No.

1. Price Trends of Gold in Select Currencies 34

2. Company-wise World Diamond Production, 2007 35
(in terms of value and volume)
3. World’s Largest Producers of Diamonds, 2007 36
(In Terms of Volume and Value)
4. Diamond Pipeline 37
5. Value Chain of the Gems and Jewellery Industry 61
6. Value Chain of Diamonds and Precious Stones 62
7. Production of Gold in India 63
8. India’s Share in World Consumption of Gold Jewellery 65
9. India’s Gold Consumption 66
10. Trends in Prices of Gold (January 2005- December 2009) 67
11. Diamond Production in India 70
12. India’s Major Export Destinations and Source Countries 72
for Diamonds (2008-09)
13. Prices of Gold and Silver (December 2008-December 2009) 96
in India
14. Prices of Platinum (Jan 2008-Dec 2009) 103

7
 List of Boxes
No. Title Pg. No.

1. World Diamond Council 38

2. Responsible Jewellery Council 44
3. Kimberley Process 45
4. Diamond Dollar Account Scheme 82
5. Exim Bank’s Role in Supporting Indian Gems and 83
Jewellery Industry
6. BIS Certification Scheme for Hallmarking of Gold Jewellery 101
7. Benefits of Becoming a Member of Hallmarking Convention 102

9
EXECUTIVE SUMMARY
INTRODUCTION
Gems and jewellery are being used
by the Indians since ages, for both
aesthetic, as well as investment
purposes. India has the distinction
of being one of the first countries
to introduce diamonds to the world.
The country was also one of the
first countries to mine, cut & polish,
and trade in diamonds. The two
major segments of the gems and
jewellery business in India are gold
and diamond jewellery. While a
predominant portion of gold
jewellery manufactured in India is
for domestic consumption, a
predominant portion of rough, uncut
diamonds processed in India are
exported either in the form of
polished diamonds or in the form
of finished diamond jewellery. The
gems and jewellery industry has an
important role in the Indian
economy. With an estimated
consumption of 713 tonnes of gold
during the year 2008 (including
jewellery consumption of 501
tonnes), India is one of the largest
consumers of gold in the world.
RAW MATERIAL BASE:
GLOBAL SCENARIO
Production
Gold
The major producer of gold in the
world in the year 2008 was China
with a production of 295 metric
tonnes (growth rate of 7.3% over
the previous year); China held a
share of 18.9% of the total world
production of gold during 2008,
followed by South Africa (12.7%),
USA (10.7%), Australia (9.9%) and
Peru (9.7%). Compared to 2007,
during 2008, countries such as
Indonesia (-23.7%), Australia
(-8.5%), USA (-3.4%), Canada
(-1%) and South Africa (-0.8%)
witnessed a decline in production,
and countries such as China
(7.3%), Russia (5.1%) and Peru
(2.9%), witnessed an increase in
production of gold.
During the third quarter of 2009,
the demand for gold has shown a
decline in almost all the segments.
This may be partially owing to global
economic slowdown and increase in
11
prices, reducing the disposable
income with the consumers.
Diamond
During 2007, Botswana was the
largest diamond producing country,
in terms of value, estimated at US $
2.96 billion, recording a decline in
growth of 7.7% over the year 2006.
Botswana constituted a share of
25% in the world production of
diamonds. Botswana was followed
by Russian Federation (21.7%),
Canada (13.7%), South Africa
(11.7%) and Angola (10.5%), as the
world’s largest producers of
diamond. Lesotho (growth of
96.4%), Canada (17.5%) and Sierra
Leone (13%) were countries, which
showed impressive growth rates in
their production of diamonds during
2007.
Russia was the largest diamond
producer by volume with a production
of 38.3 million (23% of world’s
diamond production) carats in 2007,
followed by Botswana (20%), Congo
(17%), Australia (11%) and Canada
(10%). In terms of growth in volume
of production, Guinea recorded
115% growth in 2007 (over 2006),
followed by Canada (28%) and
Angola (5.7%).
Silver, Gemstones and Platinum
Major producers of silver in the
world in the year 2008 include Peru
12
(19%), Mexico (15.8%), China
(13.7%), Chile (10.5%), and
Australia (9.5%). There has been
an increase in the production
compared to the previous year in
almost all the major countries,
except USA and Australia, which
witnessed a decline of (–) 11.1%
and (–) 4.3%, respectively.
In the case of gemstones (other
than diamond), major producers of
the world include: Botswana (26.5%),
Russia (24.7%), Canada (19.1%),
Angola (10.6%) and South Africa
(6.5%). Though most of the countries
haven’t shown an increase in its
production in 2008, over 2007, some
countries such as Sierra Leone
(66.7%), Guinea (35%), Central
African Republic (27%), and Angola
(14.9%) have shown tremendous
increase in production in the year
2008, over the previous year. Brazil
(-33.3%) and Australia (-0.4%) were
the few major countries, which
showed a decline in production, over
the previous year.
The largest producer of platinum
in the world was South Africa, holding
a share of 76.6% of the total world
production, followed by Russia
(12.5%), Canada (3.6%), Zimbabwe
(2.8%) and USA (1.9%). However,
major producers such as South
Africa (–7.8%), Russia (– 7.4%) and
USA (– 4.1%) have shown a decline
in their production in 2008, over the
previous year.
INTERNATIONAL TRADE IN
PRECIOUS METALS, GEMS
AND JEWELLERY
Exports and Imports of
Precious Metals and Stones
Gold
The largest exporter of gold in the
world in the year 2007 was USA
with a share of 19.9% in total world
exports, followed by Australia
(15.9%), Canada (9.3%), Hong
Kong (7.3%) and Peru (7.1%). The
world’s largest importers of gold
include Switzerland (25.7%), UK
(19.6%), USA (8.4%), India (7.5%),
and South Africa (4.4%).
Diamond
Israel (with a share of 19.7%),
Belgium (19.6%), India (14.3%),
USA (12.8%), and UK (9.1%) were
the largest exporters of diamond in
the world, in the year 2007. The
largest importers of diamonds
include: USA (17.7%), Belgium
(16.2%), India (13.1%), Israel
(13%), and Hong Kong (12.9%).
India was an exporter as well as
an importer of diamonds, with a
respective share of 14.3% and
13.1% in the world. This may be
because, India imports rough
diamonds, for value addition, and
exports as cut and polished
diamonds.
Precious Stones
Hong Kong, USA, Switzerland,
Thailand and India were among the
leading exporters, as well as
importers of precious stones (other
than diamond) in the world in the
year 2007. Hong Kong was the
largest exporter of precious stones
(other than diamonds) with a share
of around 17.1% of the total world
exports, and was followed by USA
(13.2%), Switzerland (12.7%),
Thailand (12.2%), and India (9%).
In the case of imports, the leading
importers include: USA (26.5%),
Hong Kong (14.4%), Switzerland
(9.2%), Thailand (7.2%) and India
(6.3%).
Pearls
In the case of Pearls, Hong Kong
was the largest exporter, with the
exports valued US $ 482.92 million
constituting a share of 30.2%, in
the world exports of pearls in the
year 2007. Japan, China, Australia,
and French Polynesia were the
other major exporters of pearls.
Hong Kong was the largest
importer with a share of around
33.2%, followed by Japan (18.3%),
USA (15.8%), Germany (4.4%), and
Australia (4%).
Platinum
South Africa, constituting a share
of 32.5% was the largest exporter
of platinum in the world in the year
2007. UK, USA and Germany were
the other major exporters. USA was
also a major importer of platinum
constituting a share of 24.4% in the
world, followed by Japan (19.2%),
Germany (12.7%) and UK (8.6%).
13
Silver
Major exporters of silver in the year
2007 include: China, with a share
of 15.9% in the world, followed by
Mexico (11.2%), Hong Kong (8.7%)
and Germany (8.1%). USA, Hong
Kong, UK, Germany and India were
the major importers of silver in the
world.
Exports and Imports of
Jewellery
Articles of Jewellery
World exports of jewellery articles
made of precious metals was
valued at US $ 42.5 billion in 2007;
major exporters include: Italy
(14.2%), India (11.9%), USA
(10.5%), and Hong Kong (9.9%).
Major importers of jewellery include:
USA (23.7%), UAE (13.7%), Hong
Kong (9.1%), and Switzerland
(6.7%).
Articles of Natural / Cultured
Pearls, Precious Stones
World exports of articles of natural
and cultured pearls, or made of
precious stones was valued at US $
1945.99 million in 2007. Major
exporters include USA (76.4%),
Hong Kong (6.4%), China (5.4%),
Switzerland (2%), and Japan
(1.3%); major importers under this
category include: Hong Kong
(15.7%), Switzerland (14.9%), UK
(9%), Netherlands Antilles (9%),
and Japan (8.6%).
14
Articles of Imitation Jewellery
World exports of articles of imitation
jewellery were valued at
US $ 4967.03 million in 2007. Major
exporters of imitation jewellery
include Hong Kong (21.9%), China
(17.2%), Austria (8%), France
(6.4%), and Italy (5.7%); major
importers under this category
include USA (19.6%), Germany
(7.3%), France (7.3%), UK (6.4%),
and Italy (6.2%).
Profile of Select Countries
Brazil
Brazil is known for its diversity and
volume of precious stones deposits
in its soil such as tourmaline,
aquamarine, agate, amethyst,
citrine, topaz and quartz; Brazil is
the only major source of imperial
topaz and paraiba tourmaline in the
world.
During 2007, Brazil’s exports,
under the HS Code 71 catetory,
consisted mainly of gold (valued
US $ 790.88 million), followed by
precious stones (with a value of US $
111.57 million), and articles of
jewellery and parts (with a value of
US $ 72.9 million). Major export
destinations of gems and jewellery
include: USA, Germany, UK, Hong
Kong and Mexico, and the major
import sources include Peru, South
Africa, Germany, Belgium and UK.
Gold was largely exported to USA
(around 95% of the total exports of
gold by Brazil). India was a major
source country for import of
diamonds, imitation jewellery and
articles of natural and cultured
pearls.
China
China is one of the largest
consumers of gold, with gold
jewellery being the major item of
demand. In the year 2008, the total
demand for gold in China was
392.7 tonnes, a growth of 19.8%,
over the previous year. During the
third quarter of 2009, the gold
demand in China was 120.2
tonnes, a growth rate of 12% over
the corresponding quarter of 2008.
After diamond was found in the
three provinces of Liaoning,
Shandong and Hunan, the diamond
industry in China has been growing,
since 1980s. The annual production
of diamonds in 2008 was US $ 1.3
million (69.4 thousand carats), an
increase of 18% in value (13% in
carat) since 2006. China is one of
the largest producers of silver in the
world. In the year 2008, China
produced silver worth 2600 tonnes,
an increase of 1.6% over the
previous year; China, in the year
2008, held a share of 13.7% in the
world production of silver.
China’s exports of gems and
jewellery have grown by 21% per
annum since 2005; from US $ 5.5
billion to US $ 8.1 billion in 2007. The
sub-item which was largely exported
(according to value) from China,
under the HS Code 71 category, was
articles of jewellery and parts of
precious metals with a share of
30.9% in the total exports of gems
and jewellery in the year 2007.
However, silver (42%), and articles
of natural or cultured pearls and
precious and semi precious stones
(30.8%) were the items which
showed highest CAGR during the
period 2005 – 2007. Exports of
precious stones showed a decline
(-26.4%) over the years, from US $
29.1 million in 2004 to US $ 15.8
million in 2007. Major destinations for
China’s gems and jewellery exports
include: Hong Kong, USA, Belgium,
Switzerland and UK.
Israel
Diamond jewellery is the main sub
segment of Israel’s gems and
jewellery industry, followed by gold,
silver and imitation jewellery. The
artists in Israel make use of most
of their skills, innovative
technologies and techniques, which
enable them to offer their products
at very reasonable prices.
Exports of diamonds, according
to the Central Bureau of Statistics,
Government of Israel, showed a
decline following the economic
recession. During January -
September 2009 there was a drastic
decline in exports ranging above
15
40%. The economic slowdown was
cited as the main reason for this
decline in exports. During 2007, the
export of precious metals, gems and
jewellery by Israel touched US $ 19.1
billion, achieving a CAGR of 7.5%,
during 2005-2007; and the imports
of Israel were US $ 12.6 billion in
2007. Israel was a major exporter of
diamonds, which constituted around
97% of the total gems and jewellery
exports, and around 2% was
accounted by articles of jewellery.
Major export destinations of
diamonds from Israel include: USA,
constituting a share of 48.5%,
followed by Belgium (16.7%), Hong
Kong (15%), India (4.8%) and
Switzerland (4.7%). Major source
countries for imports of diamonds by
Israel include: USA (40%), Belgium
(24.8%), India (8.5%), Hong Kong
(8.2%), and UK (8.1%).
Italy
Italy has a large gems and jewellery
industry, mainly located in the
regions, namely, Veneto, Toscana,
Lombardia, Lazio and Piedmont.
These regions have captured more
than half of the Italian market of
gems and jewellery. There are two
major clusters in Italy for gems and
jewellery which are located in
Vicenza and Arezzo.
Constituting a share of 69.5%,
articles of jewellery and parts was the
major jewellery export item, under
the HS Code 71 category, in Italy.
16
However all the categories of
precious metals, gems and jewellery
have witnessed an increase in
exports from Italy, with platinum and
diamonds witnessing the highest
CAGR of 69.8% and 52%,
respectively, during 2005 to 2007.
The exports of platinum increased
from US $ 222.71 million to US $
642.17 million, and that of diamonds
increased from US $ 56.83 million to
US $ 131.45 million during this
period. The total exports of precious
metals, gems, and jewellery (HS
Code 71) witnessed a CAGR of
17.4%, since 2005, showing an
increase from US $ 6.3 billion to US
$ 8.7 billion, in value terms. Major
export destinations of Italy’s precious
metals, gems and jewellery industry
include: USA, Switzerland, France,
UAE and UK, and the major source
countries for import of precious
metals, gems and jewellery include:
USA, Switzerland, France, Belgium
and Hong Kong. Major export
destinations of articles of jewellery
and parts include: USA (15.4%), UAE
(13.6%), Switzerland (10.2%),
France (6%) and UK (4.9%), and the
major source countries for articles of
jewellery and parts include:
Switzerland (29.6%), Hong Kong
(13.9%), France (8.8%), Poland
(7.9%), and Turkey (7.7%).
Malaysia
Malaysia is another major producer
and exporter of gems and jewellery,
with the industry having
concentration in Penang. According
to industry sources, approximately
75-80 percent of the gold and
jewellery in Malaysia are
manufactured or fabricated in
Penang, followed by Johor Bahru
and Kuala Lumpur, with activities
ranging from manufacturing to
import, export, retail and wholesale.
During 2007, exports of precious
metals, gems and jewellery from
Malaysia were valued at US $ 2.1
billion, of which 64% constituted
articles of jewellery and parts,
followed by gold with 19% share.
Other export segments of gems and
jewellery, namely, diamonds,
precious stones, pearls, and silver
constituted marginal share in the
total gems and jewellery exports from
Malaysia.
Major export destinations for
gold include: Thailand (27.9%),
Australia (13.9%), Hong Kong
(13.2%), China (8.9%), and Taiwan
(8.2%), whereas the major source
countries for gold include: Japan
(71.3%), Singapore (19.2%),
Indonesia (3.2%), USA (2.9%), and
Hong Kong (1%). In the case of
articles of jewellery and parts, major
export destinations include: UAE
(71.2%), Singapore (21.3%), USA
(2.6%), China (1.7%), and Hong
Kong (1%); and the major source
countries include: Singapore
(60.1%), China (14%), Hong Kong
(7%), USA (4.8%), and Switzerland
(4.1%).
STATUS OF PRECIOUS
METALS, GEMS AND
JEWELLER Y INDUSTRY IN
INDIA
Gold
The total resources of gold in the
country, as on April 2005, were
estimated at 390.28 million tonnes.
Out of these, 19.25 million tonnes
were under the reserve category,
and the balance 371.03 million
tonnes were under the resources
category. Besides, the total
resources of gold ore of placer type
in the country were estimated at
26.12 million tonnes. Karnataka has
the largest known reserves of gold
in India followed by Rajasthan and
Kerala. Although there have been
significant ore resources, India’s
gold production has shown a
decline over the years.
India has been the largest
consumer of gold jewellery in recent
times, and in the year 2008, the gold
consumption in India was estimated
to be 501 tonnes, accounting for 23%
of world demand. In the third quarter
of 2009, the consumption of gold
jewellery in India has declined by
nearly 37% and the total
consumption of gold has declined by
around 45% over the same period in
the previous year.
During the year 2008-09, the
export of gold (or jewellery) has
witnessed a growth rate of 51.1%
over the previous year, from US $
4.3 billion to US $ 6.5 billion, and the
17
imports had grown by 24.4%, from
US $ 17.1 billion to US $21.2 billion.
Major source countries for import of
raw gold by India include
Switzerland, constituting 44.6% of
the total imports of raw gold in the
year 2008-09, followed by Australia
(19.7%), UAE (19.6%) and South
Africa (10.4%). Main export
destinations of gold jewellery include
UAE, Singapore and Hong Kong.
Diamond
According to USGS data, diamond
production (gem and industrial) in
India in the year 2007 was 55
thousand carats and has remained
more or less stagnant over the
years. As per United Nations
Framework Classification (UNFC)
system, as on 1.4.2005, India had
total resources of around 4.5 million
carats, of which 1.2 million carats
was reserves. By grades, about
17% of resources are of gem
variety, 18% are of industrial variety,
while bulk of the resources (65%)
is placed under unclassified
category. Andhra Pradesh accounts
for 40% of diamond resources,
followed by Madhya Pradesh
(32%), and Chhattisgarh (28%).
India imports rough diamonds
and process them for value addition
and exports. As a result, India is a
net exporter under this category in
value terms. India exported
diamonds valued US $ 14.2 billion
during 2007-08, an increase of 34%
18
over the previous year. During the
year 2008-09, the exports of
diamonds showed an increase of
10.6%, touching US $ 15.7 billion.
Export of crushed industrial
diamonds showed a tremendous
increase during this period. India
imported diamonds valued
US $ 7.7 billion in 2007-08; during
the year 2008-09, the imports
increased by 110% from US $ 7.7
billion to US $ 16.3 billion. In the case
of diamond exports, major
destinations were: Hong Kong
(30.1%), UAE (22.5%), USA
(17.6%), Belgium (11.4%), and Israel
(5.0%). As regards diamond imports,
Hong Kong (27.6%), Belgium
(24.4%), UAE (25.6%), UK (6.4%),
and USA (4.8%) were the major
source countries for India.
Precious stones
Although traditional Indian
gemologists have identified around
84 precious and semi-precious
stones, nine stones, namely: Ruby,
Emerald, Pearl, Diamond, Red
coral, Zircon, Blue sapphire, Yellow
sapphire, and Cat’s Eye, form the
‘Navratnas’ or nine gems. India was
more an exporter of precious
stones than an importer of the
same, and the difference between
these two being minimal. During
2007-08, the exports of precious
stones were US $ 280.8 million, an
increase of 6.5% over the previous
year, and in the year 2008-09,
exports of precious stones
witnessed a marginal decline of
0.1%, over the previous year.
Import of precious stones has
grown marginally in the year 2008-
09, by only 4.6% over the previous
year.
Major export destinations for
precious stones (other than
diamonds, which were not worked or
graded) include: USA (30.5%), Hong
Kong (22.7%) and Thailand (13.9%).
The source countries for the same
include: Thailand (23.3%), Hong
Kong (19.1%), and Zambia (13.9%).
In the case of articles of precious
stones other than diamonds (natural/
synthetic), the major export
destinations were USA (38.8%),
Germany (23.9%), and Switzerland
(9%), and the source countries for
the same include: Hong Kong
(27.8%), Sri Lanka (22.2%), and
Germany (16.7%).
Platinum
The total resources of platinum
group of metals in India, as on April
2005, was only 14.2 tonnes; the
entire known resources are located
in Niligiri, Boula-Nuasahi and
Sukinda areas in Orissa. The
exports of platinum which had
witnessed an increase of 175% in
value terms, during 2007-08, over
the previous year, showed a
tremendous increase of 1804%
during the year 2008-09, over the
previous year. Imports also showed
a high increase during the year
2008-09, of around 6542% over the
previous year. During 2007-08, the
imports had grown by 55% over the
previous year. UAE was the major
export destination for India’s export
of raw platinum, constituting 49%
of total exports; major source
countries for raw platinum imports
by India include: UAE (78.7%),
South Africa (15.3%), Switzerland
(2.7%). UAE and Australia were the
major export destinations of
platinum jewellery constituting a
combined share of 43.8% and the
major source countries for imports
by India were Thailand and Belgium
with 69% and 13% share,
respectively.
Pearls
During 2007-08, the exports of
pearls had witnessed an impressive
performance, with the export of
cultured pearls showing a growth
of 125%. During the year 2008-09,
the imports of pearls declined by
7.8% over the previous year. Major
export destinations of pearls
include: USA (38.6%), UAE
(14.1%), Austria (12.0%), Japan
(7.5%), and Hong Kong (10.8%).
The source countries for import of
pearls by India include Japan
(34.5%), China (31.9%) and Hong
Kong (21.1%).
Silver
During 2007-08, exports of silver
(unwrought and semi-manufactured
form) witnessed a negative growth
19
of 35.5%, and silver jewellery
witnessed a growth of 19.5%.
However, during the year 2008-09,
exports of silver (unwrought and
semi-manufactured form) grew by
27.4%, and export of silver
jewellery witnessed a growth of
87%. During the year 2008-09,
India imported unwrought silver
valued around US $ 2 billion, a
growth of 79% over the previous
year. Import of silver jewellery
witnessed a growth of 80.6%. Major
export destinations of silver include:
USA (21.3%), Switzerland (29.7%),
UK (13.8%), Iran (11.5%), and
Japan (9.3%), and that of silver
jewellery include: USA (38.1%),
China (12.6%), UAE (10.4%), Hong
Kong (7.1%), and UK (5.8%). The
source countries for import of silver
by India include: UK (38%), China
(15.4%), Russia (11.8%),
Switzerland (11.6%) and Hong
Kong (3.8%); and that of silver
jewellery include: USA (35.2%),
Italy (17.6%), Hong Kong (12.3%),
UAE (12.4%), and Thailand (6.1%).
ROLE OF EXIM BANK IN
SUPPORTING INDIAN GEMS
AND JEWELLERY INDUSTRY
Exim Bank of India seeks to create
an enabling environment to
promote two-way transfer of
technology, trade and investments
and operates a wide range of
lending, service and support
programmes. The Bank has a
variety of loan products to cater to
20
the financing requirements of
various enterprises. The credit
facilities are available for financing
at all stages of export cycle of
Indian firms. The Bank’s Lines of
Credit (LOC), extended to
commercial banks, financial
institutions, regional development
banks, and entities overseas, serve
as a market entry mechanism to
Indian exporters, and provide a
safe mode of non recourse
financing option to Indian exporters.
Apart from LOC, the Bank offers
buyer’s credit and supplier’s credit
for exports on deferred payment
terms. These facilities help
companies, especially the SMEs, to
offer competitive credit terms to the
buyers and to explore new
geographical markets.
Exim Bank has extended
supplier’s credit, pre shipment credit,
post shipment credit, and foreign
currency packing credit (FCPC), to
the firms engaged in the gems and
jewellery sector, among others. Exim
Bank has signed an MOU with the
Indian Diamond Institute, which
envisages development of human
resources through professional
training, and thereby support the
export efforts of the industry. Exim
Bank has provided grant to IDI for
upgrading LRS (Laser Raman
Spectroscopic Machine) equipment
in order for the Institute to provide
training to carry out in-depth study
of all types of gems. The MOU 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 organizing their respective training
programmes.
MARKET ANALYSIS
The product-country analysis shows
that USA, EU, Japan and Hong
Kong are the leading importers of
major gems and jewellery products.
These countries have been
sourcing their jewellery import
requirements mainly from countries
such as Hong Kong, China, Italy,
USA, Germany and UK, of which
USA, UK and Germany are
importers as well as exporters.
Hong Kong appears to be more of
a trading hub in the Asian continent.
India served as one of the major
source countries for diamonds, as
also for articles of jewellery for
select countries. In the case of
diamonds, India is one of the major
importers of rough diamonds, and
one of the major exporters of cut/
polished diamonds. India’s exports
of cut and polished diamonds have
been to all major markets in the
world. India is also a major exporter
of articles of jewellery and parts,
and the exports have been to all
the major importers in the world.
However, some of the markets are
not well-explored by Indian gems
and jewellery exporters. For
example, India may endeavour to
concentrate on markets like: UK
and Switzerland for articles of
jewellery of gold and platinum
group of minerals (HS code
711319); USA, Germany, UK and
Switzerland for articles of jewellery
made of silver (HS code 711311);
USA, Japan, Switzerland and UAE
for articles of natural and cultured
pearls (HS code 711610);
Switzerland, UK and Japan for
articles of semi-precious stones
(HS code 711620); and USA,
Germany, France, UK and Italy for
articles of imitation jewellery (HS
code 7117).
India may leverage its traditional
craft-skills, low-cost labour, and
fabrication techniques in some of the
jewellery products (such as
processing of small-sized
diamonds), and replicate such
advantages in the production of other
products, and thereby become a
global player across the gems and
jewellery segments.
CHALLENGES AND
STRATEGIES
Challenges
Unorganised Sector
Being an unorganized sector
hampers the ability of Indian gems
and jewellery Industry to emerge as
a world-class supplier. According to
a FICCI study, the gold processing
industry has around 15,000 players,
with only around 80 units having
21
revenues over US $ 5 million. India
is also home to around 4,50,000
goldsmiths, over 100,000 gold
jewellers, along with about 6,000
diamond-processing players and
8,000 diamond jewellers.
Impact of Recession
There had been a loss of market
for gems and jewellery exports due
to recession and global economic
slowdown. During 2007-08, there
was growth in export of gems and
jewellery by 23%, over the previous
year. The growth trend continued
even in 2008-09 during which the
exports showed a growth of 44%
over the previous year.
However, during the period April-
September 2009-10, due to
economic slowdown, the demand for
gems and jewellery shrank, which
resulted in export slowdown for India.
Following 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. Further, the
economic slowdown has also
affected the consumer buying
pattern, with growing demand for
single-line jewellery, low-carat
jewellery, and gems-studded
jewellery.
Rise in Prices
As mentioned earlier, the prices of
precious metals, especially gold
and silver, has been witnessing
22
steep increase, since the last few
years, which has been changing
the buying pattern of consumers.
During the period December 2008 -
December 2009, the price of gold
per ten grams, has increased from
Rs 13,445 to Rs 16,870, showing
an increase of 26%. Even though
the price of silver had witnessed a
decline after February 2009, it
again started rising after April 2009.
From Rs 17,847 per kg in
December 2008, the silver price
increased to Rs 27,430 per kg in
December 2009.
Possible Threats from China
and from Other Countries
Producing Diamonds
Although India currently enjoys
dominance in the world’s cut and
polished diamond market, China
may emerge as a rival in the long-
term, mainly because of the
availability of cheap labour, growing
domestic demand, and also the
improvement in the quality of
workmanship in the country. It may
be added that increasing number
of diamond processors are setting
up their facilities in China due to
these reasons. Also, there has
been growing pressure in major
diamond producing countries in
Africa, like Botswana, Namibia and
South Africa, to gain further
economic benefits from diamond
value chain, seeking investments in
cutting and polishing industry. Such
developments may affect the
prospects of India.
Low Level of Technology
Absorption
Utilization of hi-tech, speedy and
efficient machinery and software
has led to the gradual replacement
of traditional / manual methods of
polishing, manufacturing and
designing of gems and jewellery.
Proactive players in the Indian
gems and jewellery industry are
always on the lookout for better
technology for their units. However,
such technology absorption is
relatively low in Indian gems and
jewellery industry, due to the small
size, and unorganized nature of
majority of the players in this
industry. Also, mere absorption of
technology may not be helpful,
without a proper blend of manual
labour with machinery, to provide
ethnicity to the end-products.
Usage of semi-skilled and unskilled
workforce in operation of such high-
end machines may result in
significant under-utilization of the
machinery / technology, and may,
at times, cause losses in
operations. Skill development is
therefore very essential for proper
reclassification of the workmen in
this industry.
R&D and Product Development
Another major challenge faced by
the industry is the low level of R&D
intensity, and facilities for
undertaking R&D and product
development. Proper R&D solutions
would help in improving product
quality, reducing wastage,
introducing new designs and
concepts, and innovation in supply
chain management and marketing.
The gap between hi-end machines
and unskilled labour can also be
reduced with innovative R&D
solutions.
Strategies
Branding of Jewellery
Branding of jewellery plays a very
important role in the jewellery
market as it assures consumers
that the products are of certain
quality, durability, and conform to
several social, environmental and
durability standards. Brand
promotion is therefore one of the
best modes of market penetration.
Though in its nascent stage,
branded jewellery in India has been
showing encouraging signs, despite
tough competition. According to an
estimate by the Indian Brand Equity
Foundation (IBEF), the market for
branded jewellery is expected to
reach US $ 2.2 billion by 2010.
Some of the jewellery brands in
India are DeBeers, D’damas,
Tanishq, Oyzterbay, and Gili. In
order to gain market share,
branded jewellers may have to
come up with designs that
customers want, and win the trust
and confidence of consumers by
hallmarking and demonstrating the
purity of the gold used by them. To
compete with traditional players,
23
branded players may also find
some ways to differentiate
themselves from others. While the
success of a particular brand may
depend on differentiation and
affordability, quality will be a key
element in sustaining a brand. In
addition, branded players require
focused advertising and astute
salesmanship to compete with
traditional jewellers.
Hallmarking of jewellery
Hallmarking is the accurate
determination and official recording
of the proportionate content of
precious metal in jewellery.
Government of India has been
protecting the interests of
consumers from adulteration, and
irregular metal quality, and
launched the Hallmarking Scheme
through Bureau of Indian
Standards. The principal objectives
of the Hallmarking Scheme are to
protect the consumers against the
fraud of adulteration and to oblige
the manufacturers to maintain legal
standards of fineness. However, it
is difficult to make Hallmarking of
gold jewellery mandatory across the
country due to insufficient number
of certification centres. At present,
there are over 100 BIS-recognised
assaying and hallmarking centres in
India, which are centred around
Tier – 1 and Tier – 2 cities. It is
proposed that India may consider
expanding the network of
hallmarking infrastructure across
the country, and help penetrate
24
quality products even in rural areas.
India may also consider becoming
a member of International
Hallmarking Convention, and derive
the benefits of such Convention.
Increasing Market Presence of
Platinum Jewellery
With the gold prices increasing at
record levels, consumers have
started showing interest in
ornaments made from other metals,
like platinum and palladium. The fall
in prices of platinum has also
triggered the demand for platinum
jewellery across the world, including
India. During the past one year the
prices of platinum have witnessed
decline, which is one of the main
reasons for the consumers to opt
for platinum jewellery. During March
2008, the price of platinum stood
at US $ 2005 per troy ounce (31.1
gms), and during November 2008,
the price fell down to as low as US
$ 844 per troy ounce. As of
December 2009, the price of
platinum stood at US $ 1448 per
troy ounce. As the demand for
platinum jewellery is increasing and
especially when the consumer
preferences are shifting to platinum
jewellery, due to rise in price of
gold, Indian jewellers need to
diversify their product range and
concentrate more in the
manufacture of platinum-based
jewellery. Leading retail jewellers
should also add exclusive space for
platinum jewellery in their stores.
According to industry observers, at
present, facilities for ore
beneficiation and extraction of
platinum group metals do not exist
in the country. Technology also has
to be imported for extraction of
platinum group of metals, which
should be promoted in India
Change in Product Portfolio
As the recession is reducing the
demand for jewellery products
worldwide, it is necessary to
diversify the export product
portfolio, and concentrate more on
lesser-priced jewellery, such as
imitation, fashion or costume
jewellery. Indian gems and jewellery
industry may also diversify the
export product portfolios on the
lines of the change in perception
of the consumers. It may be
mentioned that the new-age
consumer perceives jewellery as a
personal accessory that manifests
the wearer’s attitude, personality
and lifestyle. Significant
opportunities may be available to
the players in the Indian jewellery
industry, if they leverage and
package the products with the
blending of tradition and culture in
designs that are universal and
contemporary in their aesthetic
appeal. While the products with
such blend would stand out with
resemblance of cultural and
regional identity, they may not
significantly look as ethnic products.
In other words, the products should
be a new-look piece, but with
traditional inspiration. Branding and
packaging are very important in
marketing such products. Focusing
on such product lines would enable
the players in establishing an edge
over their competitors. Players
should also have desire for product
innovation to catch-up with the
change in consumer trends.
Continuous Skill Development
Human resource is one of the
critical factors for the gems and
jewellery industry, as the industry
is labour-centric. Non-availability of
skilled workers is often cited as one
of the major reasons for the inability
of the players in this industry to
scale up their operations. Thus, the
players need to constantly upgrade
the skills of the workmen, through
training and retraining strategies, to
enhance their productivity. Some of
the focus areas for imparting skill-
upgradation include: technology
interface of design and product
development, innovation in
manufacturing process and
reduction of wastage,
standardization and quality control,
and international networking and
marketing. In addition to firm level
strategies, the industry also needs
to address the challenge of skill
development collectively. Supply of
craftsmen / artisans that come
through generations need to be
complemented by fresh talents,
trained in a professional manner, to
have access to wider talent pool.
The industry may establish close
linkages with the existing learning
25
centres, and help them in imparting
skills / training that are needs of
the hour. At present, there are few
institutes which provide training in
jewellery design, viz., Indian
Institute of Gems and Jewellery,
Indian Diamond Institute, and
National Institute of Design. Also,
the National Skill Development
Corporation (NSDC), initiated by the
Government of India, is expected
to give thrust on skill development
of various sectors, including gems
and jewellery. It is also important
for the players to accomplish
greater degree of professionalism
and establish appropriate
organization structure that would
attract and retain best talent in the
industry.
Technology Upgradation
Players in this industry need to
adopt latest technology, including
the ICT interface in all aspects,
starting from mining, cutting and
polishing, to fabrication and
marketing. Technological solutions
are available for several of the
challenges faced by the gems and
jewellery industry; these solutions
include: innovations in designs
(through CAD/CAM machinery),
quality and finish of products
(through infrared, photo-typing,
etching, wax-casting), cost control
in process and reduction of
wastage (laser cutting, hollow-tube
processing). Imparting of
technological solutions may reduce
cost and time, which may not be
26
feasible under conventional
methods. Technology also helps the
fabricators to churn-out the new-
design products in a much speedy
way.
Establishing Diamond Bourses
At present, one diamond bourse,
Bharat Diamond Bourse, has been
established in Mumbai.
Nevertheless, the traders have to
visit Antwerp, Israel, Hong Kong
and other locations to buy and sell
rough and polished diamonds.
Establishment of more diamond
bourses will give a major fillip to
India to emerge as an international
diamond trading hub, and also to
make trading in diamonds easier
for the players in India. It will be
easier to get the rough diamonds
through these trading centres and
also for getting buyers for the cut
and polished diamonds.
Government of India has already
announced the plan for establishing
more diamond bourses to make the
country an international trading hub
to boost the gems and jewellery
exports. These diamond bourses
are expected to provide a single
platform for traders and it would
help in making India a trading
centre for diamonds.
Increase in Exploration
Activities
As per United Nations Framework
Classification, total resources
(reserves and remaining resources)
of gold ore (primary) in India as on
April 1, 2005, were estimated at
390.28 million tonnes, of which only
19.25 million tonnes are placed
under reserve category, and the
rest, 371.03 million tonnes, under
resources category. Besides, it has
been estimated that the total
resources of gold of placer type in
the country would be around 26
million tonnes. However, resource
augmentation and gold production
have not been significant in India.
This may require increase in
exploration activities with
improvements in technology and
know-how. According to a report by
the Planning Commission,
Government of India, the mining
sector also requires improved
method of narrow-vein-mining for
achieving full economic benefits.
Introduction of small-scale mining
culture in the gold industry is also
another requirement with adoption
of modern gold extraction
technology. Cluster mining of small
gold deposits may also deserve
consideration and should be
encouraged. The metallurgical
technique for extraction of platinum
group of elements from low grade
ore is also required to be sourced
from developed countries, in order
for India to become a producer of
platinum. Efforts should be made
to increase the production of rough
diamonds from India to partly meet
the requirement of Indian diamond
cutting and polishing industry.
Exploration activity in different
states is required to be boosted for
discovering new economically
viable kimberlite / lamporite rocks
for indigenous production of
diamonds.
Enhancing Visibility through
Continuous Participation in
International Exhibitions
Continuous participation in
international trade shows and
jewellery exhibitions is very
important for the Indian gems and
jewellery industry; such strategy
would help in projecting the industry
as a player in entire jewellery value
chain, from cutting, polishing,
fabricating of wide variety of plain
and stone-studded jewellery.
Participation in international
exhibitions would also help
establish new business links for the
Indian gems and jewellery industry,
and would also pave the way for
the industry to develop further
business links to enhance the level
of their innovations in designs and
technology. This platform would
also help in attracting and
mobilizing the major buyers of
gems and jewellery internationally,
and also provide exhibitors with
learning opportunities and exposure
to new markets and trends. The
recent foreign trade policy has
increased the personal jewellery
carriage limit to US $ 5 million, from
US $ 2 million, and the limit in case
of personal carriage, as samples,
for export promotion tours, has also
27
been increased from US $ 0.1
million to US $ 1 million. This would
also help the industry promote
exports, as the industry will be able
to showcase more jewellery in
exhibitions abroad.
CONCLUSION
World gems and jewellery industry
is on the verge of transformation
due to both supply-side and
demand-side factors. Some of the
recent trends in the global gems
and jewellery industry include:
fragmentation of rough diamond
supply positions; emergence of new
mining areas; beneficiation
movement in mining countries, and
ever-growing raw material prices. At
fabrication level, fashion and styles
have been changing significantly;
the ratio of cost of raw materials
to sales has been coming down,
squeezing the profit margin of the
fabricators. There has been
volatility in raw material prices; the
global slowdown led to low capacity
utilization in this industry bringing
down the margins in the jewellery
manufacturing. In some countries,
including India, some of the
processing units have been partially
shut down due to slackening
demand. As a result, the value
chain in the gems and jewellery
industry may witness consolidation;
only select major players are likely
to cope with the trends and sustain
the competitive pressures.
28
It is expected that the spike in
gold and silver prices might change
the consumer preferences, as also
impact their demand pattern. The
growing consumer sophistication,
decline in investment-driven
(jewellery) demand, and competition
from other luxury goods are also
likely to impact the demand pattern
of gems and jewellery. Further, the
consumer awareness and
consciousness, generated through
the vigilant measures adopted by
various national Governments, are
expected to drive the demand for
branded and hallmarked jewellery. At
national level, India has been
adopting various strategies to cope
with the global trends in gems and
jewellery business. World Gold
Council and the Indian gems and
jewellery industry have jointly
introduced international jewellery
designing competitions among the
Indian artisans to generate
awareness about the skills of Indian
artisans in the global market, as also
to expose Indian artisans to new
design developments emerging
around the world. There have been
initiatives taken by many designing
centers to train Indian jewellers in
international manufacturing and
designing skills. This is expected to
enhance demand as well as sales for
the Indian gems and jewellery
industry.
Indian gems and jewellery
industry is increasingly building its
ability to produce full range of sizes
and qualities of stones, utilizing not
only the low-cost and abundant
workforce, but also advanced
technologies. The industry has been
seeking further growth through
processing of larger size stones and
manufacture of diamond jewellery.
Both the Government and the gems
and jewellery industry have
recognized the use of IT in diamond
clusters in order to enable seamless
flow of information between the
functional areas, right from job
contractors to small / mid-sized firms,
to large, integrated units. The IT
interface would also provide the
necessary platform for firms to scale
up their operations. While several
such measures have been taken, at
firm-level, industry-level, and
Government-level, there exists still a
need to strengthen the position of
India in the global market place
through a concerted strategy,
addressing the challenges of raw-
material sourcing, technological
infusion at processing stage,
adoption of dynamism in design and
product development, and
sustainable market entry approach.
29
1. INTRODUCTION
Gems and jewellery are being
used by the Indians since ages for
both its aesthetic as well as
investment purposes. India has the
distinction of being one of the first
countries to introduce diamonds to
the world. The country was also
one of the first countries to mine,
cut & polish, and trade in diamonds.
The gems and jewellery sector
may be categorized broadly into:
 Gemstones: Diamonds,
coloured stones - precious,
semi precious and synthetic
stones;
 Jewellery – plain gold,
studded, silver, costume
jewelleries; and
 Pearls.
The two major segments of the
gems and jewellery business in India
are gold and diamond jewellery.
While a predominant portion of gold
jewellery manufactured in India is for
30
domestic consumption, a
predominant portion of rough, uncut
diamonds processed in India is
exported either in the form of
polished diamonds or in the form of
finished diamond jewellery.
The gems and jewellery industry
has an important role in the Indian
economy. With an estimated
consumption of 713 tonnes of gold
during the year 2008 (including
jewellery consumption of 501
tonnes), India is the largest
consumer in the world. (Table 1).
Apart from its historical religious
significance, gold is valued as an
important savings and investment
vehicle. Even in present times, gold
remains the bride’s wealth and is the
preferred jewellery worn by women
in India irrespective of their religious
belief. Buying of gold and jewellery
is an important part in every stage of
the life-cycle of an Indian citizen.
 Table 1:
CONSUMER DEMAND FOR GOLD IN THE WORLD
(in tonnes)
Countries 2007 2008 % Change

