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RIMPY NARULA BM-A-01
PRATEEK GUPTA BM-A-02
ARCHIT MALHOTRA BM-A-03
RIDHIKA AGARWAL BM-A-17
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OVERVIEW
Diamonds, gems and Jewellery have been a part of the Indian civilization since its recorded
history, the significance of the gems and Jewellery industry in the Indian economic scenario is a
development of the last three or four decades. In 1966-67, the export turnover of the Gems &
Jewellery industry was just Rs 220 m representing a 3 per cent of total merchandise exports.
However, it has now grown to become one of the leading export oriented industries in India
recording an export turnover of around Rs 91617.53 Crore during 2008-09, making it a
significant foreign exchange earner for the country.
The gems and jewellery sector, which has seen a substantial fall in exports since 2007 due to the
withdrawal of a 6 per cent duty concession under the Generalized System of Preferences on
jewellery exports to the US, has been severely affected by the economic meltdown.
As a result, Indias share of gems and jewellery exports to the US has come down from 36 per
cent in 2006 to 20 per cent in 2009.
The UAE was the largest importer of gems and jewellery from India in 2008-09, with a share of
31 per cent. This was followed by Hong Kong with a 25 per cent and the US with 20 per cent.
The gems and jewellery sector accounted for 13 per cent of Indias total merchandise exports.
During April 2009, the total gems and jewellery exports of the country was $1,144 million, as
against $1,740 million during the same period last fiscal, a fall of about 34 per cent.
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INTRODUCTION
Gems & Jewellery Sector
Diamonds, gems and Jewellery have been a part of the Indian civilisation since its recorded
history, the significance of the gems and Jewellery industry in the Indian economic scenario is a
development of the last three or four decades. In 1966-67, the export turnover of the Gems &
Jewellery industry was just Rs 220 m representing a 3 per cent of total merchandise exports.
However, it has now grown to become one of the leading export oriented industries in India
recording an export turnover of around Rs 875 bn during 2006-07 and contributing 16 per cent of
total exports, making it a significant foreign exchange earner for the country.
Classification:
Gems & Jewellery Sector
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1. Polished Diamonds: India is one of the best markets in the world in the polished diamonds
for its world-class quality of diamonds as well as exquisite cutting skills. Over 83 per cent of
India's Gems & Jewellery cut and polished diamonds account for exports. Jaipur and Surat
are famous as world class polishing and designing centers.
2. Gem Stones: This category refers to the stones other than diamonds, these stones comes
under two basic categories that are precious stones and Semi precious stones. There is a huge
demand for these gemstones especially of Sapphire, Emerald and Ruby. India's exports of
gems have crossed 5000000 carats