Jewellery Net Total Jewellery Net Total Jewellery Net Total

retail retail retail
investment investment investment

India 551.7 217.5 769.2 501.6 211.4 713.0 -9.1 -2.8 -7.3
China 302.2 25.6 327.8 326.7 65.9 392.6 8.1 157.4 19.8
USA 257.9 16.6 274.5 188.1 78.9 267.0 -27.1 375.3 -2.7
Europe — 9.6 9.6 — 242.7 242.7 — 2428.1 2428.1
excluding
CIS
Turkey 188.1 61.1 249.2 153.2 57.1 210.3 -18.6 -6.5 -15.6
Saudi Arabia 117.9 9.0 126.9 108.9 13.5 122.4 -7.6 50.0 -3.5
Vietnam 21.4 56.1 77.5 19.6 96.2 115.8 -8.4 71.5 49.4
UAE 99.8 7.5 107.3 100.0 9.5 109.5 0.2 26.7 2.1
Russia 85.7 — 85.7 91.4 — 91.4 6.7 0.0 6.7
Egypt 67.8 0.7 68.5 74.3 2.5 76.8 9.6 257.1 12.1
Indonesia 55.2 0.3 55.5 55.9 2.9 58.8 1.3 866.7 5.9
Italy 59.1 — 59.1 50.3 — 50.3 -14.9 — -14.9
Other Gulf 40.0 2.9 42.9 34.8 2.9 37.7 -13.0 — -12.1
UK 50.1 — 50.1 37.2 — 37.2 -25.7 — -25.7
Taiwan 14.7 7.4 22.1 12.2 8.7 20.9 -17.0 17.6 -5.4
Hong Kong 14.2 1.0 15.2 17.0 1.0 18.0 19.7 0.0 18.4
Japan 30.6 -56.3 -25.7 28.2 -39.4 -11.2 -7.8 -30.0 -56.4
Total Above 1956.4 359.0 2315.4 1799.4 753.8 2553.2 -8.0 110.0 10.3
Others 444.3 51.3 495.6 386.4 64.8 410.3 -13.0 26.3 -17.2

World Total 2400.7 410.3 2811.0 2185.8 818.6 2963.5 -8.9 99.5 5.4

SOURCE: World Gold Council

31
2. RAW MATERIAL BASE:
GLOBAL SCENARIO
PRODUCTION
Gold
Gold is produced from mines in
every part of the world, except
Antarctica, where mining is not
permitted. From a level of 25701
metric tonnes in 2001, world gold
mine production has declined to
2327 metric tonnes in 2008, mainly
because of decline in production in
the major gold producing countries,
like South Africa, USA and
Indonesia.
The major producer of gold in the
world during 2008 was China with a
production of 295 metric tonnes
(growth rate of 7.3% over the
previous year); China held a share
of 18.9% of the total world production
of gold during 2008, followed by
South Africa (12.7%), USA (10.7%),
Australia (9.9%) and Peru (9.7%).
Compared to 2007, during 2008,
countries such as Indonesia
(-23.7%), Australia (-8.5%), USA
(-3.4%), Canada (-1%) and South
Africa (-0.8%), witnessed a decline
in production, and only countries
such as China (7.3%), Russia (5.1%)
and Peru (2.9%) witnessed an
increase in production of gold.
1 SOURCE: USGS (U.S. Geological Survey)
32
Growth in production of gold is
expected to remain flat in 2009, as
increased production in China,
Canada and Peru may not be able
to offset decline in production in
South Africa, USA, Indonesia and
Australia.
World gold demand primarily
comprises of jewellery fabrication,
retail investments, industrial and
dental uses and exchange traded
funds. In the year 2008, world gold
demand in volume terms declined for
jewellery consumption and industrial
and dental purposes; however, gold
demand for investment purposes
showed an increase over the
previous year (Annexure: 1).
However, in value terms (USD), the
demand for gold has shown
considerable growth in 2008,
indicating the significant price
increase during this year.
During the third quarter of 2009,
the demand for gold has shown a
decline in almost all the segments.
This may be partially owing to global
economic slowdown and increase in
prices, reducing the disposable
income with the consumers.
 Table 2:
MAJOR PRODUCERS OF GOLD IN THE WORLD
(In metric tonnes)
Countries 2007 2008 % Change %Share in 2008
China 275 295 7.3 12.7
South Africa 252 250 -0.8 10.7
USA 238 230 -3.4 9.9
Australia 246 225 -8.5 9.7
Peru 170 175 2.9 7.5
Russia 157 165 5.1 7.1
Canada 101 100 -1.0 4.3
Indonesia 118 90 -23.7 3.9
Uzbekistan 85 85 0.0 3.7
Ghana 84 84 0.0 3.6
Papua New Guinea 65 65 0.0 2.8
Chile 42 42 0.0 1.8
Mexico 39 41 5.1 1.8
Brazil 40 40 0.0 1.7
Other countries 471 440 -6.6 18.9
World total 2383 2327 -2.3 100.0

SOURCE: USGS

Gold exchange traded funds investor can purchase gold ETF

have gained popularity with investors
across the world and these were
floated in the market in 2003. These
funds and additional similar funds are
now listed in the exchanges across
the countries. Holdings of ETFs
(Exchange Traded Funds) were
estimated to be US $ 8.8 billion in
2008, and US $ 1.3 billion in the third
quarter of 2009. Investing in gold in
the traditional manner is not
accessible and carries higher costs
owing to insurance, storage and
higher markups. The claimed
advantage of the ETF is that the
shares through a stockbroker without
being concerned about such
problems.
World gold prices have shown
an upward trend over the years. Gold
prices, which stood at US $ 274.5
per ounce on December 31, 2001,
increased to US $ 869.8 per ounce
on December 31, 2008 showing a
CAGR of 15.5%.The price has
increased further to US $ 1,192 per
ounce on December 1, 2009. Exhibit
1 shows the gold prices in select
currencies. Almost all the currencies

33
 Exhibit 1:
PRICE TRENDS OF GOLD IN SELECT CURRENCIES
SOURCE: World Gold Council (based on London pm fix)
have shown an upward trend since
the year 2000. In Indian rupees, the
price of gold, which stood at
Rs. 12,803 per ounce on December
31, 2000, increased to Rs. 42,374
per ounce on December 31, 2008.
The price has increased further to
Rs. 55,228 per ounce on December
1, 2009. The main reason for the
increase in prices of gold was the
strong consumer demand, especially
with the change in investor behaviour
and consideration of gold as safe
investment, post financial crisis.
Diamond
During 2007, Botswana was the
largest diamond producing country
34
in terms of value, estimated at US
$ 2.96 billion, recording a decline
in growth of 7.7% over the year
2006. Botswana constituted a share
of 25% in the world’s production of
diamonds. Botswana was followed
by Russian Federation (21.7%),
Canada (13.7%), South Africa
(11.7%) and Angola (10.5%) as
other world’s largest producers of
diamond. Lesotho (growth of
96.4%), Canada (17.5%) and Sierra
Leone (13%) were countries, which
witnessed impressive growth rates
in their production of diamonds
during 2007.
Russia was the largest diamond
producer by volume, with a
production of 38.3 million (23% of
world’s diamond production) carats
in 2007, followed by Botswana
(20%), Congo (17%), Australia (11%)
and Canada (10%). In terms of
growth in volume of production,
Guinea recorded 115% growth in
2007 (over 2006), followed by
Canada (28%) and Angola (5.7%)
(Annexure: 2).
Including its mines in South
Africa, Namibia and Canada, De
Beers is the world’s largest diamond
mining company, constituting 42% of
the total production by value and
29% of the total production by
volume (Exhibit 2). Other major
producers include Rio Tinto, Alrosa
and BHP Billiton.
The Diamond Pipeline
The trade in gem-grade rough
diamonds is primarily controlled by
Exhibit 2:
COMPANY-WISE WORLD DIAMOND PRODUCTION, 2007
the De Beers, Trans Hex, Rio Tinto,
BHP Billiton and a hand-full of other
companies which use their cartel
power to control the supply of
diamonds on the wholesale market
( diamond pipeline ), thereby
controlling and stabilizing prices.
The process under the diamond
pipeline is given in Exhibit-42:
Silver, Gemstones and
Platinum
Major producers of silver in the
world in the year 2008 include:
Peru (19%), Mexico (15.8%), China
(13.7%), Chile (10.5%) and
Australia (9.5%). There has been
an increase in the production
compared to the previous year in
almost all the major countries,
except USA and Australia, which
witnessed a decline of (–) 11.1%
and (–) 4.3%, respectively.

SOURCE: Indian Gems and Jewellery Sector, ICRA Sector Analysis

2 SOURCE: http://www.allaboutgemstones.com/diamond_pipeline.html

35
36
Exhibit 3:
WORLD’S LARGEST PRODUCERS OF DIAMOND (2007)

SOURCE: Indian Gems and Jewellery Sector, ICRA Sector Analysis

 Exhibit 4:
DIAMOND PIPELINE

1. Rough diamonds are sent directly from De Beers mining operations in Africa
(#1), or secondary mining producers in Canada and Russia, to De Beers’ Diamond
Trading Company (DTC) in London, Gaborone, Kimberley and Windhoek, for
sorting and resale. The rough stones are separated into 16,000 categories based
on size, color and quality, then divided by human or automated sorters into
individual lots called “boxes.”
2. The DTC is part of the De Beers Group supply-chain known as the Central Selling
Organization (CSO), which combines (“aggregating”) supplies of rough diamonds
from multiple sources into one wholesale market (#2).
3. The DTC holds a sale called a “site” or “sight”, ten times per year, in London
and Johannesburg, where De Beers sells the “boxes” to its select group (“supplier
of choice”) of 125 “sightholders” (#3) or diamond manufacturers, cutters, and
retailers. De Beers (DTC) sets the price of each box in advance, determining the
quantity and quality that each site-holder will receive. A ‘sight’ can have a value
of between US $ 500,000 to US $ 2,000,000.
4. The sightholder then transports the box of rough diamonds back to diamantaire
firms (cutting and polishing factories) located around the world (#4). India cuts
the vast majority of small stones (0.20 carats or less) in Mumbai and Surat,
while large stones are primarily cut in Antwerp, Tel Aviv, Ramat Gan, and New
York. Other major cutting centers are located in Johannesburg, China, and
Thailand.
5. The diamonds are then re-sold from the cutting and polishing (manufacturing)
centers to wholesalers (Diamond Bourses), or to jewellery manufacturers (#5)
around the world. Both traders and manufacturers may sell diamonds “upstream”
and “downstream” through the diamond pipeline, to take advantage of market
fluctuations. Once the diamonds are set into jewellery, they are sold to retailers
or directly to the customers.

SOURCE: http://www.allaboutgemstones.com/diamond_pipeline.html

37
 Box 1:
WORLD DIAMOND COUNCIL
Amid growing concern over human rights violations and atrocities committed
against innocent victims in diamond producing countries, the World Federation of
Diamond Bourses, and the International Diamond Manufacturers Association
passed resolution creating the World Diamond Council (WDC). The resolution
called for the newly formed WDC to include representation from the diamond
industry itself, and also from among countries where diamonds play a major
economic role, and from the international banking sector. The mandate for the
World Diamond Council is the development, implementation and oversight of a
tracking system for the export and import of rough diamonds to prevent the
exploitation of diamonds for illicit purposes, such as war and inhumane acts. Human
rights activists refer to diamonds exploited in this way as “blood” or “conflict”
diamonds.
As a result of the commitment and resolve of WDC leaders and members,
significant strides have been made towards resolving and reconciling the issues
threatening the diamond industry because of “conflict” diamonds. Various
committees, under the aegis of WDC, were formed for efficient functioning to
cover areas such as legal, technical, legislative, steering, finance, banking,
information and research.
The world diamond industry does not condone the exploitation of diamonds
for illicit or immoral purposes. Nor, will it acquiesce to outside efforts to disrupt the
importance that diamonds are to the established and emerging economies around
the world. Rather it is the goal of the diamond industry, working through the World
Diamond Council, to work openly and in partnership with the people of the world
whenever and wherever such challenges occur.

SOURCE: World Diamond Council

In the case of gemstones (other the only countries, which showed a

than diamond), the major producers
in the world include: Botswana
(26.5%), Russia (24.7%), Canada
(19.1%), Angola (10.6%), and South
Africa (6.5%). Though most of the
countries haven’t shown an increase
in its production in 2008, over 2007,
some countries such as Sierra Leone
(66.7%), Guinea (35%), Central
African Republic (27%) and Angola
(14.9%) have shown tremendous
increase in its production in 2008
over the previous year. Brazil
(– 33.3%) and Australia (– 0.4%) were
decline in production compared to
the previous year (Table 4).
The largest producer of platinum
in the world was South Africa holding
a share of 76.6% of the total world
production, followed by Russia
(12.5%), Canada (3.6%), Zimbabwe
(2.8%) and USA (1.9%). However,
the major producers such as
South Africa (–7.8%), Russia
(– 7.4%) and USA (– 4.1%) have
shown a decline in their production
in 2008 over the previous year.

38
 Table 3:
MAJOR PRODUCERS OF SILVER IN THE WORLD
Countries 2007 2008 % Change %Share in 2008
Peru 3500 3600 2.9 19.0
Mexico 3000 3000 0.0 15.8
China 2560 2600 1.6 13.7
Chile 1900 2000 5.3 10.5
Australia 1880 1800 -4.3 9.5
Poland 1200 1300 8.3 6.9
USA 1260 1120 -11.1 5.9
Canada 800 800 0.0 4.2
South Africa 70 70 0.0 0.4
Other countries 4630 4600 -0.6 24.2
World Total 20800 20890 100.0

SOURCE: USGS

Table 4:
MAJOR PRODUCERS OF GEMSTONES IN THE WORLD
Countries 2007 2008 % Change %Share in 2008
Botswana 25000 25000 0.0 26.5
Russia 23300 23300 0.0 24.7
Canada 18000 18000 0.0 19.1
Angola 8700 10000 14.9 10.6
South Africa 6100 6100 0.0 6.5
Congo 5400 5400 0.0 5.7
Namibia 2200 2200 0.0 2.3
Guinea 815 1100 35.0 1.2
Ghana 720 720 0.0 0.8
Sierra Leone 360 600 66.7 0.6
Central African Republic 370 470 27.0 0.5
Guyana 350 350 0 0.4
Australia 231 230 -0.4 0.2
Tanzania 230 230 0 0.2
Cote d’lvoire 210 210 0 0.2
Brazil 300 200 -33.3 0.2
China 100 100 0 0.1
Other countries 210 210 0 0.2
World total 92596 94420 2.0 100.0

SOURCE: USGS

39
 Table 5:
MAJOR PRODUCERS OF PLATINUM IN THE WORLD
Countries 2007 2008 % Change %Share in 2008
South Africa 166000 153000 -7.8 76.6
Russia 27000 25000 -7.4 12.5
Canada 6200 7200 16.1 3.6
Zimbabwe 5300 5600 5.7 2.8
USA 3860 3700 -4.1 1.9
Columbia 1400 1700 21.4 0.9
Other countries 3490 3500 0.3 1.8
World total 213250 199700 -6.4 100.0

SOURCE: USGS

40
3. INTERNATIONAL TRADE IN
PRECIOUS METALS, GEMS AND
JEWELLERY
EXPORTS AND IMPORTS OF
PRECIOUS METALS AND
STONES
Gold
The largest exporter of gold in the
world, in the year 2007, was USA
with a share of 19.9% in the total
world exports, followed by Australia
(15.9%), Canada (9.3%), Hong
Kong (7.3%) and Peru (7.1%). The
world’s largest importers of gold
include: Switzerland (25.7%), UK
(19.6%), USA (8.4%), India (7.5%)
and South Africa (4.4%).
(Annexure: 3).
Diamond
Israel (with a share of 19.7%),
Belgium (19.6%), India (14.3%),
USA (12.8%), and UK (9.1%) were
the largest exporters of diamond in
the world, in the year 2007. The
largest importers of diamonds
include: USA (17.7%), Belgium
(16.2%), India (13.1%), Israel (13%)
and Hong Kong (12.9%). India was
an exporter as well as an importer
of diamonds with a respective
share of 14.3% and 13.1%, in the
world. This may be because, India
imports rough diamonds, for value
addition, and for exports, as cut
and polished diamonds.
Precious Stones
Hong Kong, USA, Switzerland,
Thailand and India were among the
largest exporters, as well as
importers of precious stones (other
than diamond) in the world in 2007.
Hong Kong was the largest
exporter of precious stones (other
than diamonds), with a share of
around 17.1% of the total world
exports, and was followed by USA
(13.2%), Switzerland (12.7%),
Thailand (12.2%), and India (9%).
In the case of imports, the leading
importers include: USA (26.5%),
Hong Kong (14.4%), Switzerland
(9.2%), Thailand (7.2%), and India
(6.3%).
Pearls
In the case of Pearls, Hong Kong
was the largest exporter, with the
exports valued US $ 482.92 million,
constituting a share of 30.2% in the
world exports of pearls in the year
2007. Japan, China, Australia, and
French Polynesia were the other
major exporters of pearls.
41
Hong Kong was the largest importer
with a share of around 33.2%,
followed by Japan (18.3%), USA
(15.8%), Germany (4.4%), and
Australia (4%).
Platinum
South Africa, constituting a share
of 32.5% was the largest exporter
of platinum in the world in the year
2007. UK, USA and Germany were
the other major exporters. USA was
also a major importer of platinum
constituting a share of 24.4% in the
world, followed by Japan (19.2%),
Germany (12.7%), and UK (8.6%).
Silver
Major exporter of silver was China,
with a share of 15.9% in the world,
in the year 2007, followed by
Mexico (11.2%), Hong Kong (8.7%),
and Germany (8.1%). USA, Hong
Kong, UK, Germany and India were
the major importers of silver in the
world.
EXPORTS AND IMPORTS OF
JEWELLERY
Articles of Jewellery
World exports of jewellery articles
made of precious metals was
valued at US $ 42.5 billion in 2007;
major exporters include: Italy
(14.2%), India (11.9%), USA
(10.5%), and Hong Kong (9.9%).
Major importers of jewellery include:
USA (23.7%), UAE (13.7%),
Hong Kong (9.1%), and Switzerland
(6.7%).
42
Articles of Natural / Cultured
Pearls, Precious Stones
World exports of articles of natural
and cultured pearls, or made of
precious stones was valued at
US $ 1945.99 million in 2007. Major
exporters include USA (76.4%),
Hong Kong (6.4%), China (5.4%),
Switzerland (2%) and Japan
(1.3%); major importers under this
category include: Hong Kong
(15.7%), Switzerland (14.9%), UK
(9%), Netherlands Antilles (9%),
and Japan (8.6%).
Articles of Imitation Jewellery
World exports of articles of imitation
jewellery were valued at US $
4967.03 million in 2007. Major
exporters of imitation jewellery
include Hong Kong (21.9%), China
(17.2%), Austria (8%), France
(6.4%), and Italy (5.7%); major
importers under this category
include USA (19.6%), Germany
(7.3%), France (7.3%), UK (6.4%),
and Italy (6.2%).
SELECT GLOBAL TRENDS
One of the recent major trends
witnessed by the gems and
jewellery industry, due to the
economic slowdown, has been the
increase in recycling of gold or
usage of gold scrap. Key focus has
been the surge in the levels of gold
scrap coming back to the market.
With mine production on a declining
trend and the outlook relatively
benign, scrap levels are likely to
remain as the primary supply of
gold. Selling of gold jewellery has
provided the consumers with
access to the much-needed funds
during the economic crisis. In the
price sensitive markets, the profit-
taking motive behind recycling
activity has been very strong,
highlighting the intrinsic value of
jewellery and the strength of the
savings/investment aspect of gold
jewellery purchases. Cash flow
challenges have forced consumers
to sell some of their assets,
including their jewellery, to raise the
much-needed cash. Increase in
recycling activity has been both a
western and non-western
phenomenon, although volumes in
the non-western markets have
continued to dominate. In western
markets, the primary motivation
behind recycling of gold has been
distress selling, while in the more
traditional non-western markets, the
primary motive has been profit-
taking.
Research by World Gold Council
suggests that jewellery buyers
across the world recognize that gold
jewellery is both a store of value, as
well as a means of adornment.
Nevertheless, the investment and
adornment motives tend to overlap
strongly in traditional markets, such
as the Middle East (including Turkey)
and India, largely due to the very
strong cultural values underpinning
jewellery ownership; bar and coin
demand in these regions account for
a relatively modest proportion of total
demand for gold.
New technologies, often
adapted from other industries, are
finding their way into jewellery
manufacturing. The use of Computer
Aided Design (CAD) is fast growing,
and is increasingly being coupled
with Rapid Prototyping, which
enables new designs to reach the
market more quickly, thereby
increasing competitiveness. Laser
technology is also being increasingly
utilised, not only for repair of
defective castings and broken
jewellery (it enables gem set
jewellery to be repaired without the
need for removing the gemstones),
but also for decoration (laser
engraving), cutting and hallmarking.
Examples of technologies being
adapted from other industries include
cables (in place of conventional
chains), knitted wires and powder
metallurgy processing.
According to World Gold
Council, in the first quarter of 2009,
total demand for gold increased by
38% to reach a level of 1016 tonnes,
valued US $ 29.7 billion. The overall
demand for gold has fallen in the third
quarter of 2009, by 34% over the
corresponding period of previous
year, along with investment demand
which witnessed a decline of 46%
over the corresponding period of
previous year. The impact of high
gold prices, at a time of global
economic crisis, led to a widespread
decline in consumer demand for gold
jewellery, by 30%, compared to the
same period in 2008. In India,
despite economic pressures and
43
sustained increase in gold prices,
second quarter gold demand
recovered from the exceptionally
weak levels witnessed in the
previous quarter, but remained well
below the levels of a year before.
Total gold off-take in India was down
by 48% during the first three
quarters, with jewellery, the largest
component of demand, falling
by 36%.
Following the global financial
crisis, the growth environment for the
global gems and jewellery industry
remains uncertain. The world
diamond industry, which is large sub-
segment of global gems and
jewellery industry faced demand
slump following the global economic
crisis. Diamond prices in the world,
like many other commodities,
bottomed out, forcing the diamond
majors (such as De Beers, Zao
Alrosa) to cut down production and
supply of rough diamonds to boost
up the prices. Mining was halted at
many mines, which were put on
maintenance during this period. The
most prominent example was the
move by Debswana, jointly owned by
De Beers and the Government of

Box 2:
RESPONSIBLE JEWELLERY COUNCIL
The Responsible Jewellery Council (RJC) is an international, not-for-profit
organization established to reinforce consumer confidence in the jewellery industry
by advancing responsible business practices throughout the diamond and gold
jewellery supply chain. The Council aims to build ‘a community of confidence’
across every step of the diamond and gold jewellery supply chain in all geographies,
and among businesses, both large and small. It seeks to work with a wide range
of stakeholders in defining and implementing responsible jewellery practices
through the RJC’s certification system. The certification process starts with the
Council accrediting conformity assessment bodies and auditors who verify RJC
member organizations for conformance with RJC Code of Practices. Membership
opportunity is open to all businesses and associations participating in the diamond
and gold jewellery supply chain and / or engaged in activities that have a potential
impact on consumer confidence in diamond or gold jewellery.
In 2005, a group of 14 organisations from a cross section of the diamond and
gold jewellery business came together to form the Council for Responsible Jewellery
Practices. These founding organisations were ABN AMRO, BHP Billiton Diamonds,
Cartier (part of Richemont), World Jewellery Confederation, Diamond Trading
Company (part of De Beers), Diarough, Jewelers of America, National Association
of Goldsmiths (UK), Newmont Mining, Rio Tinto, Rosy Blue, Signet Group, Tiffany
& Co., and Zale Corporation.

SOURCE: Responsible Jewellery Council

44
 Box 3:
KIMBERLEY PROCESS
The Kimberley Process (KP) is a joint initiative of governments, industry and civil
society to stem the flow of conflict diamonds – rough diamonds used by rebel movements
to finance wars against legitimate governments. The trade in these illicit stones has fuelled
decades of devastating conflicts in countries such as Angola, Cote d’Ivoire, the Democratic
Republic of the Congo, and Sierra Leone.
The Kimberley Process (KP) is open to all countries that are willing and able to
implement its requirements. As of November 2008, the KP has 49 members (Annexure:
5) representing 75 countries, with the European Community and its member states counting
as an individual participant. KP members account for approximately 99.8% of the global
production of rough diamonds. In addition, the World Diamond Council representing the
international diamond industry, and civil society organizations – Global Witness, Partnership
– Africa Canada – are participating in the KP, and have played a major role since its
outset.
The Kimberley Process Certification Scheme (KPCS) imposes extensive requirements
on its members to enable them to certify shipments of rough diamonds as ‘conflict-free’
and prevent conflict diamonds from entering the legitimate trade. Under the terms of the
KPCS, participating states must meet ‘minimum requirements’ and must put in place
national legislation and institutions; export, import and internal controls; and also commit
to transparency and the exchange of statistical data. Participants can only legally trade
with other participants, who have also met the minimum requirements of the scheme, and
international shipments of rough diamonds must be accompanied by a KP certificate
guaranteeing that they are conflict-free.
The Kimberley Process is chaired, on a rotating basis, by participating countries. So
far, South Africa, Canada, Russia, Botswana, the European Community, and India (was
the Chair in 2008) have chaired the KP. KP participating countries, industry and civil society
observers gather twice a year at intersessional and plenary meetings, as well as in working
groups and committees that meet on a regular basis. Implementation is monitored through
‘review visits’ and annual reports as well as by regular exchange and analysis of statistical
data.
The joint efforts of governments, industry leaders and civil society representatives
have enabled the KP to curb successfully the flow of conflict diamonds in a very short
period of time. Diamond experts estimate that conflict diamonds now represent a fraction
of one percent of the international trade in diamonds, compared to estimates of up to 15%
in the 1990s. That has been the KP’s most remarkable contribution to a peaceful world,
which should be measured not in terms of carats, but by the effects on people’s lives. KP
has done more than just stem the flow of conflict diamonds; it has also helped stabilise
fragile countries and supported their development. KP has brought large volumes of
diamonds into the legal market that would not otherwise have made it there and this has
increased the revenues of poor governments, and helped them to address their
development challenges. For instance, some US $ 125 million worth of diamonds were
legally exported from Sierra Leone in 2006, compared to almost none at the end of the
1990s.

SOURCE: Kimberley Process

45
Botswana, which decided to close
mining operations in three of its four
mines for several months. De Beers
(which account for over 40% of
global rough diamond production)
cut its production drastically across
the world, which resulted in a 90%
fall in the supply during the first
quarter of 2009, as compared to the
corresponding period of the previous
year. It was also reported that the
sales by the Diamond Trading
Corporation has declined by over
50% in the first half of 2009, due to
reduced purchases by sight-
holders3.

3 The Diamond Trading Company, which is the world´s largest single source
of rough diamonds, sells its rough diamonds exclusively through its
Sightholders, who work within the strategic framework of “Supplier of Choice”.

46
4. PROFILE OF SELECT COUNTRIES
Brazil
The development of gems and
jewellery industry in Brazil was
followed by the discovery of gold
and diamonds at the end of the
17th century. Brazil is known for its
diversity and volume of precious
stones deposits in its soil, such as
tourmaline, aquamarine, agate,
amethyst, citrine, topaz and quartz;
Brazil is the only source of imperial
topaz and paraiba tourmaline in the
world. The jewellery sector in Brazil
is basically characterized by the
production of small volume of high-
valued items; the industry develops
its own style by incorporating
symbols of their culture in pieces
made of a variety of raw-materials.
While the extraction of precious
stones and gold are carried out by
thousands of individual miners and
small number of mining companies,
the cutting and manufacturing of
stone artifacts is carried out by
small home based firms with
growing volume of outsourcing in
the last few years.
During 2007, Brazil’s exports,
under the HS Code 71 category,
consisted mainly of gold (valued
US $ 790.88 million), followed by
precious stones (with a value of
US $ 111.57 million), and articles of
jewellery and parts (with a value of
US $ 72.9 million).
Major export destinations of
gems and jewellery include: USA,
Germany, UK, Korea DPR (North),
and Belgium, and the major import
sources include: Germany, Peru,
USA, Chile, and Italy. Gold was
largely exported to USA (around 94%
of the total exports of gold by Brazil).
India was a source country for import
of diamonds, imitation jewellery,
articles of jewellery and precious
stones.
China
Gems and jewellery industry in
China, since the onset of reforms
over 25 years ago, has been
growing to emerge as an industry
with dynamism and high
development prospects. China is
one of the largest consumers of
gold, with gold jewellery being the
major item of demand. During
2008, the total demand for gold in
China was 392.7 tonnes, a growth
rate of 19.8%, over the year 2007.
During the third quarter of 2009, the
demand was 120.2 tonnes, a
47
 Table 6:
BRAZIL’S EXPORTS OF PRECIOUS METALS, GEMS AND JEWELLERY
(US $ Million)
HS Code Items 2005 2006 2007 % share CAGR (%)
in total

71 Total Precious Metals, 787.41 1080.12 1242.93 100.0 25.6

Gems and Jewellery
7108 Gold 458.88 658.6 790.88 63.6 31.3
7103 Precious stones 94.59 109.15 111.57 9.0 8.6
(other than diamonds)
7113 Articles of jewellery 62.97 73.50 72.90 5.9 7.6
and parts
7106 Silver 20.40 35.84 30.36 2.4 22.0
7117 Imitation jewellery 18.07 19.26 20.72 1.7 7.1
7102 Diamonds 20.42 5.15 18.88 1.5 -3.8
7116 Articles of natural or 15.73 15.28 14.73 1.2 -3.2
cultured pearls and
precious and
semi precious stones
7110 Platinum 8.53 34.62 0.39 0.0 -78.6

SOURCE: UN COMTRADE

growth rate of 12% over the
corresponding quarter of 2008 4.
Gold has been a traditional item of
interest for the Chinese consumers.
Shenzen and Payu are the major
processing centres of gold in China.
The Shenzhen special economic
zone is the largest jewellery
manufacturing and wholesale
center supplying to the domestic
market in China; it is also a major
manufacturing centre for gem-set
gold jewellery for the domestic
market; major centre for platinum
jewellery production; and a major
centre for gemstone polishing.
During 2008, China was the largest
producer of gold in the world with
295 metric tonnes5 with a growth
rate of 7.3% over the previous year.
During 2008, China’s share in world
gold production was 18.9%.
Demand for diamond in China is
increasing, and the Chinese diamond
industry is growing fast. Previously,
diamond was used only for industrial
use, and rarely for jewellery. After
diamond was found in the three
provinces of Liaoning, Shandong
and Hunan, the diamond industry
started growing since the 1980s. The
annual production of diamonds in
2008 was valued at US $ 1.3 million6

4 World Gold Council

5 USGS
6 World Diamond Council

48
 Table 7:
BRAZIL’S MAJOR EXPORT DESTINATIONS AND IMPORT SOURCES OF
PRECIOUS METALS, GEMS AND JEWELLERY
HS Items Export destinations Import sources
Code Countries US $ Million Countries US $ Million
(% share) (% share)

71 Total Precious USA 862.44 (69.4) Germany 178.23 (40.1)

Metals, Gems Germany 120.88 (9.7) Peru 117.94 (26.5)
and Jewellery UK 53.57 (4.3) USA 49.97 (11.2)
World 1242.93 (100.0) World 444.40 (100.0)
7108 Gold USA 740.62 (93.6) France 0.66 (64.7)
UK 50.20 (6.3) Korea Republic (S) 0.25 (24.5)
Peru 0.05 (0.01) Germany 0.05 (4.9)
World 790.88 (100.0) World 1.02 (100.0)
7103 Precious USA 33.78 (30.3) USA 0.87 (21.5)
stones Hong Kong 17.91 (16.1) Madagascar 0.64 (15.8)
India 9.29 (8.3) Thailand 0.57 (14.1)
World 111.57 (100.0) World 4.04 (100.0)
7113 Articles of USA 32.25 (44.2) Italy 9.80 (46.5)
jewellery Germany 4.99 (6.8) USA 5.80 (27.5)
and parts Israel 4.49 (6.2) Germany 1.82 (8.6)
World 72.9 (100.0) World 21.09 (100.0)
7106 Silver USA 21.93 (72.2) Peru 117.92 (74.4)
Germany 5.61 (18.5) Chile 33.85 (21.3)
Belgium 1.32 (4.3) Germany 2.11 (1.3)
World 30.36 (100.0) World 158.58 (100.0)
7117 Imitation USA 6.59 (31.8) China 8.48 (42.8)
jewellery Argentina 1.53 (7.4) Hong Kong 4.81 (24.3)
Colombia 1.33 (6.4) Korea Republic (S) 1.94 (9.8)
World 20.72 (100.0) World 19.81 (100.0)
7102 Diamonds Israel 7.33 (38.8) Israel 5.43 (68.1)
USA 6.02 (31.9) USA 0.93 (11.7)
Belgium 4.33 (22.9) Belgium 0.84 (10.5)
World 18.88 (100.0) World 7.97 (100.0)
7116 Articles of USA 4.68 (31.8) USA 1.4 (95.2)
natural or Germany 3.08 (20.9) Switzerland 0.07 (4.8)
cultured pearls France 0.61 (4.1) Hong Kong 0.01 (0.7)
and precious World 14.73 (100.0) World 1.47 (100.0)
and semi
precious stones
7110 Platinum Argentina 0.25 (64.1) Germany 173.19 (82.0)
USA 0.08 (20.5) USA 35.31 (16.7)
Canada 0.04 (10.3) Belgium 2.12 (1.0)
World 0.39 (100.0) World 211.15 (100.0)

SOURCE: UN COMTRADE

49
(69.4 thousand carats), an increase
of 18% in value (13% in carat) since
2006. In order to promote the
development of China’s diamond
industry, authorized by the state
council, the Shanghai Diamond
Exchange was established. This
non-profit organization brought
together most of the diamond
processing and trading companies in
China, and in addition attracted
alliances from several foreign
diamond companies.
China is a one of largest
producers of silver in the world.
During 2008, China produced silver
worth 26007 tonnes, an increase of
1.6% over the previous year; China,
in the year 2008, held a share of
13.7% in the world production of
silver. There have been changes in
consumption pattern in China.
People no longer want to buy
jewellery as a store of value, and use
them more for aesthetic use. This
has created increased demand for
silver jewellery in China. Platinum
jewellery has been emerging as a
fast growing sector, competing the
gold jewellery sector.
China’s exports of gems and
jewellery have grown by 21%
(CAGR) since 2005; from US $ 5.5
billion to US $ 8.1 billion in 2007. The
item which was largely exported
(according to value) from China,
under the HS Code 71 category. was
articles of jewellery and parts with a

Table 8:
CHINA’S EXPORTS OF PRECIOUS METALS, GEMS AND JEWELLERY
(US $ Million)
HS Code Items 2005 2006 2007 % share CAGR (%)
in total

71 Total Precious Metals, 5532.84 6893.92 8122.75 100.0 21.2

Gems and Jewellery
7113 Articles of jewellery 2004.58 2102.48 2507.37 30.9 11.8
and parts
7106 Silver 1000.91 1642.18 2017.17 24.8 42.0
7102 Diamonds 1443.66 1752.02 1904.23 23.4 14.8
7117 Imitation jewellery 611.53 721.58 855.00 10.5 18.2
7101 Pearls 146.50 143.97 208.37 2.6 19.3
7116 Articles of natural or 61.74 93.16 105.55 1.3 30.8
cultured pearls and
precious and
semi precious stones
7103 Precious stones 29.13 18.17 15.77 0.2 -26.4
7110 Platinum 4.19 6.73 6.14 0.1 21.1

SOURCE: UN COMTRADE

7 USGS

50
share of 30.9% in the total exports
of gems and jewellery during 2007.
However, silver (42%), and articles
of natural or cultured pearls and
precious and semi precious stones
(30.8%) were the items which
showed highest CAGR during the
period 2005-2007. The exports of
precious stones showed a negative
CAGR of (-26.4%) over the years,
from US $ 29.1 million in 2004 to
US $ 15.8 million in 2007.
Major export destinations for
China are given in Table 9; Hong
Kong, USA, Belgium, Switzerland
and UK were the major export
destinations for China’s gems and
jewellery exports. However some of
the other major destinations include:
India for pearls and silver; Japan for
pearls, precious stones, platinum
and articles of natural and cultured
pearls; and Korea Republic for
precious stones and articles of
jewellery and parts. In the case of
imports, major source countries were
Hong Kong, Belgium, Switzerland,
USA and UK.
Israel
Israel is one of the world’s largest
centres for diamond cutting. The
country’s integrated culture, with
immigrants from over 70 countries,
offers diversity in artistic ideas,
styles, techniques and know-how.
The Israeli jewellery industry has
developed unique technologies that
add to the strength, design, beauty
and quality of its products.
Israel is one of the world’s largest
sources of polished diamonds. The
partnership between the diamond
and jewellery industries has no
middlemen, in order to keep the
prices competitive.
Diamond jewellery is the main
sub segment of Israel’s gems and
jewellery industry, followed by gold,
silver and imitation jewellery. The
artists in Israel make use of most of
their skills, innovative technologies
and techniques, which enable them
to offer their products at very
reasonable prices. It may be
mentioned that Israel’s jewellery is
allowed duty free in USA, Europe,
Jordan, Canada, Mexico and Egypt.
The exports of diamonds,
according to the Central Bureau of
Statistics, Government of Israel,
witnessed a decline in 2008 (Table
10). During January - September
2009 there was a drastic decline in
exports ranging around 60%. The
economic slowdown was cited as the
main reason for this level of decline
in exports.
Israel was largely an exporter of
precious metals, gems and jewellery,
than an importer of the same. During
2007, the export of precious metals,
gems and jewellery by Israel touched
US $ 19.1 billion, achieving a CAGR
of 7.5%, during 2005-2007; and the
imports of Israel were US $ 12.6
billion in 2007. Israel was a major
exporter of diamonds, which
constituted around 97% of the total
51
 Table 9:
CHINA’S MAJOR EXPORT DESTINATIONS AND IMPORT SOURCES OF
PRECIOUS METALS, GEMS AND JEWELLERY
HS Items Export destinations Import sources
Code Countries US $ Million Countries US $ Million
(% share) (% share)

71 Total Precious Hong Kong 4512.02 (55.5) Hong Kong 2422.07 (37.8)
Metals, Gems USA 1296.30 (16.0) Belgium 851.32 (13.3)
and Jewellery Belgium 664.58 (8.2) Switzerland 555.85 (8.7)
World 8122.75 (100.0) World 6407.63 (100.0)
7113 Articles of Hong Kong 1303.35 (52.0) Italy 150.99 (34.7)
jewellery and USA 823.84 (32.9) Hong Kong 113.51 (26.1)
parts Korea Republic (S) 79.46 (3.2) France 43.66 (10.0)
World 2507.37 (100.0) World 435.33 (100.0)
7106 Silver Hong Kong 1641.91 (81.4) Hong Kong 198.61 (55.7)
Thailand 135.32 (6.7) Japan 69.04 (19.4)
India 107.38 (5.3) Korea Republic (S) 30.38 (8.5)
World 2017.17 (100.0) World 356.53 (100.0)
7102 Diamonds Hong Kong 932.94 (49.0) Hong Kong 847.75 (43.3)
Belgium 653.12 (34.3) Belgium 843.24 (43.1)
Switzerland 165.37 (8.7) Israel 171.08 (8.7)
World 1904.23 (100.0) World 1957.14 (100.0)
7117 Imitation USA 334.94 (39.2) Hong Kong 45.47 (56.6)
jewellery Hong Kong 135.76 (15.9) Korea Republic (S) 20.06 (25.0)
UK 54.42 (6.4) Switzerland 2.9 (3.6)
World 855.00 (100.0) World 80.36 (100.0)
7101 Pearls Hong Kong 178.10 (85.5) Hong Kong 16.38 (80.3)
India 19.64 (9.4) Japan 2.59 (2.7)
Japan 3.81 (1.8) UK 0.53 (2.6)
World 208.37 (100.0) World 20.39 (100.0)
7116 Articles of Hong Kong 60.73 (57.5) USA 6.12 (41.3)
natural or USA 17.62 (16.7) Taiwan 5.03 (33.9)
cultured pearls Switzerland 5.40 (5.1) Hong Kong 2.22 (15.0)
and precious World 105.55 (100.0) World 14.82 (100.0)
and semi
precious stones
7103 Precious stones Hong Kong 10.03 (63.6) Hong Kong 80.75 (78.7)
USA 1.80 (11.4) Brazil 7.67 (7.5)
Thailand 0.93 (5.9) Uruguay 5.40 (5.3)
World 15.77(100.0) World 102.63 (100.0)
7110 Platinum USA 4.59 (74.8) Switzerland 525.47 (28.5)
Japan 1.01 (16.4) UK 477.57 (25.9)
Hong Kong 0.39 (6.4) Germany 287.74 (15.6)
World 6.14 (100.0) World 1844.92 (100.0)

SOURCE: UN COMTRADE

52
gems and jewellery exports, and
around 2% was accounted by articles
of jewellery. Major export
destinations of diamonds from Israel
include: USA, constituting a share of
48.5%, followed by Belgium (16.7%),
Hong Kong (15%), India (4.8%) and
Switzerland (4.7%). Major source
countries for imports of diamonds by
Israel include: USA (40%), Belgium
(24.8%), India (8.5%), Hong Kong
(8.2%), and UK (8.1%).
Italy
Italy has a large gems and jewellery
industry, mainly located in the
regions, namely, Veneto, Toscana,
Lombardia, Lazio and Piedmont.
These regions have captured more
than half of the Italian market for
gems and jewellery. There are two
major clusters in Italy for gems and
jewellery which are located in
Vicenza and Arezzo. Italian
jewellery industry has been
enjoying spiraling growth in exports.
This scenario may change due to
slump in demand in the most
important markets, due to global
economic crisis. It is reported that
the producers in the Vicenza area
may face relatively less challenges,
because of the level of automation
and the possibility of reduction in
cost of operations, and thereby the
price at the hands of end-
consumers. Also the gems and
jewellery industry in Valenza has an
edge over others due to high
quality design skills for diamond
and other precious stones. The
gems and jewellery industry in
Arezzo is likely to face challenges
mainly due to overseas competition.
In addition, a greater share of
Arezzo’s jewellery exports goes to
Latin America and the USA,
markets which have been having
weak demand of late.
Exports of gems and jewellery
from Italy are given in Table - 13.
Constituting a share of 69.5%,
articles of jewellery and parts was the
major export item, under the HS
Code 71 category, in Italy. However,
all the categories of precious metals,
gems and jewellery have witnessed
an increase in exports from Italy, with
platinum and diamonds witnessing
the highest CAGR of 69.8% and
52%, respectively, during 2005 to
2007. Exports of platinum increased
from US $ 222.71 million to US $
642.17 million, and that of diamonds
increased from US $ 56.83 million to
US $ 131.45 million during this
period. The total exports of precious
metals, gems and jewellery (HS
Code 71) witnessed a CAGR of
17.4%, since 2005, an increase from
US $ 6.3 billion to US $ 8.7 billion, in
value terms.
Major export destinations of
Italy’s precious metals, gems and
jewellery industry include: USA,
Switzerland, France, UAE and UK,
and the major source countries for
import of precious metals, gems and
jewellery include USA, Switzerland,
France, Belgium and Hong Kong
(Table 14). Major export destinations
53
 Table 10:
EXPORTS AND IMPORTS OF DIAMONDS BY ISRAEL
(US $ Million)
Items 2007 2008 % change Jan-Sep Jan-Sep % change
2008 2009
Exports
Diamonds
Polished 7116.9 6299.2 -11.5 5503.7 2609.5 -52.6
Rough 3373.2 3318.2 -1.6 2176.4 1278.9 -41.2
Total 10490.1 9617.4 -8.3 5963.4 2396.1 -59.8
Imports
Rough and 9642.5 8836.4 -8.4 7447.4 3125.7 -58.0
polished
diamonds (net)

SOURCE: Monthly Bulletin of Statistics, October 2009, Central Bureau of

Statistics, Government of Israel

Table 11:
ISRAEL’S EXPORTS OF PRECIOUS METAL, GEMS AND JEWELLERY
(US $ Million)
HS Code Items 2005 2006 2007 % share CAGR (%)
in total

71 Total Precious Metals, 16484.13 16659.59 19060.29 100.0 7.5

Gems and Jewellery
7102 Diamonds 16017.00 16127.49 18416.94 96.6 7.2
7113 Articles of jewellery 345.62 338.30 356.30 1.9 1.5
and parts
7103 Precious stones 52.85 64.19 67.38 0.4 12.9
(other than diamonds)
7108 Gold 7.01 21.44 65.55 0.3 205.8
7117 Imitation jewellery 34.66 48.51 51.89 0.3 22.4
7106 Silver 0.08 0.08 6.46 0.0 798.6
7110 Platinum 0.02 0.68 0.44 0.0 369.0
7101 Pearls 0.22 0.05 0.05 0.0 -52.3
7116 Articles of natural or 0.08 0.08 0.01 0.0 -64.6
cultured pearls and
precious and semi
precious stones

SOURCE: UN COMTRADE

54
 Table 12:
ISRAEL’S MAJOR EXPORT DESTINATIONS AND IMPORT SOURCES OF
PRECIOUS METALS, GEMS AND JEWELLERY
HS Items Export destinations Import sources
Code Countries US $ Million Countries US $ Million
(% share) (% share)

71 Total Precious USA 9246.77 (48.5) USA 4931.49 (39.1)

Metals, Gems Belgium 3083.87 (16.2) Belgium 3036.84 (24.1)
and Jewellery Hong Kong 2789.76 (14.6) India 1047.94 (8.3)
World 19060.29 (100.0) World 12611.42 (100.0)
7102 Diamonds USA 8938.86 (48.5) USA 4867.90 (40.0)
Belgium 3074.27 (16.7) Belgium 3021.66 (24.8)
Hong Kong 2762.04 (15.0) India 1037.26 (8.5)
World 18416.94 (100.0) World 12178.19 (100.0)
7113 Articles of USA 201.19 (56.5) Italy 85.77 (30.8)
jewellery UK 30.27 (8.5) Thailand 46.17 (16.6)
and parts Switzerland 16.06 (4.5) Turkey 41.40 (14.9)
World 356.30 (100.0) World 278.12 (100.0)
7103 Precious stones USA 33.34 (49.5) USA 19.69 (52.9)
Hong Kong 11.58 (17.2) Italy 5.81 (15.6)
Switzerland 9.18 (13.6) Switzerland 3.21 (8.6)
World 67.38 (100.0) World 37.24 (100.0)
7108 Gold Jordan 63.44 (96.8) Singapore 4.10 (36.8)
Canada 0.80 (1.2) Italy 3.74 (33.6)
Italy 0.55 (0.8) Germany 1.32 (11.8)
World 65.55 (100.0) World 11.14 (100.0)
7117 Imitation USA 32.78 (63.2) China 2.72 (25.9)
jewellery UK 2.70 (5.2) USA 1.72 (16.4)
Japan 2.54 (4.9) Italy 1.59 (15.1)
World 51.89 (100.0) World 10.50 (100.0)
7106 Silver USA 6.46 (100.0) Belgium 13.12 (44.1)
World 6.46 (100.0) Italy 11.87 (39.9)
Germany 4.32 (14.5)
World 29.78 (100.0)
7110 Platinum Italy 0.30 (68.2) USA 7.29 (65.9)
UK 0.12 (27.3) Switzerland 2.78 (25.1)
World 0.44(100.0) Germany 0.77 (7.0)
World 11.06 (100.0)
7101 Pearls UK 0.03 (60.0) Japan 0.49 (50.0)
Panama 0.01 (20.0) Hong Kong 0.19 (19.4)
World 0.05 (100.0) Switzerland 0.12 (12.2)
World 0.98 (100.0)
7116 Articles of World 0.01 (100.0) USA 0.80 (81.6)
natural or Hong Kong 0.07 (7.1)
cultured pearls China 0.05 (5.1)
and precious World 0.98 (100.0)
and semi
precious stones

SOURCE: UN COMTRADE

55
of articles of jewellery and parts
include: USA (15.4%), UAE (13.6%),
Switzerland (10.2%), France (6%)
and UK (4.9%), and the major source
countries for articles of jewellery and
parts include: Switzerland (29.6%),
Hong Kong (13.9%), France (8.8%),
Poland (7.9%), and Turkey (7.7%).
Malaysia
Malaysia is another major producer
and exporter of gems and jewellery,
with the industry having
concentration in Penang. According
to industry sources, approximately,
75-80 percent of the gold and
jewellery in Malaysia are
manufactured or fabricated in
Penang, followed by Johor Bahru
and Kuala Lumpur, with activities
Table 13:
ITALY’S EXPORTS OF PRECIOUS METALS, GEMS AND JEWELLERY
HS Code Items
ranging from manufacturing to
import, export, retail and wholesale.
There are about 300 registered
companies engaged in the gold and
jewellery industry in Penang,
including major gold and jewellery
manufacturers such as OE Design,
Zenmax, Yikon and Zhulian.
Penang is one of the major export
regions of gold and jewellery in
South East Asia. More than
70 percent of the gold and jewellery
manufactured in Penang is meant
for the export market.
The primary suppliers of raw
materials for gems and jewellery
trade in Penang are bullion banks
(such as UOB (United Overseas
Bank), RHB and Maybank) and
international private bullion houses.
(US $ Million)
2005 2006 2007 % share CAGR (%)
in total

71 Total Precious Metals, 6304.66 7418.79 8694.05 100.0 17.4

Gems and Jewellery
7113 Articles of jewellery 4758.31 5211.16 6044.74 69.5 12.7
and parts
7108 Gold 632.08 859.73 969.47 11.2 23.8
7110 Platinum 222.71 486.47 642.17 7.4 69.8
7117 Imitation jewellery 195.64 236.30 280.74 3.2 19.8
7106 Silver 87.80 126.36 161.37 1.9 35.6
7102 Diamonds 56.83 117.76 131.45 1.5 52.1
7103 Precious stones 28.15 41.38 58.42 0.7 44.1
7101 Pearls 19.17 20.86 27.19 0.3 19.1
7116 Articles of natural and 10.00 11.85 15.76 0.2 25.5
cultured pearls and
precious and
semi precious stones

SOURCE: UN COMTRADE

56
 Table 14:
ITALY’S MAJOR EXPORT DESTINATIONS AND IMPORT SOURCES OF
PRECIOUS METALS, GEMS AND JEWELLERY
HS Items Export destinations Import sources
Code Countries US $ Million Countries US $ Million
(% share) (% share)

71 Total Precious USA 1180.00 (13.6) USA 1169.04 (26.7)

Metals, Gems Switzerland 1123.63 (12.9) Switzerland 660.42 (15.1)
and Jewellery France 955.96 (11.0) France 447.71 (10.2)
World 8694.05 (100.0) World 4374.06 (100.0)
7113 Articles of USA 932.65 (15.4) Switzerland 290.90 (29.6)
jewellery and UAE 823.71 (13.6) Hong Kong 136.86 (13.9)
parts Switzerland 614.34 (10.2) France 86.25 (8.8)
World 6044.74 (100.0) World 983.18 (100.0)
7108 Gold Switzerland 350.82 (36.2) France 249.93 (58.9)
France 304.35 (31.4) Switzerland 67.29 (15.9)
Croatia 63.31 (6.5) Kazakhstan 31.02 (7.3)
World 969.47 (100.0) World 424.46 (100.0)
7110 Platinum France 134.36 (20.9) USA 849.29 (68.2)
USA 116.58 (18.2) Switzerland 140.93 (11.3)
Switzerland 101.39 (15.8) UK 107.79 (8.7)
World 642.17 (100.0) World 1245.51 (100.0)
7117 Imitation France 53.46 (19.0) Hong Kong 122.23 (39.5)
jewellery Spain 29.73 (10.6) Austria 50.76 (16.4)
USA 28.17 (10.0) France 43.85 (14.2)
World 280.74 (100.00) World 309.79 (100.0)
7106 Silver Spain 31.30 (19.4) Germany 35.77 (48.2)
France 26.62 (16.5) Argentina 8.76 (11.8)
UK 16.41 (10.2) France 8.02 (10.8)
World 161.37 (100.0) World 74.14 (100.0)
7102 Diamonds France 23.66 (18.0) Belgium 371.99 (66.1)
Hong Kong 23.30 (17.7) Israel 81.39 (14.5)
Israel 19.53 (14.9) India 38.09 (6.8)
World 131.45 (100.0) World 563.05 (100.0)
7103 Precious stones France 13.55 (23.2) Switzerland 26.18 (28.8)
Switzerland 11.32 (19.4) Hong Kong 14.49 (15.9)
Hong Kong 6.77 (11.6) India 13.70 (15.1)
World 58.82 (100.0) World 91.00 (100.0)
7101 Pearls Switzerland 7.35 (27.0) Hong Kong 16.31 (41.0)
Hong Kong 5.23 (19.2) Switzerland 8.23 (20.7)
Japan 5.15 (18.9) Japan 6.52 (16.4)
World 27.19 (100.0) World 39.76 (100.0)
7116 Articles of France 3.60 (22.8) USA 16.79 (48.3)
natural or Spain 2.56 (16.2) Hong Kong 11.63 (33.4)
cultured pearls Germany 2.44 (15.5) Switzerland 2.73 (7.9)
and precious World 15.76 (100.0) World 34.77 (100.0)
and semi
precious stones

SOURCE: UN COMTRADE

57
A dominant international private
bullion house is MKS Precious Metal
Switzerland, and its Malaysian office
is a key local supplier for many of
the jewellery fabricators and
manufacturers. The Chinese have
been the major players in the gold
and jewellery industry in Penang for
years with their experience
encompassing manufacturing and
trading of gold articles (bangles,
necklace, bracelet, earrings, etc.),
and gem setting (diamond &
precious stones). Apart from the
Chinese, smaller groups of Indian
jewellers are also involved, mainly in
gem setting, focusing on retail,
wholesale, and a small portion of
import and export. Most of the Indian
players provide the design and
specifications based on their
customer’s requirements to the
Chinese goldsmiths and
manufacturers for production.
During 2007, exports of precious
metals, gems and jewellery from
Malaysia were valued at US $ 2.1
billion, of which 64% constituted
articles of jewellery and parts,
followed by gold, with 19% share.
Other export segments of gems and
jewellery, namely, diamonds,
precious stones, pearls, and silver
constituted marginal share in the
total gems and jewellery exports from
Malaysia.

Table 15:
MALAYSIA’S EXPORTS OF PRECIOUS METALS, GEMS AND JEWELLERY
(US $ Million)
HS Code Items 2005 2006 2007 % share CAGR (%)
in total

71 Total Precious Metals, 1435.15 1736.33 2154.87 100.0 22.5

Gems and Jewellery
7113 Articles of jewellery 934.88 991.98 1381.53 64.1 21.6
and parts
7108 Gold 367.89 506.27 421.71 19.6 7.1
7102 Diamonds 19.21 12.98 11.91 0.6 -21.3
7117 Imitation jewellery 1.77 4.43 4.10 0.2 52.2
7103 Precious Stones 1.24 0.19 1.13 0.1 -4.5
7116 Articles of natural or 0.55 0.36 0.38 0.0 -16.9
cultured pearls and
precious and semi
precious stones
7101 Pearls 0.43 1.56 0.16 0.0 -39.0
7106 Silver 0.10 0.05 0.04 0.0 -36.8
7110 Platinum 0.32 0.01 0.02 0.0 -75.0

SOURCE: UN COMTRADE

58
 Table 16:
MALAYSIA’S MAJOR EXPORT DESTINATIONS AND IMPORT SOURCES
OF PRECIOUS METALS, GEMS AND JEWELLERY
HS Items Export destinations Import sources
Code Countries US $ Million Countries US $ Million
(% share) (% share)

71 Total Precious UAE 1004.58 (46.6) Japan 768.06 (51.5)

Metals, Gems Singapore 342.87 (15.9) Singapore 348.76 (23.4)
and Jewellery Switzerland 137.59 (6.4) Taiwan 107.88 (7.2)
World 2154.87 (100.0) World 1490.11 (100.0)
7113 Articles of UAE 984.15 (71.2) Singapore 64.16 (60.1)
jewellery and Singapore 294.92 (21.3) China 14.95 (14.0)
parts USA 35.26 (2.6) Hong Kong 7.47 (7.0)
World 1381.53 (100.0) World 106.71 (100.0)
7108 Gold Thailand 117.80 (27.9) Japan 636.84 (71.3)
Australia 58.77 (13.9) Singapore 171.46 (19.2)
Hong Kong 55.64 (13.2) Indonesia 28.87 (3.2)
World 421.71 (100.0) World 893.31 (100.0)
7102 Diamonds Hong Kong 6.62 (55.6) Singapore 71.99 (49.9)
Singapore 3.51 (29.5) Hong Kong 33.17 (23.0)
Thailand 0.55 (4.6) India 19.37 (13.4)
World 11.91 (100.0) World 144.23 (100.0)
7117 Imitation Indonesia 2.99 (72.9) Singapore 4.61 (33.6)
jewellery Saudi Arabia 0.32 (7.8) China 3.11 (22.7)
Thailand 0.16 (3.9) Hong Kong 1.88 (13.7)
World 4.10 (100.0) World 13.72 (100.0)
7101 Pearls Hong Kong 0.09 (56.3) Singapore 1.76 (48.2)
Singapore 0.07(43.8) Japan 1.02 (27.9)
World 0.16 (100.0) Germany 0.64 (17.5)
World 3.65 (100.0)
7116 Articles of Singapore 0.29 (76.3) USA 1.04 (54.2)
natural or Germany 0.08 (21.1) Hong Kong 0.35 (18.2)
cultured pearls World 0.38 ( 100.0) China 0.27 (14.1)
and precious World 1.92 (100.0)
and semi
precious stones
7103 Precious stones Singapore 0.38 (33.6) India 1.18 (22.6)
USA 0.27 (23.9) Singapore 1.16 (22.2)
Hong Kong 0.22 (19.5) Thailand 1.11 (21.3)
World 1.13 (100.0) World 5.22 (100.0)
7106 Silver USA 0.03 (75.0) Japan 49.07 (48.8)
World 0.04 (100.0) Singapore 24.42 (24.3)
Australia 15.38 (15.3)
World 100.65 (100.0)
7110 Platinum World 0.02 (100.0) Japan 14.57 (40.0)
USA 12.45 (34.2)
Taiwan (Taipei) 8.87 (24.4)
World 36.38 (100.0)

SOURCE: UN COMTRADE

59
 Major export destinations for
gold include: Thailand (27.9%),
Australia (13.9%), Hong Kong
(13.2%), China (8.9%), and Taiwan
(8.2%), whereas the major source
countries for gold include: Japan
(71.3%), Singapore (19.2%),
Indonesia (3.2%), USA (2.9%), and
Hong Kong (1%). In the case of
60
articles of jewellery and parts major
export destinations include: UAE
(71.2%), Singapore (21.3%), USA
(2.6%), China (1.7%), and Hong
Kong (1%); and the major source
countries include: Singapore
(60.1%), China (14%), Hong Kong
(7%), USA (4.8%), and Switzerland
(4.1%).
5. STATUS OF PRECIOUS METALS,
GEMS AND JEWELLERY
INDUSTRY IN INDIA
The gems and jewellery industry
plays a very important role in the
Indian economy. The primary
jewellery demand in India is for gold;
from historic times, gold and
jewellery have played a pivotal role
in the Indian social scenario. Gold
jewellery is the most preferred
jewellery worn by women in India
irrespective of their religious beliefs
and is the most preferred gifts in
Indian weddings.
The basic value chain of the
gems and jewellery industry is given
in Exhibit 5.
The gems and jewellery industry
in India comprises of sourcing,
Exhibit 5:
VALUE CHAIN OF GEMS AND JEWELLERY INDUSTRY
processing, manufacturing and
selling of precious metals, diamonds,
pearls, precious and semi-precious
gemstones, and artificial jewellery.
India is one of the fastest growing
jewellery markets in the world and is
the largest consumer of gold in the
world. Indian gems and jewellery
industry is also one of the largest
diamond processors in the world;
more than 90% in terms of pieces,
around 80% in terms of carats, and
around 55% in terms of volume are
processed in India. This means that
India processes 9 out of 10 diamonds
processed in the world.
India is also the largest consumer
of gold in the world (over 700 tonnes
61
in 2008), accounting for around 24%
of world gold consumption, majority
of them goes into production of
jewellery. India is also emerging as
the largest trading centre for gold.
The demand for gold jewellery in
India has been traditionally linked to
social and religious significance, as
gold is valued as an important
savings and investment vehicle in
India, and is the second most
preferred investment after bank
deposits. This is mainly because gold
and jewellery is highly portable and
holds its value in times of need. It is
considered to provide a hedge
against economic, social, political
and personal risks. Hence, jewellery
is a preferred, handy investment, as
it can be worn and enjoyed in
ordinary times and sold in times of
financial distress.
In the case of diamonds and
precious stones, the value chain is
as given in Exhibit 6.
Exhibit 6:
VALUE CHAIN OF DIAMONDS AND PRECIOUS STONES
62
India sources rough diamonds
mainly from De Beers; the country
has a large cutting and polishing
industry, which processes the
diamonds, after which the design and
fabrication of studded jewellery takes
place. India mainly concentrates on
small stones in the case of
diamonds.
Major segment of the Indian
gems and jewellery industry is
unorganized and fragmented with
most of the players running family-
owned business. It is estimated that
there are nearly 500,000 goldsmiths,
over 100,000 jewellers, over 6,000
diamond processors, and about
8,000 diamond jewellers in the
country. The country is dependent on
importing precious metals,
gemstones as also diamonds.
Further, the Indian gems and
jewellery industry thrive on the
availability of skilled workforce and
large market size.
Gold
The production of gold in India
during 2007 was 3000 kilograms
witnessing an increase of 25% over
the production in the previous year.
However, the production of gold
has shown a declining trend over
the years. The total resources of
gold in the country, as on April
2005, were estimated at 390.28
million tonnes. Out of these, only
19.25 million tonnes were under the
reserves category, and the balance
of 371.03 million tonnes were under
the resources category (Table 17).
Besides, the total resources of gold
ore of placer type in the country
were estimated at 26.12 million
tonnes. Karnataka has the largest
known reserves of gold in India,
followed by Rajasthan and Kerala
(Table 18). Although there have
been significant ore resources,
India’s gold production has shown
a decline over the years.8

Exhibit 7:
PRODUCTION OF GOLD IN INDIA

SOURCE: USGS Minerals Yearbook 2006 & 2007

8 Placer: a deposit of sand or gravel that contains particles of gold, gemstones,

or other heavy minerals of value.
Reserves: an estimate within specified accuracy limits of the valuable metal
or mineral content of known deposits that may be produced under current
economic conditions and with present technology; that part of the reserve
base that could be economically extracted or produced at the time of
determination.
Resources: a concentration of naturally occurring solid, liquid, or gaseous
material in or on the Earth’s crust in such form and amount that economic
extraction of a commodity from the concentration is currently or potentially
feasible.

63
 Table 17:
RESERVES OF GOLD (As on 1.4.2005) IN INDIA
Mineral Reserves Remaining Total
resources
Gold (Tonnes)
 Ore (Primary) 19,253,951 371,035,286 390,289,237
 Metal (Primary) 85 406.12 491.12
 Ore (Placer) 0 26,121,000 26,121,000
 Metal (Placer) 0 5.86 5.86

SOURCE: Indian Minerals Yearbook, 2006

Table 18:
RESERVES OF GOLD IN INDIA - STATE WISE (As on 1.4.2005)
(In tonnes)
States Ore Metal
Andhra Pradesh 12,098,347 31.58
Bihar 22,884,860 37.60
Chhattisgarh 900,000 2.70
Jharkhand 346,850 3.12
Karnataka 66,172,387 153.41
Kerala
 Primary 558,460 0.20
 Placer 26,121,000 5.86
Madhya Pradesh 7,322,000 7.81
Maharashtra 1,517,000 3.55
Rajasthan 65,589,000 125.84
Tamil Nadu 67,000 1.00
West Bengal 12,833,333 124.00

Note: All reserves are primary unless specified otherwise

SOURCE: Indian Minerals Yearbook, 2006

India has been the largest
consumer of gold jewellery in recent
times, and during 2008, the
consumption was estimated to be
501 tonnes accounting for 23% of
world demand (Exhibit 8). The main
reason for demand for gold has been
the traditions and cultures in India,
which gives a lot of importance to
gold as a gift in marriages or other
functions and also the need for gold,
as an investment. For the purpose

64
of purchase of gold ornaments, from
reputed jewellers and/or gold coins,
many financiers have introduced
financing schemes. The customer
can purchase ornaments or gold
coins under these financing schemes
and pay back in installments.
Inspite of an increase in gold
prices, the demand for gold jewellery
has been increasing, barring few
years. The continuous rise in prices
of gold however dampened the
jewellery demand after 2005, and in
the year 2008, the demand showed
a decline of 9% over the previous
year. During the first three quarters
of 2009, the consumption for gold
jewellery in India has declined by
nearly 36%, and the total
consumption of gold has declined by
around 49%, over the same period
in the previous year.
Exhibit 8:
INDIA’S SHARE IN WORLD CONSUMPTION OF GOLD JEWELLERY
SOURCE: World Gold Council
Trends in foreign exchange
reserves show that the share of gold
in the total foreign exchange
reserves has been declining over the
years. During 1993-94, gold
accounted a share of 21%, whereas
during the period 2008-09, the share
had fallen to 3.8%.
The upward movement of gold
price has contributed to the partial
growth in value of gold under the
country’s foreign exchange reserves.
It may be noted that despite
economic recession around the
world and crash in commodity prices,
gold price has been increasing.
Between December 2008 -
December 2009, the price has
increased from Rs. 13,445 per ten
grams to Rs. 16,870 per ten grams,
an increase of 25 %. (Exhibit 10)
65
 Exhibit 9:
INDIA’S GOLD CONSUMPTION

SOURCE: World Gold Council, Note: *First three quarters of 2009

Table 19:
TRENDS IN FOREIGN EXCHANGE RESERVES OF INDIA
(US $ Million)
Year SDR Gold Foreign Reserve Total % share of
End of Currency tranche Foreign gold in
Month Assets position Exchange total
March Reserves foreign
(1+2+3+4) exchange
reserves
1 2 3 4 5 6
1994 108 4078 15068 299 19553 20.9
1995 7 4370 20809 331 25517 17.1
1996 82 4561 17044 310 21997 20.7
1997 2 4054 22367 291 26714 15.2
1998 1 3391 25975 283 29650 11.4
1999 8 2960 29522 663 33153 8.9
2000 4 2974 35058 658 38694 7.7
2001 2 2725 39554 616 42897 6.4
2002 10 3047 51049 610 54716 5.6
2003 4 3534 71890 672 76100 4.6
2004 2 4198 107448 1311 112959 3.7
2005 5 4500 135571 1438 141514 3.2
2006 3 5755 145108 756 151622 3.8
2007 2 6784 191924 469 199179 3.4
2008 18 10039 299230 436 309723 3.2
2009 1 9577 241426 981 251985 3.8

SOURCE: RBI

66
 Exhibit 10:
TRENDS IN PRICES OF GOLD (JAN 2005-DECEMBER 2009) IN INDIA
SOURCE: MCX
India imports gold largely for
processing into jewellery, both for
domestic consumption and exports.
During 2007-08, India imported gold
(largely in the form of raw gold)
valued US $ 17 billion, witnessing an
increase of 15.6% over the previous
year. In the same year, India
exported gold mainly in the form of
jewellery, valued US $ 4.32 billion
(majority of them are studded with
diamonds), which witnessed an
increase of 2.2% over the previous
year. This signifies the importance of
domestic demand for jewellery and
the reliance of imported gold for
jewellery manufacturing.
During the year 2008-09, the
export of gold (or jewellery) has
witnessed a growth rate of 51.1%
over the previous year. All the
categories of gold jewellery has
witnessed tremendous increase in
exports during this period, except
gold jewellery set with diamonds,
which witnessed a marginal growth
of 1% in exports.
Major source countries for import
of raw gold by India include
Switzerland, constituting 44.6% of
the total imports of raw gold during
2008-09, followed by Australia
(19.7%) and UAE (19.6%). In the
case of export of gold jewellery
during the year 2008-09, main export
destinations include UAE, USA, UK,
Singapore and Hong Kong.
(Annexure 4)
67
68
Table 20:
EXPORT AND IMPORT OF GOLD JEWELLERY BY INDIA
(US $ Million)
Code Commodity Name 2005-06 2006-07 2007-08 2008-09 % Change % Change % change
2006-07 2007-08 2008-09
vs vs vs
2005-06 2006-07 2007-08

Exports
7108 Gold (including gold plated with platinum) 0.3 1.00 4.66 28.08 233.3 366.0 502.6
unwrought or in semi-manufactured forms,
or in powder form
71131910 Jewellery of gold unset 683.61 771.94 840.04 2320.88 12.9 8.8 176.3
71131920 Jewellery of gold set with pearls 239.33 108.15 123.17 470.18 -54.8 13.9 281.7
71131930 Jewellery of gold set with diamond 2151.83 3,265.61 3,259.28 3293.00 51.8 -0.2 1.0
71131940 Jewellery of gold set with precious and 89.67 80.37 94.07 419.27 -10.4 17.0 345.7
semi precious stones other than diamonds

Total 3164.74 4,227.07 4,321.22 6531.41 33.6 2.2 51.1

Imports
7108 Gold (including gold plated with platinum) 10829.37 14,452.27 16739.36 20758.68 33.5 15.8 24.0
unwrought or in semi-manufactured forms,
or in powder form
71131910 Jewellery of gold unset 14.05 25.21 23.65 16.8 79.4 -6.2 -29.0
71131920 Jewellery of gold set with pearls 6.29 3.35 2.34 5.57 -46.7 -30.1 138.0
71131930 Jewellery of gold set with diamond 120.22 262.05 263.78 407.36 118.0 0.7 54.4
71131940 Jewellery of gold set with precious and 6.88 11.36 21.53 17.37 65.1 89.5 -19.3
semi precious stones other than diamonds

Total 10976.81 14,754.24 17,050.66 21205.78 34.4 15.6 24.4

SOURCE: DGCIS
 Exports of gold jewellery by SEZ/
EPZ had witnessed a tremendous
increase during the year 2008-09,
over the year 2007-08, a growth of
almost 80%. However, during the
period April-November 2009-10, gold
jewellery exports from SEZ/EPZ
witnessed a decline of 11% over the
previous year. One of the reasons
for this negative trend is the global
economic slowdown, which engulfed
the demand for jewellery worldwide.
Diamond
Traditionally, India has always
excelled in the field of diamond
cutting, gem cutting, polishing and
processing. India’s diamond
tradition goes back thousands of
years and is one of the oldest in
the world. In fact, it was reported
that diamonds were discovered by
India and were the only source of
diamonds until 1730s. At present,
India is one of the the world’s
leading diamond cutting and
polishing centers in the world.
Table 21:
EXPORTS OF GOLD JEWELLERY BY SEZ/EPZ IN INDIA
Year Exports
2007-08 2653.72
2008-09 4767.93
April-Nov 2008-09 4677.88
April-Nov 2009-10 4161.33
SOURCE: Gems and Jewellery Export Promotion Council (GJEPC)
According to USGS data,
diamond production (gem and
industrial) in India in the year 2007
was 55 thousand carats and has
remained more or less stagnant over
the years. As per United Nations
Framework Classification (UNFC)
system, as on 1.4.2005, India had
total resources of around 4.5 million
carats, of which 1.2 million carats
was reserves. By grades, about 17%
of resources are of gem variety, 18%
are of industrial variety, while bulk of
the resources (65%) is placed under
unclassified category. Andhra
Pradesh accounts for 40% of
diamond resources, followed by
Madhya Pradesh (32%), and
Chhattisgarh (28%) (Table 22).
Gujarat is one of the major states
in India promoting gems and
jewellery sector as one of the thrust
areas for development. Gujarat,
having the largest human resource
pool in the country in diamond cutting
and polishing, accounts for 80% of
the total diamonds processed in
(US $ Million)
% change to previous period
79.7
-11.0
69
 Exhibit 11:
DIAMOND PRODUCTION IN INDIA

SOURCE: USGS Minerals Yearbook 2006 & 2007

Table 22:
RESERVES OF DIAMOND IN INDIA
(As on 1.4.2005)
(in carats)
Mineral Reserves Remaining resources Total
Diamond 1,205,577 3,376,336 4,581,913
By grades
Gem – 756,765 756,765
Industrial – 840,823 840,823
Unclassified 1,205,577 1,778,748 2,984,325
By States
Andhra Pradesh – 1,822,955 1,822,955
Madhya Pradesh 1205,577 249,381 1,454,958
Chhattisgarh – 1,304,000 1,304,000

SOURCE: Indian Minerals Yearbook, 2006

India. The state intends to further  Financial support for modern

enhance its dominance in the sector jewellery enterprises;
and has introduced various
 Assistance for setting up
schemes, including:
Hallmark certification centres

70
 for jewellery and testing
centres for gems;
 Scheme for support to safety
measures and protection from
occupational hazards;
 Scheme for setting up training
institute for the development of
gems and jewellery sector;
 Support for development of
jewellery parks.
India imports rough diamonds
and process them for value addition
and exports. As a result, India is a
net exporter under this category in
value terms. India exported
diamonds valued US $ 14.2 billion
during 2007-08, an increase of 34%
over the previous year. During the
year 2008-09, the exports of
diamonds witnessed an increase of
10.6%, touching US $ 15.7 billion.
Export of crushed industrial
diamonds showed a tremendous
increase during this period. (Table
23).
India imported diamonds valued
US $ 7.7 billion in 2007-08; during
the year 2008-09, the imports
increased by 110% from US $ 7.7
billion to US $ 16.3 billion.
In the case of diamond exports,
major destinations include: Hong
Kong (30.1%), UAE (22.5%), USA
(17.6%), Belgium (11.4%) and Israel
(5.0%). As regards diamond imports,
Hong Kong (27.6%), UAE (25.6%),
UK (6.4%), and USA (4.8%) were the
major source countries for India.
(Annexure 4).
Precious Stones
Gems or precious stones have
fascinated mankind since ancient
times. Precious stones are not only
adorned as the items associated
with royalty, they are considered as
valuable gifts along with gold. The
role played by precious and semi-
precious stones in Indian mythology
and society is well-known. In India,
people, for astrological reasons,
have used gems, as they are
considered to be influencing various
planetary positions, which in turn
are believed to be influencing
human life cycle and human
destiny. Gems are also used in
preparation of some Ayurvedic
medicines. Although traditional
Indian gemologists have identified
around 84 precious and semi-
precious stones, amongst them 9
stones namely: Ruby, Emerald,
Pearl, Diamond, Red coral, Zircon,
Blue sapphire, Yellow sapphire, and
Cat’s Eye, form the ‘Navratnas’ or
nine gems.
Table 24 gives the total reserves
and resources of select precious
stones.
India was more an exporter of
precious stones than an importer of
the same, and the difference
between these two being minimal.
During 2007-08, the exports of
precious stones were US $ 280.8
71
72
Exhibit 12:
INDIA'S MAJOR EXPORT DESTINATIONS AND SOURCE COUNTRIES FOR DIAMONDS (2008-09)

SOURCE: DGCIS
 Table 23:
INDIA’S EXPORTS AND IMPORTS OF DIAMONDS
(US $ Million)
Code Commodity Name 2005-06 2006-07 2007-08 2008-09 % Change % Change % change
2006-07 2007-08 2008-09
vs vs vs
2005-06 2006-07 2007-08

Exports
7102 Diamonds, whether or not worked, 11610.33 10,586.45 14,211.75 15725.30 -8.8 34.2 10.6
but not mounted or set
71021000 Unsorted diamonds w/n worked,not mounted 0.49 0.52 0.54 1.23 6.1 3.8 127.8
710221 Unworked or simply sawn, cleaved or bruted: 0.34 0.54 2.25 7.98 58.8 316.7 254.7
710229 Other : 1.42 0.64 0.29 17.83 -54.9 -54.7 6048.3
71023100 Non-industrial diamonds unworked/simply 438.23 495.56 523.32 621.22 13.1 5.6 18.7
sawn cleaved or bruted
710239 Others : 11169.85 10,089.19 13,685.35 15077.03 -9.7 35.6 10.2
Imports
7102 Diamonds, whether or not worked, 8953.57 7,308.23 7,764.88 16300.44 -18.4 6.2 109.9
but not mounted or set
71021000 Unsorted diamonds w/n worked,not mounted 0.81 3.24 1.00 0.28 300.0 -69.1 -72.0
710221 Unworked or simply sawn, cleaved or bruted: – 0.08 0.02 2.14 - -75.0 10600.0
710229 Other : 0.5 2.30 15.51 0.01 360.0 574.3 -99.9
71023100 Non-industrial diamonds unworked/
simply sawn cleaved or bruted 6259.31 5,762.00 5,895.75 6512.72 -7.9 2.3 10.5
710239 Others : 2692.94 1,540.61 1,852.61 9785.28 -42.8 20.3 428.2
SOURCE: DGCIS

73
 Table 24:
RESERVES AND RESOURCES OF SELECT PRECIOUS STONES IN INDIA
(As on 1.4.2005)
Mineral Unit Reserves
Diamond Carats 1,205,577
Ruby Kilogram 1,925
Sapphire Kilogram 0 450
Garnet Carats 20,975,605
SOURCE: Indian Mineral Yearbook, 2006
million, an increase of 6.5% over the
previous year, and in the year 2008-
09, exports of precious stones
witnessed a marginal decline of
(-)0.1%, over the previous year.
Import of precious stones has grown
marginally; during the year 2008-09,
imports grew by 4.6% over the
previous year.
Major export destinations for
precious stones (other than
diamonds, which were not worked or
graded) include: USA (30.5%), Hong
Kong (22.7%) and Thailand (13.9%).
The source countries for the same
include Thailand (23.3%), Hong
Kong (19.1%), and Zambia (13.9%).
In the case of articles of precious
stones other than diamonds (natural/
synthetic), the major export
destinations include: USA (38.8%),
Germany (23.9%), and Switzerland
(9%), and the source countries for
the same include: Hong Kong
(27.8%), Sri Lanka (22.2%), and
Germany (16.7%). (Annexure 4).
74
Remaining Total
Resources Resources
3,376,336 4,581,913
3,346 5,271
450
36,680,028 57,655,633
Platinum
Platinum is a naturally occurring
rare metal which is scantier than
gold. One of the main advantages
of platinum in jewellery fabrication is
its strength and resistance to
tarnish. It can be repeatedly heated
and cooled without hardening and
oxidation effects; even the most
slender sections of platinum,
permanently retain their shape,
providing a secure setting for
diamonds, and giving jewellery
designers a freedom of invention,
not always possible with other
metals. The total resources of
platinum group of metals in India,
as on April 2005, was only 14.2
tonnes; the entire known resources
are located in Niligiri, Boula-
Nuasahi and Sukinda areas in
Orissa.
The exports of platinum which
had witnessed an increase of 175%
in value terms during 2007-08, over
the previous year, witnessed a
 Table 25:
INDIA’S EXPORTS AND IMPORTS OF PRECIOUS STONES
(US $ Million)
Code Commodity Name 2005-06 2006-07 2007-08 2008-09 % Change % Change % change
2006-07 2007-08 2008-09
vs vs vs
2005-06 2006-07 2007-08

Exports
7103 Precious stones (other than diamonds) and 268.23 263.30 280.46 280.04 -1.8 6.5 -0.1
semiprecious stones, whether or not worked or
graded but not strung, mounted or set
710310 Unworked or simply sawn or roughly shaped: 4.6 7.22 14.76 8.08 57.0 104.4 -45.3
710391 Ruby, sapphire and emeralds 94.42 81.55 87.12 103.67 -13.6 6.8 19.0
710399 Other: 169.21 174.54 178.58 168.29 3.1 2.3 -5.8
71162000 Articles of precious or semi precious stones 3.06 0.41 0.35 0.67 -86.6 -14.6 91.4
(natural synthetic/reconstructed)

Total 271.29 263.71 280.81 280.71 -2.8 6.5 -0.04

Imports
7103 Precious stones (other than diamonds) and 166.89 161.97 190.18 198.9 -2.9 17.4 4.6
semiprecious stones, whether or not worked or
graded but not strung, mounted or set
710310 Unworked or simply sawn or roughly shaped: 120.38 124.73 133.61 113.97 3.6 7.1 -14.7
710391 Ruby, sapphire and emeralds 25.89 15.53 25.66 46.09 -40.0 65.2 79.6
710399 Other: 20.62 21.71 30.91 38.84 5.3 42.4 25.7
71162000 Articles of precious or semi precious stones 0.07 0.15 0.14 0.18 114.3 -6.7 28.6
(natural synthetic/reconstructed)

Total 166.96 162.12 190.32 199.08 -2.9 17.4 4.6

SOURCE: DGCIS

75
tremendous increase of 1804%
during the year 2008-09, over the
previous year. Imports also showed
an increase during 2008-09, of
around 6542% over the previous
year. During 2007-08, the imports
had grown by 55% over the previous
year.
UAE was the major export
destination for India’s export of raw
platinum, constituting 49.1% of total
exports; major source countries for
raw platinum imports by India
include: UAE (78.7%), South Africa
(15.3%), Switzerland (2.7%), and UK
(1.9%). UAE and Australia were the
major export destinations of platinum
jewellery constituting a combined
share of 43.8%, and the major
source countries for imports by India
were Thailand and Belgium with 69%
and 13% share, respectively
(Annexure 4).
Pearls
During 2007-08, the exports of
pearls had witnessed an impressive
performance, with the sub-segment
- cultured pearls - witnessing a
growth of 125%. During 2008-09,
the exports of pearls grew by
17.6%, driven by the tremendous
growth of 778% in the export of
cultured pearls (unworked) category
(Table 27).
During 2008-09, the imports of
pearls declined by 7.8% over the
previous year (Table 27). Major
export destinations of pearls include:
76
USA (38.6%), UAE (14.1%), Austria
(12.0%), and Hong Kong (10.8%).
The source countries for import of
pearls by India include: Japan
(34.5%), China (31.9%), and Hong
Kong (21.1%). (Annexure 4).
Silver
During 2007-08, exports of silver
(unwrought and semi-manufactured
form) witnessed a negative growth
of 35.5%, and silver jewellery
witnessed a growth of 19.5%.
However, during 2008-09, the
exports of silver (unwrought and
semi-manufactured form) grew by
27.4%, and silver jewellery
witnessed a growth of 87.7% in
exports (Table 28).
During 2008-09, India imported
unwrought silver valued around US
$ 2 billion, a growth of 79% over the
previous year. Import of silver
jewellery witnessed a growth of
80.6%. (Table 28). Major export
destinations of silver include:
Switzerland (29.7%), USA (21.3%),
UK (13.8%), Iran (11.5%) and Japan
(9.3%), and that of silver jewellery
include: USA (38.1%), China (12.6%),
UAE (10.4%), Hong Kong (7.1%)
and UK (5.8%). The source countries
for import of silver by India include:
UK (37.8%), China (15.4%), Russia
(11.8%), Switzerland (11.6%), and
Hong Kong (3.8%), and that of silver
jewellery include: USA (35.2%), Italy
(17.6%), UAE (12.4%), Hong Kong
(12.3%), Thailand (6.1%), and
Turkey (7.2%) (Annexure 4).
 Table 26:
INDIA’S EXPORTS AND IMPORTS OF PLATINUM
(US $ Million)
Code Commodity Name 2005-06 2006-07 2007-08 2008-09 % Change % Change % change
2006-07 2007-08 2008-09
vs vs vs
2005-06 2006-07 2007-08

Exports
7110 Platinum, unwrought or in semi- manufactured form, 10.73 55.84 155.26 2979.17 73.4 178.0 1818.83
or in powder form
71131950 Jewellery of platinum group metals unset 3.92 1.06 1.24 0.83 241.9 17.0 -33.06

Total 14.65 56.90 156.50 2980.00 75.0 175.0 1804.15

Imports
7110 Platinum, unwrought or in semi- manufactured form, 32.2 14.09 21.62 1474.69 31.3 53.4 6720.95
or in powder form
71131950 Jewellery of platinum group metals unset 0.31 3.11 5.01 294.18 -20.7 61.1 5771.86

Total 32.51 17.20 26.63 1768.87 17.4 54.80 6542.40

SOURCE: DGCIS

77
78
Table 27:
INDIA’S EXPORTS AND IMPORTS OF PEARLS
(US $ Million)
Code Commodity Name 2005-06 2006-07 2007-08 2008-09 % Change % Change % change
2006-07 2007-08 2008-09
vs vs vs
2005-06 2006-07 2007-08

Exports
7101 Pearls, natural or cultured, whether or not worked or 2.34 1.95 2.84 3.34 -16.7 45.6 17.61
graded but not strung, mounted or set; pearls,
natural or culture
710110 Natural pearls 1.78 0.83 1.52 1.45 -53.4 83.1 -4.61
71012100 Cultured pearls unworked 0.22 0.08 0.18 1.58 -63.6 125.0 777.78
71012200 Cultured pearls worked 0.33 1.03 1.13 0.31 212.1 9.7 -72.57
Imports
7101 Pearls, natural or cultured, whether or not worked or 4.83 4.37 7.01 6.46 -9.5 60.4 -7.85
graded but not strung, mounted or set; pearls,
natural or culture
710110 Natural pearls 0.89 0.4 0.98 1.66 -55.1 145.0 69.39
71012100 Cultured pearls unworked 3.59 3.38 5.05 3.59 -5.8 49.4 -28.91
71012200 Cultured pearls worked 0.36 0.6 0.98 1.21 66.7 63.3 23.47

SOURCE: DGCIS
 Table 28:
INDIA’S EXPORTS AND IMPORTS OF SILVER
(US $ Million)

Code Commodity Name 2006-07 2007-08 2008-09 % Change % change

2007-08 vs. 2006-07 2008-09 vs 2007-08

Exports
7106 Silver (including silver plated with gold or platinum), 17.98 11.59 14.76 -35.5 27.4
unwrought or in semi- manufactured forms, or in powder form
71061000 Silver in powder form 0.01 00.0 0.02 Neg Neg
71069100 Unwrought silver 15.87 0.00 1.8 Neg Neg
710692 Semi-manufactured : 2.1 11.59 12.95 451.9 11.7
711311 Jewellery of silver, whether or not plated or clad with 82.93 99.08 195.01 19.5 96.8
other precious metal:

Total 100.91 110.67 207.77 9.7 87.7

Imports
7106 Silver (including silver plated with gold or platinum), 213.93 1152.06 2061.94 438.5 79.0
unwrought or in semi- manufactured forms, or in powder form
71061000 Silver in powder form 30 8.14 1.27 -72.9 -84.4
71069100 Unwrought silver 115.23 959.21 1982.56 732.4 106.7
710692 Semi-manufactured : 68.7 184.7 78.11 168.9 -57.7
711311 Jewellery of silver, whether or not plated or clad with 7.34 14.61 26.38 99.0 80.6
other precious metal:

Total 221.27 1166.67 2088.32 427.3 79.0

SOURCE: DGCIS

79
Government Initiatives
Gems and Jewellery, diamonds and
precious metals have been given a
special thrust by the Ministry of
Commerce & Industry, Government
of India, under the Foreign Trade
Policy through the following measures:
 Allowing 100 per cent FDI in
the gems and jewellery sector
under the automatic route;
 Abolishing duty on polished
diamonds;
 Lowering import duty on
platinum, and exempting
rough, coloured, precious
gems stones from customs
duty. Rough, semi-precious
stones are also exempted from
import duty;
 Setting up of Gems and
Jewellery Parks and SEZs to
stimulate sectoral investments;
 Allowing import of gold of 8 k
and above under
replenishment scheme, subject
to the condition that import
being accompanied by an
Assay Certificate specifying
purity, weight and alloy
content;
 Allowing personal carriage of
gems and jewellery products in
case of holding/participating in
overseas exhibitions, up to
US $ 5 million, and up to US $
1 million in case of export
promotion tours;
80
 Increase in number of days, up
to 90 days, for re-import of
unsold items in case of
participation in an exhibition in
USA;
 Allowing duty free import
(based on FOB value of
exports during the previous
financial year) of consumables
and tools, for:
o Jewellery made out of:
 Precious metals (other
than Gold and
Platinum) – 2%
 Gold and Platinum –
1%
 Rhodium finished
Silver – 3%
o Cut and Polished
Diamonds – 1%
 Following items, if exported,
would be eligible for facilities:
o Gold jewellery, including
partly processed jewellery
and articles including
medallions and coins
(excluding legal tender
coins), whether plain or
studded, containing gold of
8 carats and above;
o Silver jewellery including
partly processed jewellery,
silverware, silver strips and
articles including
medallions and coins
(excluding legal tender
 coins and any engineering
goods) containing more
than 50% silver by weight;
o Platinum jewellery
including partly processed
jewellery and articles
including medallions and
coins (excluding legal
tender coins and any
engineering goods)
containing more than 50%
platinum by weight.
 Increasing the entitlement of
duty free import of commercial
samples up to Rs. 300,000;
 Allowing duty free re-import of
rejected jewellery with 2% of
FOB value of exports;
 Permitting import of Diamonds
on consignment basis for
Certification/ Grading, and
re-export by the authorized
offices/agencies of
Gemological Institute of
America (GIA) in India or other
approved agencies;
 Firms and companies dealing
in purchase/ sale of rough or
cut and polished diamonds/
precious metal jewellery plain,
minakari and / or studded with/
without diamond and/or other
stones, with a track record of
at least two years in import or
export of diamonds / coloured
gemstones/ diamond and
coloured gemstones studded
jewellery / plain gold jewellery,
and having an average annual
turnover of Rs. 3 crores or
above during preceding three
licensing years, may also carry
out their business through
designated Diamond Dollar
Accounts (DDA) (Box 4);
 In an endeavour to make India
a diamond international trading
hub, it is planned to establish
“Diamond Bourse(s)”.
Investment Scenario
India has a favourable investment
climate with the policy allowing
100% FDI under the automated
route. However, the FDI inflows into
this industry has been meager;
during the period April 2000 to
October 2009, the diamond and
gold ornaments sector received an
FDI inflow of US $ 263.56 million,
constituting a share of 0.26% in the
total FDI inflows during this period
into India. This may be because,
the industry is significantly
fragmented, and the large portion
of the domestic market is in the
unorganized sector.
However, of late, India is gaining
prominence among foreign firms as
international hub for manufacturing,
retailing and sourcing for quality
designer jewellery. Global retailers,
such as Wal-Mart, JC Penny, are
increasingly procuring jewellery from
India. The domestic players are also
looking at expanding their footprints
in the country; especially in retail
81
 Box 4:
DIAMOND DOLLAR ACCOUNT SCHEME
Under the Diamond Dollar Account Scheme (DDAS), eligible firms and
companies may be allowed to open Diamond Dollar Account with their bankers. A
maximum of two Diamond Dollar Accounts would be allowed with two separate
bankers. The sources of dollars in Diamond Dollar Accounts shall be (i) bank
finance; (ii) export proceeds from shipments of polished/rough diamonds; and (iii)
sale proceeds from local sales of polished/rough diamonds.
Through DDAS, firms and companies, dealing in the purchase/sale of rough
or cut and polished diamonds/precious metal jewellery, plain, minakari and/or
studded with/without diamond and/or other stones with a track record of atleast 3
years in import or export of diamonds/coloured gemstones/diamond and coloured
gemstones studded jewellery/ plain gold jewellery and having an average annual
turnover of Rs 5 crore or above during the preceding three licensing years, have
been allowed to carry out their business. This scheme shall be optional and those
importers/exporters who wish to continue to use Rupee Accounts shall be allowed
to do so under the existing policies.
Under this scheme, Dollars kept in such accounts and are available from
bank finance and/or export proceeds shall be used only for import/purchase of
rough diamonds from overseas/local sources.

space; some of the major 30 stores by 2009, up from the

developments include9:
 Reliance Retail is planning an
aggressive entry into the
jewellery retail market. The
company has plans to open
around 400 to 500 jewellery
retail outlets across the
country;
 Damas India, part of one of
the largest jewellery retail
outlets in the world, is adding
16 new stores to the 12 stores
it has already established in
India;
 Swarovski, the global crystal
goods manufacturer and
marketer, plans to set up
9 Source: Indian MSME Ecosystem, February 2009
current 13;
 The Gitanjali Group has
bought ‘Nakshatra’, the
premium brand of jewellery
promoted by Diamond Trading
Company (DTC);
 Gitanjali Gems, a diamond and
jewellery manufacturer has
entered into an agreement with
the Mineral and Metal Trading
Corporation of India (MMTC),
a leading bullion trader, for a
joint venture;
 Thai company, Pranda
Jewellery, is foraying into
retailing in India and has plans
towards retail expansion in the
country;

82
 Box 5:
EXIM BANK’S ROLE IN SUPPORTING INDIAN
GEMS AND JEWELLERY INDUSTRY
Exim Bank of India seeks to create an enabling environment to promote two-
way transfer of technology, trade and investments and operates a wide range of
lending, service and support programmes. The Bank has a variety of loan products
to cater to the financing requirements of enterprises. The credit facilities are
available for financing at all stages of export cycle of Indian firms. The Bank’s
Lines of Credit (LOC) extended to commercial banks, financial institutions, regional
development banks, and entities overseas serve as a market entry mechanism to
Indian exporters and provide a safe mode of non recourse financing option to
Indian exporters. Apart from LOC, the Bank offers buyer’s credit and supplier’s
credit for exports on deferred payment terms. These facilities help companies,
especially the SMEs, to offer competitive credit terms to the buyers and to explore
new geographical markets.The Bank has extended supplier’s credit, pre shipment
credit, post shipment credit, and foreign currency packing credit (FCPC), to its
clients in the gems and jewellery sector.
Exim Bank has signed a Memorandum of Understanding (MOU) with the
Indian Diamond Institute (IDI), which enables the development of human resources
through professional training, and hence be supportive of the export efforts of the
industry. The Bank has provided grant to IDI for upgrading LRS (Laser Raman
Spectroscopic Machine) equipment, and thereby enabling the Institute to provide
training to carry out in-depth study of all types of gems. The MOU will also enable
both the institutions to exchange literature, data, information and research output
on the gems and jewellery industry, and also facilitate the exchange of foreign
experts visiting the two institutions, and in organizing their respective training
programmes.

 Geneva-based luxury watch  Kiah, the diamond jewellery

and jewellery brand De
Grisogono is firming up its
plans to foray into the Indian
market through establishing
mono-brand outlets;
retailer, which currently
operates 15 retail stores in
India and one store in Dubai,
is planning to expand the retail
network of ‘Kiah Diamond
Jewellery’ stores.

83
6. MARKET ANALYSIS
In this chapter, market analysis
has been undertaken to understand
the competitive position of India vis-
à-vis other competitor countries, and
also to identify the export
destinations which have not been
fully tapped by India for its exports
of gems and jewellery under select
product categories. Since India is
one of the major exporting countries,
for articles of jewellery, the world’s
largest exporters and importers, and
India’s export destinations for the
various categories under select sub-
product groups have been analyzed.
Other product groups which are
covered in this chapter are articles
of natural and cultured pearls,
precious and semi precious stones;
and imitation jewellery.
ARTICLES OF JEWELLERY
Articles of jewellery and parts
thereof, of precious metal or of
metal clad with precious metal
(HS 7113): Major importers under
this category include USA, UAE,
Hong Kong, Switzerland and UK.
Among the major source countries,
Italy exported to all the major
importers. India was one of the
major exporters of articles of
84
jewellery and was one of the major
source countries for USA and UAE.
Even though India was exporting to
all the major importers, Switzerland
was one major importer where India
needed to improve its exports. Of
the total exports of US $ 42.5 billion
under this category, India exported
US $ 5.06 billion constituting a
share of 12% in the total world
exports in 2007. (Table 29).
Articles of jewellery and parts
thereof of silver, whether or not
plated or clad with other precious
metal (HS 711311): Among the Asian
markets, Thailand, Hong Kong and
China were major source countries,
and among the western markets,
Italy was a major source country
under this category. The major
importers include: USA, Hong Kong,
Germany, UK and Singapore.
Thailand was a major source country
for USA, Hong Kong, Germany and
UK. China was a major source
country for USA, Hong Kong and
Germany. India was not a major
exporter under this category; its
exports amounted to US $ 94.2
million and had a share of only 2.4%
in the world exports in 2007. India’s
 Table 29:
MARKET ANALYSIS OF ARTICLES OF JEWELLERY (HS 7113)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers

Hong Kong

Switzerland

France
China
India

USA
Italy

UK
World 42554.14

USA 10086.29
UAE 5829.26
Hong Kong 3872.93
Switzerland 2842.76
UK 2714.45

NOTE: *Articles of jewellery and parts thereof, of precious metal or of metal

clad with precious metal.
SOURCE: UN - COMTRADE

Table 30:
MARKET ANALYSIS OF ARTICLES OF JEWELLERY (HS 711311)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers
Hong Kong
Thailand

China

USA
Italy

World 3844.93

USA 1306.33
Hong Kong 251.95
Germany 250.82
UK 249.87
Singapore 183.07

Note: *Articles of jewellery and parts thereof of silver, whether or not plated or
clad with other precious metal.
SOURCE: UN - COMTRADE

85
major markets include USA (55.3%),
UK (8.3%), Germany (5.6%) and
Italy (4.3%). However, India has the
potential to target USA, Hong Kong
and Singapore as its export markets
under this category (Table 30).
Articles of jewellery and parts
thereof of other precious metal
(gold or platinum group of
minerals), whether or not plated
or clad with precious metal (HS
711319): USA, UAE, Hong Kong,
Switzerland and UK were the major
importers of articles of jewellery and
parts thereof of other precious metal,
whether or not plated or clad with
precious metal in 2007 (HS 711319).
Major source countries under this
category include: Italy and UK,
exporting to almost all the major
importers of the world. Other major
source countries include: India, Hong
Kong and USA. India was one of the
major exporters under this category,
and exported around US $ 5 billion
during 2007, constituting a share of
13% in the total world exports. India
was a major source country for USA,
UAE and Hong Kong. India should
however improve its exports to
Switzerland, which is another major
importer under this category
(Table 31).
Articles of jewellery and parts
thereof of other precious metal,
whether or not plated or clad with
precious metal (HS 711320):
Japan, UK, USA, New Zealand and

Table 31:
MARKET ANALYSIS OF ARTICLES OF JEWELLERY (HS 711319)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers
Hong Kong

Switzerland

France
China
India

USA
Italy

UK

World 38343.25

USA 8749.95
UAE 5757.91
Hong Kong 3598.27
Switzerland 2759.48
UK 2411.15

NOTE: *Articles of jewellery and parts thereof, of precious metal (gold and
platinum group of mineral) whether or not plated or clad with precious metal.
SOURCE: UN - COMTRADE

86
Hong Kong were the major importers
in this category, and the major
exporters include USA and Italy in
2007. USA was among the world’s
major exporters, as also among
world’s major importers. USA was
the largest exporter constituting
almost 52% of the total exports in the
world. Among the major importers,
USA was a major source country for
Japan, UK, New Zealand and Hong
Kong; and Italy was a major source
country for Japan, UK, USA and
Hong Kong (Table 32). India had very
minimal exports under this category,
amounting to US $ 0.02 million.
ARTICLES OF NATURAL AND
CULTURED PEARLS,
PRECIOUS OR
SEMI-PRECIOUS STONES
Articles of natural or cultured
pearls, precious or semi-precious
stones (natural, synthetic or
reconstructed) (HS 7116): Major
importers under this category
include: Hong Kong, Switzerland,
UK, Netherlands Antilles and Japan
in 2007. Major source countries for
imports of pearls and precious
stones include: USA and China.
China was a major source country
to all the major importers, except

Table 32:
MARKET ANALYSIS OF ARTICLES OF JEWELLERY (HS 711320)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers

Germany
Australia

Ireland
Italy
USA

UK

World 365.95

Japan 88.57
UK 53.43
USA 30.01
New Zealand 27.57
Hong Kong 22.72

Note: * Articles of jewellery and parts thereof of base metal, whether or not
plated or clad with precious metal.
SOURCE: UN - COMTRADE

87
 Table 33:
MARKET ANALYSIS OF ARTICLES OF NATURAL AND CULTURED
PEARLS, PRECIOUS OR SEMI-PRECIOUS STONES (HS 7116)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers

Switzerland

Hong Kong
China
USA

Italy
World 3844.93

Hong Kong 304.78

Switzerland 289.94
UK 176.08
Netherlands 174.26
Antilles
Japan 167.93

Note: **Articles of natural or cultured pearls, precious or semi precious stones

(natural, synthetic or reconstructed).
SOURCE: UN - COMTRADE

Netherlands Antilles, and USA was
a major source country for all the
major importers (Table 33). India had
very minimal exports in this category,
amounting to US $ 0.27 million.
Japan, Switzerland and UAE. Hong
Kong was both an importer and
exporter under this category (Table
34). India had negligible exports (US
$ 0.02 million) under this category.

Articles of natural/cultured Articles of precious or semi

pearls (HS 711610): Major importers
of products under this category
include: Hong Kong, USA, Japan,
Switzerland and UAE in 2007. Major
source countries for these importers
include: China and Hong Kong.
China dominated the export scene
by supplying to all the major
importers, while Hong Kong was a
major source country for USA,
precious stones (natural
synthetic/reconstructed) (HS
711620): Switzerland, Hong Kong,
Netherlands Antilles, UK and Japan
were the major importers under this
category in 2007. The only supplier
to Netherlands Antilles was USA.
USA was a major supplier to all the
major importers; Japan has mainly
sourced from USA, Germany, China

88
 Table 34:
MARKET ANALYSIS OF ARTICLES OF NATURAL AND CULTURED
PEARLS, PRECIOUS OR SEMI-PRECIOUS STONES (HS 711610)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers

Hong Kong
Polynesia

Germany
Australia

French
Japan
China

USA
World 205.00

Hong Kong 72.94

USA 35.79
Japan 21.00
Switzerland 13.99
UAE 6.56

Note: * Articles of natural/cultured pearls

SOURCE: UN - COMTRADE

and Hong Kong. UK has mainly product category amounted to US $

sourced from USA, China, Italy,
Switzerland and Hong Kong (Table
35). India had negligible exports (US
$ 0.25 million) under this category.
IMITATION JEWELLERY
Imitation jewellery (HS 7117): The
Asian and European countries
dominated the export of imitation
jewellery – Hong Kong, China,
Austria and France. Major importers
of artificial jewellery include USA,
Germany, France, UK and Italy in
2007. Hong Kong was a major
source country for all the major
importers, followed by China and
Austria. India’s exports under this
117.46 million. Though India is also
one of the major exporters of
artificial jewellery, India’s products
are mainly sourced by UK. Other
major export destinations for India
include: USA, UAE, Spain and
Saudi Arabia; however, the volumes
are insignificant as compared to the
potential. India needs to target
these markets through various
strategies (Table 36).
Cuff links & studs of base
metal w/n plated with precious
metal (HS 711711): Major importers
of products under this category
include: USA, UK, Japan, France,

89
 Table 35:
MARKET ANALYSIS OF ARTICLES OF NATURAL AND CULTURED
PEARLS, PRECIOUS OR SEMI-PRECIOUS STONES (HS 711620)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers

Hong Kong
Switzerland
Germany

China

Italy
USA
World 1741.00

Switzerland 275.95
Hong Kong 231.84
Netherlands 174.06
Antilles
UK 170.94
Japan 146.93

Note: * Articles of precious or semi precious stones (natural synthetic/

reconstructed)
SOURCE: UN - COMTRADE

and Hong Kong; major source IN SUM

countries for products under this
category include: Thailand, UK,
Hong Kong, China, and Germany in
2007. Thailand served as a source
country for all major importers of the
world (Table 37). India’s exports
under this product group amounted
to US $ 2.58 million. Though India
was not a major exporter under this
category, India was a major source
country for USA contributing 8.1% of
the total imports by the USA. In value
terms, India’s export to USA was US
$ 2.09 million, a share of 81 % of
India’s total exports under this
product group.
The product-country analysis shows
that USA, EU, Japan and Hong
Kong are the leading importers of
major gems and jewellery products.
These countries have been
sourcing their jewellery import
requirements mainly from countries
such as Hong Kong, China, Italy,
USA, Germany and UK, of which
USA, UK and Germany are
importers as well as exporters.
Hong Kong appears to be more of
a trading hub in the Asian continent.
India served as one of the major
source countries for diamonds, as

90
 Table 36:
MARKET ANALYSIS OF IMITATION JEWELLERY (HS 7117)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers

Hong Kong

France
Austria
China

India
World 4967.03

USA 974.73
Germany 365.01
France 364.99
UK 316.89
Italy 309.79

Note: * Imitation jewellery

SOURCE: UN - COMTRADE

Table 37:
MARKET ANALYSIS OF IMITATION JEWELLERY (HS 711711)*
(US $ Million)
World’s Imports
Major (US $ Million) Major Source Countries
Importers
Hong Kong

Germany
Thailand

China

Italy
UK

World 123.45

USA 25.71
UK 10.7
Japan 7.93
France 6.48
Hong Kong 5.79

Note: * Cuff links & studs of base metal w/n plated with precious metal
SOURCE: UN - COMTRADE

91
also some articles of jewellery. In
the case of diamonds, India is one
of the major importers of rough
diamonds, and one of the major
exporters of cut/polished diamonds.
India’s exports of cut and polished
diamonds have been to all major
markets in the world. India is also
a major exporter of articles of
jewellery and parts, and exported
to all the major importers of the
world. However, some of the
markets are not well-explored by
Indian gems and jewellery
exporters. For example, India may
endeavour to concentrate on
markets like: UK and Switzerland
for articles of jewellery of gold and
platinum group of minerals (HS
code 711319); USA, Germany, UK
and Switzerland for articles of
92
jewellery made of silver (HS code
711311); USA, Japan, Switzerland
and UAE for articles of natural and
cultured pearls (HS code 711610);
Switzerland, UK and Japan for
articles of semi-precious stones
(HS code 711620); and USA,
Germany, France, UK and Italy for
articles of imitation jewellery (HS
code 7117).
India may leverage its traditional
craft-skills, low-cost labour, and
fabrication techniques in some of the
jewellery products (such as
processing of small-sized
diamonds), and replicate such
advantages in the production of other
products, and thereby become a
global player across the gems and
jewellery segments.
7. CHALLENGES AND STRATEGIES
CHALLENGES
Unorganized Sector
India’s gems and jewellery industry
is highly unorganized and
fragmented with more than 90% of
the players having family owned
businesses. According to a FICCI
study, the gold processing industry
has around 15,000 players, with
only around 80 units having
revenues of over US $ 5 million.
India is also home to around
450,000 goldsmiths, over 100,000
gold jewellers, about 6,000
diamond-processing players, and
8,000 diamond jewellers. The
unorganized and small-scale nature
of the sector hampers the ability of
Indian gems and jewellery industry
to innovate, upgrade technologies,
and emerge as a world-class
supplier.
Impact of Recession
There had been a loss of market
for gems and jewellery exports due
to recession and global economic
slowdown. As can be seen in Table
38, during 2007-08, there was a
growth in gems and jewellery
exports by 23%, over the previous
year. The growth trend continued
even in 2008-09 during which the
exports showed a growth of 44%
over the previous year.
However, during the period April-
September 2009-10, due to
economic slowdown, the demand for
gems and jewellery shrank, which
resulted in export slowdown for India.
This has been depicted in Table 38.
Following 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. Further, the economic
slowdown has also affected the
consumer buying pattern, with
growing demand for single-line
jewellery, low-carat jewellery, and
gems-studded jewellery.
An analysis of India’s major
export destinations of gems and
jewellery reveals that during the
period April – September 2009-10,
exports to all the major export
destinations, except Singapore had
witnessed a decline (Table 39).
Exports to countries like China, UAE
93
 Table 38:
EXPORT PERFORMANCE OF INDIAN GEMS AND
JEWELLERY INDUSTRY
(US $ Million)
2006-07 2007-08 2008-09
Exports 15,983.57 19,691.58 28,411.38
Growth Rate — 23.2 44.3
Comparative Export Performance in April – September 2008 and
April – September 2009
2008 2009 Growth (%)
April – September 17,387.66 13,608.40 -21.7
April 3,074.25 1,824.42 -40.7
May 2,969.89 2,011.60 -32.3
June 3,063.81 2,298.99 -25.0
July 2,635.75 2,443.92 -7.3
August 2,842.69 2,386.83 -16.0
September 2,801.27 2,642.65 -5.7

and Singapore, which had witnessed
tremendous increase during 2008-09
witnessed a decline during the period
April-September 2009-10.
The financial performance of
players in this sector has also been
impacted by the recessionary trends
in demand. Out of the fourteen
jewellery companies analyzed, 6
companies witnessed a decline in
income, and eight companies
witnessed decline in profit during the
first half of 2009-10. (Table 40).
Rise in Prices
Exhibit 13 shows the prices of gold
and silver in the last one year,
which has been on a rising trend.
During the period December 2008 -
December 2009, the price of gold
per ten grams, has increased
from Rs. 13,445 to Rs. 16,870,
witnessing an increase of 26%.
Even though the prices of silver
had witnessed a decline after
February 2009, it again started
rising after April 2009. From Rs.
17,847 per kg in December 2008,
the silver price increased to Rs.
27,430 per kg in December 2009.

As mentioned earlier, the prices of The steep rise in raw material

precious metals, especially gold
and silver, has been witnessing
steep increase, since the last few
years, which has been changing
the buying pattern of consumers.
prices has squeezed the cost
efficiency of the Indian gems and
jewellery sector. The ratio of
production cost to net sales of this
industry, which hovered around 86%

94
 Table 39:
ANALYSIS OF MAJOR EXPORT DESTINATIONS OF INDIA
FOR GEMS AND JEWELLERY
(US $ Million)
Countries 2007-08 2008-09 % change Apr-Sep Apr-Sep % change
2008-09 2009-10

UAE 4039.43 10967.06 171.5 6762.61 5805.52 -14.2

Hong Kong 5105.36 5294.56 3.7 3023.34 2913.49 -3.6
USA 4975.96 4660.00 -6.3 2840.01 2177.32 -23.3
Singapore 217.85 549.35 152.2 297.46 326.24 9.7
China 35.06 739.5 2009.2 341.21 235.29 -31.0
Subtotal of 14373.66 22210.47 54.5 13264.63 11457.86 -13.6
Export of
5 Countries

India’s Total 19691.58 28411.38 44.3 17387.66 13608.41 -21.7

Export of Gems
and Jewellery

%Share of 12.07 15.33 - 15.97 17.77 -

Gems and
Jewellery in
India’s total
Exports

SOURCE: Department of Commerce, Ministry of Commerce & Industry,

Government of India

in 2004-05 increased to 92% in 2008- Possible Threats from China,

09, affecting the profitability of this
sector.
Table 42 shows the ratio of cost
of production to net sales of various
industries within the manufacturing
sector, including gems and jewellery.
The ratio reveals that the gems and
jewellery industry is an exceptionally
high cost industry. After 2004-05, the
ratio has been showing an increase
varying between 85% and 95%.
and From Other Countries
Producing Diamonds
Although India currently enjoys
dominance in the world’s cut and
polished diamond market, China
may emerge as a rival in the long-
term, mainly because of the
availability of cheap labour, growing
domestic demand, and also the
improvement in the quality of
workmanship in the country. It may

95
 Table 40:
FINANCIAL PERFORMANCE OF COMPANIES
(APRIL-SEPTEMBER 2009-10)
Company Name Income Net profit

Apr- Sep Apr-Sep % change Apr- Sep Apr-Sep % change

2008-09 2009-10 2008-09 2009-10
Rajesh Exports Ltd. 4804.51 7695.48 60.2 60.92 50.95 -16.4
Titan Industries Ltd. 1901.21 2034.47 7.0 120.49 123.64 2.6
Gitanjali Gems Ltd. 1439.83 1687.35 17.2 68.74 75.35 9.6
Su-Raj Diamonds & 1111.63 1416.65 27.4 24.61 25.56 3.9
Jewellery Ltd.
Suashish Diamonds Ltd. 536.72 647.64 20.7 -10.28 30.44 -396.1
Shrenuj & Co. Ltd. 413.99 407.07 -1.7 5.47 6.69 22.3
Classic Diamonds 371.35 365.05 -1.7 9.13 10.39 13.8
(India) Ltd.
Flawless Diamond 336.92 283.15 -16.0 13.55 10.50 -22.5
(India) Ltd.
Renaissance 175.37 212.89 21.4 8.89 8.9 0.1
Jewellery Ltd.
C G Impex Ltd. 145.41 179.44 23.4 1.59 0.98 -38.4
Vaibhav Gems Ltd. 96.40 50.70 -47.4 -1.62 -11.73 624.1
Goldiam International Ltd. 29.51 33.23 12.6 -7.88 -1.00 -87.3
Shantivijay Jewels Ltd. 33.58 21.01 -37.4 0.72 -0.75 -204.2
Shukra Jewellery Ltd. 25.27 11.02 -56.4 0.12 0.05 -58.3

SOURCE: Prowess

Exhibit 13:
PRICES OF GOLD AND SILVER (DECEMBER 2008 - DECEMBER 2009)
IN INDIA

SOURCE: MCX

96
 Table 41:
PRODUCTION COST*/NET SALES RATIO ACROSS
MANUFACTURING SECTOR
Industry Year
2004-05 2005-06 2006-07 2007-08 2008-09
Food products 51.6 55.6 59.0 62.2 67.0
Textiles 67.0 62.7 66.1 70.6 69.3
Chemicals 62.7 63.3 58.6 60.4 62.7
Gems and jewellery 86.0 89.1 93.4 91.0 92.2
Iron and steel 56.0 63.5 61.6 64.2 67.3
Non electrical machinery 70.9 69.8 74.7 74.8 76.3
Electrical machinery 74.3 78.3 76.5 69.5 66.6
Electronics 41.3 41.4 44.1 54.5 53.9
Transport equipments 72.9 72.7 72.2 72.0 73.6
Diversified 66.6 63.9 59.2 58.3 61.1

Note: *Production cost include: Raw materials, stores and spares & purchase
of finished goods; salaries and wages; power and fuel expenses, royalties,
technical know-hows fees etc; rent and lease rent and interest expenses
SOURCE: Exim analysis; data derived from Prowess

be added that increasing number of traditional / manual methods of

of diamond processors are setting
up their facilities in China due to
these reasons. Also, there has
been growing pressure in major
diamond producing countries in
Africa, like Botswana, Namibia and
South Africa, to gain further
economic benefits from diamond
value chain, seeking investments in
cutting and polishing industry. Such
developments may affect the
prospects of India.
Low level of Technology
Absorption
Utilization of hi-tech, speedy and
efficient machinery and software
has led to the gradual replacement
polishing, manufacturing and
designing of gems and jewellery.
Proactive players in the Indian
gems and jewellery industry are
always on the lookout for better
technology for their units. However,
such technology absorption is
relatively low in Indian gems and
jewellery industry, due to the small
size, and unorganized nature of
majority of the players. Also, mere
absorption of technology may not
be helpful, without a proper blend
between manual labour and
machinery to provide ethnicity to
the end-products. Usage of semi-
skilled and unskilled workforce in
operation of such high-end

97
machines may result in significant
under-utilization of the machinery /
technology, and may at times cause
losses in operations. Skill
development is therefore very
essential for proper reclassification
of the workmen in this industry.
R&D and Product Development
Another major challenge faced by
the industry is the low level of R&D
intensity and facilities for
undertaking R&D and product
development. Proper R&D solutions
would help in improving product
quality, reducing wastage,
introducing new designs and
concepts, and innovation in supply
chain management and marketing.
The gap between hi-end machines
and unskilled labour can also be
reduced with innovative R&D
solutions.
STRATEGIES
Branding of Jewellery
Branding of jewellery plays a very
important role in the jewellery
market as it assures consumers
that the products are of certain
quality, durability and conform to
several social, environmental and
durability standards. Brand
promotion is therefore one of the
best modes of market penetration.
India’s gems and jewellery
industry is highly unorganized and
fragmented, and till the early 1990s,
the average Indian had bought
98
unbranded jewellery from local
jewellers. At that time, confidence in
the local jeweller was the hallmark
of the gold jewellery trade in India.
This used to be a major challenge in
the way of development of branded
jewellery in India. However, since the
late 1990s, there has been a shift in
consumer preferences: women are
increasingly opting for fashionable
and lightweight jewellery instead of
traditional bulky jewellery. There has
been change in consumer trend with
the buyers regarding jewellery as an
accessory and not as an investment.
Consumers have also started
realizing the value of brands, since
it gave them the surety of quality and
durability.
Though in its nascent stage,
branded jewellery in India has been
showing encouraging signs, despite
tough competition. According to an
estimate by the Indian Brand Equity
Foundation (IBEF), the market for
branded jewellery is expected to
become US $ 2.2 billion by 2010.
Some of the jewellery brands in India
are DeBeers, D’damas, Tanishq,
Oyzterbay, and Gili. In order to gain
market share, branded jewellers may
have to come up with designs that
customers want, and win the trust
and confidence of consumers by
hallmarking and demonstrating the
purity of the gold used by them. To
compete with traditional players,
branded players may also find some
ways to differentiate themselves
from others. While the success of a
particular brand may depend on
differentiation and affordability,
quality will be a key element in
sustaining a brand. In addition,
branded players require focused
advertising and astute salesmanship
to compete with traditional jewellers.
In this context it may be
mentioned that the Gem & Jewellery
Export Promotion Council has
launched the brand ‘Anant’, an
exquisite range of single line
diamond jewellery, exclusively for
Indian women. This initiative was
jointly undertaken by the Council
along with Gold Souk, Rio Tinto,
International Gemological Institute
(IGI), and All India Gems and
Jewellery Trade Foundation (GJF),
with the objective of promoting
diamond jewellery trade in India.
‘Anant’ is available at over 200 retail
outlets across the country and is
being promoted extensively through
print, electronic and outdoor media.
This promotional campaign covers
15 major and mini metros such as
Mumbai, Delhi & Gurgaon,
Ahmedabad, Rajkot, Baroda, Jaipur,
Bangalore, Chennai, Hyderabad,
Kochi, Kolkata, Kanpur, Nagpur and
Akola.
Hallmarking of Jewellery
As the jewellery making and
marketing is largely at the hands
of unorganized sector, often, Indian
consumers are faced with issues
related to quality and low caratage.
In case of traditional handcrafted
jewellery often the joints are
soldered with the use of solder
alloys of a much lower caratage.
To counter this challenge, many
countries are promoting
Hallmarking Scheme to protect the
consumers against the adulteration,
and guarantee the purity or
fineness of gold jewellery.
Hallmarking is the accurate
determination and official recording
of the proportionate content of
precious metal in jewellery.
Government of India has been
protecting the interests of consumers
from adulteration, and irregular metal
quality, and launched the
Hallmarking Scheme through
Bureau of Indian Standards. The
principal objectives of the
Hallmarking Scheme are to protect
the consumers against the fraud of
adulteration and to oblige the
manufacturers to maintain legal
standards of fineness. However, it is
difficult to make Hallmarking of gold
jewellery mandatory across the
country due to insufficient number of
certification centres. At present,
there are over 100 BIS-recognised
assaying and hallmarking centres
in India, which are centred around
Tier – 1 and Tier – 2 cities.
It is proposed that India may
consider expanding the network of
hallmarking infrastructure across the
country and help penetrate quality
products even in rural areas. India
may also consider becoming a
member of international Hallmarking
99
Convention, and derive the benefits
of such Convention.
Increasing Market Presence of
Platinum Jewellery
With the gold prices increasing at
record levels, consumers have
started showing interest in
ornaments made from other metals,
like platinum and palladium. The fall
in prices of platinum has also
triggered the demand for platinum
jewellery across the world, including
India. During the past one year, the
prices of platinum have witnessed
decline, which is one of the main
reasons for the consumers to opt
for platinum jewellery (Exhibit 14).
During March 2008, the price of
platinum stood at US $ 2005 per
troy ounce (31.1 gms), and during
November 2008, the price fell down
to as low as US $ 844 per troy
ounce. As on December 2009, the
price of platinum stood at US $
1448 per troy ounce. As the
demand for platinum jewellery is
increasing, and especially when the
consumer preferences are shifting
to platinum jewellery, due to rise in
price of gold, Indian jewellers need
to diversify their product range and
concentrate more in the
manufacture of platinum-based
jewellery. Leading retail jewellers
should also add exclusive space for
platinum jewellery in their stores.
According to industry observers,
at present, facilities for ore
beneficiation and extraction of
100
platinum group metals do not exist
in the country. Technology has also
to be imported for extraction of
platinum group of metals, which
should be promoted in India.
Change in Product Portfolio
As with all luxury products, the
demand for diamond and jewellery
is highly income elastic. With the
recession affecting the demand for
jewellery products worldwide, it is
necessary to diversify the export
product portfolio, and concentrate
more on lesser-priced jewellery,
such as imitation, fashion or
costume jewellery. One such
example would be the concept of
one gram gold jewellery which has
picked up in the Indian retail market
recently. Players in the jewellery
industry, eyeing the domestic
market has brought this idea of
producing large jewellery item with
minimal gold content, and thereby
making attractive and affordable to
the low-end consumers. This
concept could be carried forward to
international markets, especially
developing economies, targeting
middle class population. Countries
with ethnic Indian population could
also be another range of target
markets. It is believed that in such
product range, the risk of volatility
in gold prices is likely to be lower,
leading to improvement in margins,
as compared to sale of pure gold
jewellery. Another such example is
the changing demand trend from
 Box 6:
BIS CERTIFICATION SCHEME FOR HALLMARKING OF
GOLD JEWELLERY
Government of India has identified Bureau of Indian Standards (BIS), a sole
agency in India, to operate the BIS Hallmarking Scheme. The Scheme has been
aligned with International Criteria on Hallmarking (Vienna Convention 1972). As
per this Scheme, jewellers are granted with licences by BIS to sell jewellery after
hallmarking them from any of the BIS recognized Assaying and Hallmarking Centre.
BIS maintains surveillance of the certified jewellers, at a defined periodicity. Market
surveillance involves collection of hallmarked gold jewellery from licensee’s retail
outlet/manufacturing premises and having it tested for conformity in BIS recognized
Hallmarking Centre. Deviations in degree of purity of fine metal and observance
of operation not in conformance to the system may result in cancellation of BIS
recognition of the centre as per provisions under the BIS Act, Rules and Regulations.
BIS HALLMARK
A Hallmark, consists of five components i.e. BIS Mark, the Fineness number
(corresponding to given caratage), Assaying and Hallmarking Centre’s Mark,
Jeweller’s Identification Mark, and Year of Marking denoted by a code letter and
decided by BIS (e.g. code letter ‘A’ was approved by BIS for year 2000, ‘B’ being
used for the year 2001 and ‘C’ for 2002 and ‘J’ for 2008). The marking is done
either using punches or laser marking machine.
BIS Hallmark for purity and fineness is as given below:
 958 – Corresponding to 23 carat
 916 –Corresponding to 22 carats
 875 - Corresponding to 21 carats
 750 - Corresponding to 18 carats
 585 - Corresponding to 14 carats
 375 - Corresponding to 9 carats
The BIS Precious Metals Sectional Committee (MTD 10) has also formulated
and published the following Indian Standards on Gold and Gold Alloys:
 IS 1417 (Grades of gold and gold alloys, Jewellery/ artifacts – Fineness and
Marking)
 IS 1418 (Assaying of Gold in Gold Bullion, Gold Alloys and Gold Jewellery/
Artifacts Cupellation (Fire Assay Method))
 IS 2790 (Guidelines for manufacture of 23,22,21,18,14 and 9 carat gold
alloys)
 IS 3095 (Gold Sellers for use in manufacture of Jewellery)

SOURCE: http://bis.org.in

101
 Box 7:
BENEFITS OF BECOMING A MEMBER OF HALLMARKING CONVENTION
Export facilitation
Articles bearing the Convention Common Control Mark (CCM) – together
with national mark from the Assay Office – do not have to be re-hallmarked upon
import in a HMC Contracting State. The CCM system is applied independently
from the marking / hallmarking system in place in a country. Thus, it is always a
voluntary mechanism. CCM is also considered as quality mark in many countries
around the world.
Avoids duplication in controls
Since articles marked with CCM can be imported without further testing, the
Convention considerably reduces the time and costs involved in control, certification
and marking.
International Harmonisation
CCM is the only worldwide instrument which harmonises the control and
marking of precious metals. The participant countries also contribute to the
development and harmonization of international standards.
Mutual recognition
The Convention not only strengthens international harmonization, but also
helps in establishing systems for mutual recognition of control marks (Marks of
Assay Offices).
Networking and Sharing of Experiences
Members of the Convention benefit from personal contacts with other Assay
Offices, which help them establish systems for exchange of information and sharing
of experiences. This helps the Assay Offices to keep up high standards and track
fraudulent practices.
Fair Trade
The Convention encourages Fair Trade between precious metals operators,
especially to avoid under-carrating from the stage of metal trading. Consumer
satisfaction is also maintained through quality in nature of articles made out of
such metals.

SOURCE: Hallmarking Convention

102
 Exhibit 14:
PRICES OF PLATINUM (January 2008 - December 2009)
SOURCE: Platinum today
small diamonds to single diamond
jewellery. Accordingly, capabilities
need to be developed in cutting,
polishing and marketing of single
diamond jewellery.
Indian gems and jewellery
industry may also diversify the export
product portfolios on the lines of the
change in perception of the
consumers. It may be mentioned that
the new-age consumer perceives
jewellery as a personal accessory
that manifests the wearer’s attitude,
personality and lifestyle. Significant
opportunities may be available to the
players in the Indian jewellery
industry, if they leverage and
package the products with the
blending of tradition and culture in
designs that are universal and
contemporary in their aesthetic
appeal. While the products with such
blend would stand out with
resemblance of cultural and regional
identity, they may not significantly
look as ethnic products. In other
words, the products should be a new-
look piece, but with traditional
inspiration. Branding and packaging
are very important in marketing such
products. Focusing on such product
lines would enable the players in
establishing an edge over their
competitors. Players should also
have desire for product innovation to
catch-up with the change in
consumer trends.
Continuous Skill Development
Human resource is one of the
critical factors for the gems and
jewellery industry, as the industry
is labour-centric. Non-availability of
skilled workers is often cited as one
of the major reasons for the inability
103
of the players in this industry to
scale up their operations. Thus, the
players need to constantly upgrade
the skills of the workmen, through
training and retraining strategies, to
enhance their productivity. Some of
the focus areas for imparting skill-
upgradation include: technology
interface of design and product
development, innovation in
manufacturing process and
reduction of wastage,
standardization and quality control,
and international networking and
marketing. In addition to firm level
strategies, the industry also needs
to address the challenge of skill
development collectively. Supply of
craftsmen / artisans that come
through generations need to be
complemented by fresh talents,
trained in a professional manner, to
have access to wider talent pool.
The industry may establish close
linkages with the existing learning
centres, and help them in imparting
skills / training that are needs of
the hour. At present, there are few
institutes which provide training in
jewellery design, viz., Indian
Institute of Gems and Jewellery,
Indian Diamond Institute, and
National Institute of Design. Also,
the National Skill Development
Corporation (NSDC), initiated by the
Government of India, is expected
to give thrust on skill development
of various sectors, including gems
and jewellery. It is also important
for the players to accomplish
104
greater degree of professionalism
and establish appropriate
organization structure that would
attract and retain best talent in the
industry.
Technology Upgradation
Players in this industry need to
adopt latest technology, including
the ICT interface in all aspects,
starting from mining, cutting and
polishing, to fabrication and
marketing. Technological solutions
are available for several of the
challenges faced by the gems and
jewellery industry; these solutions
include: innovations in designs
(through CAD/CAM machinery),
quality and finish of products
(through infrared, photo-typing,
etching, wax-casting), cost control
in process and reduction of
wastage (laser cutting, hollow-tube
processing). Imparting of
technological solutions may reduce
cost and time, which may not be
feasible under conventional
methods. Technology also helps the
fabricators to churn-out the new-
design products in a much speedy
way.
Establishing Diamond Bourses
At present, one diamond bourse,
Bharat Diamond Bourse, has been
established in Mumbai.
Nevertheless, the traders have to
visit Antwerp, Israel, Hong Kong
and other locations to buy and sell
rough and polished diamonds.
Establishment of more diamond
bourses would give a major fillip to
India to emerge as an international
diamond trading hub, and also to
make trading in diamonds easier
for the players in India. It will be
easier to get the rough diamonds
through these trading centres and
also for getting buyers for the cut
and polished diamonds.
Government of India has already
announced the plan for establishing
more diamond bourses to make the
country an international trading hub
to boost the gems and jewellery
exports. These diamond bourses
are expected to provide a single
platform for traders and it would
make India more of a trading centre.
Increase in Exploration
Activities
India is a vast country with a
landmass of 3.28 million sq.kms, of
which about 2.42 million sq.kms
consist of hard rock. Out of the total
hard rock area, around 700,000
sq.kms have been identified as
having geological association, with
the surface showing possible
mineral occurrences. As per United
Nations Framework Classification,
total resources (reserves and
remaining resources) of gold ore
(primary) in India as on April 1,
2005, were estimated at 390.28
million tonnes, of which only 19.25
million tonnes are placed under
reserve category, and the rest
371.03 million tonnes, under
resources category. Besides, it has
been estimated that the total
resources of gold of placer type in
the country would be around 26
million tonnes. However, resource
augmentation and gold production
have not been significant in India.
This may require increase in
exploration activities with
improvements in technology and
know-how. According to a report by
the Planning Commission,
Government of India, the mining
sector also requires improved
method of narrow-vein-mining for
achieving full economic benefits.
Introduction of small scale mining
culture in the gold industry is also
another requirement with adoption
of modern gold extraction
technology. Cluster mining of small
gold deposits may also deserve
consideration and should be
encouraged. The metallurgical
technique for extraction of platinum
group of elements from low grade
ore is also required to be sourced
from developed countries, in order
for India to become a producer of
platinum. Efforts should be made
to increase the production of rough
diamonds from India to partly meet
the requirement of Indian diamond
cutting and polishing industry.
Exploration activity in different
states is required to be boosted for
discovering new economically
viable kimberlite / lamporite rocks
for indigenous production of
diamonds.
105
Enhancing Visibility through
Continuous Participation in
International Exhibitions
Continuous participation in
international trade shows and
jewellery exhibitions is very
important for the Indian gems and
jewellery industry as such strategy
would help in projecting the industry
as a player in entire value chain,
from cutting, polishing, fabricating
of wide variety of plain and stone-
studded jewellery. Participation in
international exhibitions would also
help establish new business links
for the Indian gems and jewellery
industry, and would also pave the
way for the industry to develop
further business links to enhance
the level of their innovations in
designs and technology. This
platform would also help in
attracting and mobilizing the major
buyers of gems and jewellery,
internationally, and also provide
exhibitors with learning
opportunities and exposure to new
markets and trends. The recent
foreign trade policy has increased
the personal jewellery carriage limit
to US $ 5 million, from US $ 2
million, and the limit in case of
personal carriage, as samples, for
export promotion tours, has also
been increased from US $ 0.1
million to US $ 1 million. This would
also help the industry promote
exports, as it will be able to
showcase more jewellery in
exhibitions abroad.
106
CONCLUSION
World gems and jewellery industry
is on the verge of transformation
due to both supply-side and
demand-side factors. Some of the
recent trends in the global gems
and jewellery industry include:
fragmentation of rough diamond
supply positions; emergence of new
mining areas; beneficiation
movement in mining countries, and
ever-growing raw material prices. At
fabrication level, fashion and styles
have been changing significantly;
the ratio of cost of raw materials
to sales has been increasing,
squeezing the profit margin of the
fabricators.
There has been volatility in raw
material prices; the global slowdown
led to low capacity utilization in this
industry bringing down the margins
in the jewellery manufacturing. In
some countries, including India,
some of the processing units have
been partially shut down due to
slackening demand. As a result, the
value chain in the gems and jewellery
industry may witness consolidation;
only select major players are likely
to cope with the trends and sustain
the competitive pressures.
It is expected that the spike in
gold and silver prices might change
the consumer preferences, as also
impact their demand pattern. The
growing consumer sophistication,
decline in investment-driven
(jewellery) demand, and competition
from other luxury goods are also
likely to impact the demand pattern
of gems and jewellery. Further, the
consumer awareness and
consciousness, generated through
the vigilant measures adopted by
various national Governments, are
expected to drive the demand for
branded and hallmarked jewellery.
At national level, India has been
adopting various strategies to cope
with the global trends in gems and
jewellery business. World Gold
Council and the Indian gems and
jewellery industry have jointly
introduced international jewellery
designing competitions among the
Indian artisans to generate
awareness about the skills of Indian
artisans in the global market, as also
to expose Indian artisans to new
design developments emerging
around the world. There have been
initiatives taken by many designing
centers to train Indian jewellers in
international manufacturing and
designing skills. This is expected to
enhance demand as well as sales for
the Indian gems and jewellery
industry.
The Gemological Institute of
India (GII) and the Gems and
Jewellery Export Promotion Council,
along with other major industry
associations, have established a
National Research Centre, which will
be engaged in certification, training
of students and new entrepreneurs,
and initiate market based research.
A R&D centre has also been opened
at the premises of Indian Institute of
Gems and Jewellery, Jaipur, to
provide the requisite research and
development support to the industry.
Indian gems and jewellery
industry is increasingly building its
ability to produce full range of sizes
and qualities of stones, utilizing not
only the low-cost and abundant
workforce, but also advanced
technologies. The industry has been
seeking further growth through
processing of larger size stones and
manufacture of diamond jewellery.
Both the Government and the gems
and jewellery industry have
recognized the use of IT in diamond
clusters in order to enable seamless
flow of information between the
functional areas, right from job
contractors to small / mid-sized firms,
to large, integrated units. The IT
interface would also provide the
necessary platform for firms to scale
up their operations.
While several such measures
have been taken, at firm-level,
industry-level, and Government-
level, there exists still need to
strengthen the position of India in the
global market place through a
concerted strategy, addressing the
challenges of raw-material sourcing,
technological infusion at processing
stage, adoption of dynamism in
design and product development,
and sustainable market entry
approach.
107
ANNEXURE 1: WORLD GOLD DEMAND

World gold demand

2007 2008 % Change Jan-Sept Jan-Sept % Change

2008 2009

In tonnes
Jewellery consumption 2404.4 2185.8 -9.1 1637.6 1220.7 -25.5
Industrial & dental 461.6 435.5 -5.7 345.9 273.2 -21.0
 Electronics 310.6 292.7 -5.8 238.2 179.3 -24.7
 Other industrial 93.2 86.9 -6.8 65.5 54.6 -16.6
 Dentistry 57.8 55.9 -3.3 42.2 39.3 -6.9
Identifiable investment 685.8 1183.3 72.5 742.7 1061.0 42.9
 Net retail investment 432.5 862.4 99.4 516.5 497.8 -3.6
 Bar hoarding 236.5 391.8 65.7 268.0 117.0 -56.3
 Official coins 137 191.3 39.6 126.9 179.3 41.3
 Medals/imitation coins 72.6 69.6 -4.1 50.2 20.4 -59.4
 Other identifiable retail invt -13.6 209.7 -1641.9 71.4 181.1 153.6
 ETFs & similar products 253.3 320.9 26.7 226.2 563.2 149.0

Total identifiable demand 3551.8 3804.6 7.1 2726.2 2554.9 -6.3

US $ million
Jewellery consumption 53,696 61,073 13.7 47,063 36,616 -22.2
Industrial & dental 10,307 12,275 19.1 9,983 8,185 -18.0
 Electronics 6,938 8,270 19.2 6,877 5,380 -21.8
 Other industrial 2,078 2,437 17.3 1,888 1,631 -13.6
 Dentistry 1,291 1,568 21.5 1,218 1,174 -3.6
Identifiable investment 15,293 32,486 112.4 21,225 31,465 48.2
 Net retail investment 9,515 23,601 148 14,761 14,924 1.1
 Bar hoarding 5,176 10,832 109.3 7,667 3,577 -53.3
 Official coins 3,020 5,280 74.8 3,633 5,349 47.2
 Medals/imitation coins 1,586 1,933 21.9 1,438 617 -57.1
 Other identifiable retail invt -267 5,556 -2180.9 2,023 5,381 166.0
 ETFs & similar products 5,778 8,885 53.8 6,464 16,541 155.9

Total identifiable demand 79,296 105,834 33.5 78,271 76,266 -2.6

SOURCE: World Gold Council

108
ANNEXURE 2: PRODUCTION OF
DIAMOND IN THE
WORLD AND IN INDIA

Countries 2005 2006 2007 % Change % Change % Share

2006 2007
vs. vs.
2005 2006

Volume (in thousand carats)

Russian Federation 38,000.99 38,360.81 38,291.20 0.9 -0.2 22.8
Botswana 31,889.77 34,293.40 33,638.00 7.5 -1.9 20.0
Congo 33,054.99 28,990.24 28,452.49 -12.3 -1.9 16.9
Australia 32,941.06 29,940.45 18,538.64 -9.1 -38.1 11.0
Canada 12,314.03 13,277.70 17,007.85 7.8 28.1 10.1
South Africa 15,559.53 14,934.70 15,210.83 -4.0 1.8 9.0
Angola 7,079.12 9,175.06 9,701.71 29.6 5.7 5.8
Namibia 1,866.32 2,402.47 2,266.09 28.7 -5.7 1.3
Guinea 548.52 473.86 1,018.72 -13.6 115.0 0.6
Zimbabwe 248.26 1,046.02 695.01 321.3 -33.6 0.4
India 60.12 10.27 0.00 -82.9 0.0 0.0

World 176,701.08 176,030.23 168,198.85 -0.4 -4.4 100.0

Value (US $ million)

Botswana 2,870.07 3,207.57 2,960.14 11.8 -7.7 24.5
Russian Federation 2,531.30 2,574.28 2,625.10 1.7 2.0 21.7
Canada 1,453.69 1,409.65 1,657.01 -3.0 17.5 13.7
South Africa 1,319.08 1,361.81 1,417.33 3.2 4.1 11.7
Angola 1,089.17 1,132.51 1,271.95 4.0 12.3 10.5
Namibia 696.70 900.97 715.43 29.3 -20.6 5.9
Congo 615.43 431.93 364.78 -29.8 -15.5 3.0
Australia 547.08 559.57 364.62 2.3 -34.8 3.0
Lesotho 64.30 167.09 328.14 159.9 96.4 2.7
Sierra Leone 141.94 125.30 141.56 -11.7 13.0 1.2
India 9.78 1.76 0.00 -82.0 0.0 0.0

World 11,605.93 12,129.03 12,106.55 4.5 -0.2 100.0

SOURCE: World Diamond Council

109
ANNEXURE 3: WORLD EXPORTS AND
IMPORTS (2007) OF
SELECT PRECIOUS METALS,
GEMS AND JEWELLERY

Exporters Importers

Countries US $ Million % Share in Countries US $ Million % Share in

world exports world imports
Gold,
(Including gold plated with platinum) unwrought or in semi-manufactured forms, or in
powder form
(7108)
USA 11792.11 19.9 Switzerland 15231.41 25.7
Australia 9395.53 15.9 UK 11627.47 19.6
Canada 5482.77 9.3 USA 4963.01 8.4
Hong Kong 4349.27 7.3 India 4430.99 7.5
Peru 4178.20 7.1 South Africa 2605.44 4.4
World 59216.05 100.0 World 59216.05 100.0

Diamonds,
Whether or not worked, but not mounted or set
(7102)
Israel 18416.94 19.7 USA 16514.49 17.7
Belgium 18308.22 19.6 Belgium 15126.96 16.2
India 13365.67 14.3 India 12245.43 13.1
USA 11911.36 12.8 Israel 12178.19 13.0
UK 8514.50 9.1 Hong Kong 12056.49 12.9
World 93373.85 100.0 World 93373.85 100.0

Precious stones
(Other than diamonds) and semi-precious stones, whether or not worked or graded but
not strung, mounted or set; ungrated precious stones (other than diamonds) and semi-
precious stones, unit
(7103)
Hong Kong 523.26 17.1 USA 808.78 26.5
USA 403.02 13.2 Hong Kong 440.29 14.4
Switzerland 386.35 12.7 Switzerland 279.64 9.2
Thailand 371.29 12.2 Thailand 220.59 7.2
India 275.15 9.0 India 191.55 6.3
World 3053.59 100.0 World 3053.59 100.0

(Contd...)

110
(Contd...)

Exporters Importers

Countries US $ Million % Share in Countries US $ Million % Share in

world exports world imports

Pearls,
Natural of cultured, whether or not worked or graded but not strung, mounted or set;
ungraded pearls, natural or cultured, temporarily strung for convenience or transport
(7101)
Hong Kong 482.92 30.2 Hong Kong 531.49 33.2
Japan 296.46 18.5 Japan 292.42 18.3
China 208.37 13.0 USA 253.24 15.8
Australia 205.67 12.9 Germany 69.90 4.4
French Polynesia 106.72 6.7 Australia 63.43 4.0
World 1599.66 100.0 World 1599.66 100.0

Platinum,
Unwrought or in semi-manufactured forms, or in powder form
(7110)
South Africa 9823.07 32.5 USA 7358.67 24.4
UK 4056.44 13.4 Japan 5816.35 19.2
USA 3900.05 12.9 Germany 3848.76 12.7
Germany 2985.95 9.9 UK 2607.59 8.6
Switzerland 2948.75 9.8 Switzerland 2195.93 7.3
World 30215.23 100.0 World 30215.23 100.0

Silver
(Including silver plated with gold or platinum), unwrought or in semi-manufactured forms,
or in powder form
(7106)
China 2017.17 15.9 USA 2309.13 18.2
Mexico 1418.22 11.2 Hong Kong 1992.55 15.7
Hong Kong 1103.16 8.7 UK 1215.49 9.6
Germany 1029.77 8.1 Germany 956.56 7.5
UK 872.88 6.9 India 819.73 6.4
World 12717.68 100.0 World 12717.68 100.0

Articles of jewellery
And parts thereof, of precious metal or of metal clad with precious metal
(7113)
Italy 6044.74 14.2 USA 10086.29 23.7
India 5060.02 11.9 UAE 5829.26 13.7
USA 4470.03 10.5 Hong Kong 3872.93 9.1
Hong Kong 4201.69 9.9 Switzerland 2842.76 6.7
Switzerland 3907.66 9.2 UK 2714.45 6.4
World 42554.14 100.0 World 42554.14 100.0

(Contd...)

111
 (Contd...)
Exporters Importers

Countries US $ Million % Share in Countries US $ Million % Share in

world exports world imports

Articles of natural and cultured pearls precious or semi-precious stones

(7116)
USA 1486.92 76.4 Hong Kong 304.78 15.7
Hong Kong 124.33 6.4 Switzerland 289.94 14.9
China 105.55 5.4 UK 176.08 9.0
Switzerland 39.02 2.0 Netherlands Antilles 174.26 9.0
Japan 25.10 1.3 Japan 167.93 8.6
World 1945.99 100.0 World 1945.99 100.0

Imitation Jewellery
Of base metal whether or not plated with precious metal
(7117)
Hong Kong 1089.50 21.9 USA 974.73 19.6
China 855.00 17.2 Germany 365.01 7.3
Austria 397.87 8.0 France 364.99 7.3
France 317.04 6.4 UK 316.89 6.4
Italy 280.74 5.7 Italy 309.79 6.2
World 4967.03 100.0 World 4967.03 100.0

SOURCE: UN Comtrade

112
ANNEXURE 4: INDIA’S MAJOR EXPORT
DESTINATIONS AND IMPORT
SOURCE COUNTRIES OF
PRECIOUS METALS, GEMS
AND JEWELLERY (2008-09)

Items Exporter % Share Importer % Share

(HS Code)
GOLD

Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or

in powder form
UAE 72.2 Switzerland 44.6
USA 11.9 Australia 19.7
7108 UK 11.4 UAE 19.6
Singapore 2.2 South Africa 10.4
Hong Kong 1.4 USA 2.3

Jewellery of gold set with diamond

UAE 36.5 UAE 49.6
USA 30.7 USA 25.8
71131930 Hong Kong 9.1 Hong Kong 9.4
China 7.0 UK 2.8
UK 5.0 Singapore 1.6

Jewellery of gold set with pearls

USA 35.9 Australia 47.2
UAE 31.8 USA 30.5
71131920 Hong Kong 6.2 UAE 13.5
UK 5.4 Hong Kong 4.8
Singapore 2.7 UK 2.3

Jewellery of gold set with precious and semi precious stones other than diamonds
USA 44.1 UAE 35.3
Hong Kong 34.4 Thailand 22.7
71131940 UK 7.9 USA 21.0
Italy 3.9 Hong Kong 4.1
Germany 1.5 Switzerland 1.7

(Contd...)

113
 (Contd...)

Items Exporter % Share Importer % Share

(HS Code)

Jewellery of gold unset

UAE 76.7 USA 32.0
USA 6.3 UAE 25.4
71131910 UK 2.7 Hong Kong 8.8
Hong Kong 1.8 Japan 5.7
Germany 1.2 Kuwait 3.6

DIAMONDS
Hong Kong 30.1 Hong Kong 27.6
UAE 22.5 UAE 25.6
7102 USA 17.6 Belgium 24.4
Belgium 11.4 UK 6.4
Israel 5.0 USA 4.8
SILVER

Silver (including silver plated with gold or platinum), unwrought or in semi- manufactured
forms, or in powder form
Switzerland 29.7 UK 37.8
USA 21.3 China 15.4
7106 UK 13.8 Russia 11.8
Iran 11.5 Switzerland 11.6
Japan 9.3 Hong Kong 3.8

Of silver, whether or not plated or clad with other precious metal:

USA 38.1 USA 35.2
China 12.6 Italy 17.6
711311 UAE 10.4 UAE 12.4
Hong Kong 7.1 Hong Kong 12.3
UK 5.8 Thailand 6.1
PRECIOUS STONES

Precious stones (other than diamonds) and semiprecious stones, whether or not worked
or graded but not strung, mounted or set
USA 30.5 Thailand 23.3
Hong Kong 22.7 Hong Kong 19.1
7103 Thailand 13.9 Zambia 13.9
Japan 5.8 USA 12.2
Singapore 5.0 Brazil 8.8

Articles of precious or semi precious stones (natural synthetic/reconstructed)

USA 38.8 Hong Kong 27.8
Germany 23.9 Sri Lanka 22.2
71162000 Switzerland 9.0 Germany 16.7
Argentina 6.0 USA 11.1
Canada 4.5 Thailand 11.1

(Contd...)

114
(Contd...)

Items Exporter % Share Importer % Share

(HS Code)

PEARLS
USA 38.6 Japan 34.5
UAE 14.1 China 31.9
7101 Austria 12.0 Hong Kong 21.1
Hong Kong 10.8 Thailand 5.7
Japan 7.5 USA 2.0
PLATINUM

Platinum, unwrought or in semi- manufactured form, or in powder form

UAE 49.1 UAE 78.7
USA 8.2 South Africa 15.3
7110 UK 8.1 Switzerland 2.7
Germany 7.9 UK 1.9
Switzerland 3.0 Germany 0.8

Jewellery of platinum group metals unset

UAE 22.4 Thailand 68.7
Australia 21.4 Belgium 13.3
Germany 9.9 Japan 9.6
UK 9.4 USA 7.2
Hong Kong 3.6 UK 1.2

SOURCE: DGCIS

115
ANNEXURE 5: MEMBERS OF
KIMBERLEY PROCESS

The following nations with the exception of those indicated with an asterisk (*),
meet the minimum requirements of the Kimberley Process Certification Scheme:

Members of Kimberley Process

Angola Canada Ghana Korea Republic Mexico Singapore Turkey

Armenia Central Guinea Lao, Namibia South Ukraine
African Democratic Africa
Republic Republic of
Australia China Guyana Lebanon New Sri Lanka UAE
Zealand
Bangladesh Congo, India Lesotho Norway Switzerland USA
Democratic
Republic of
Belarus Cote Indonesia Liberia Republic Tanzania Venezuela*
d’Ivoire** of Congo
Botswana Croatia Israel Malaysia Russian Thailand Vietnam
Federation
Brazil European Japan Mauritius Sierra Togo Zimbabwe
Community Leone

Note: *Venezuela has voluntarily suspended exports and imports of rough diamonds until further
notice
** Cote d’Ivoire is currently under UN Sanctions and is not trading in rough diamonds
SOURCE: Kimberley Process

116
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119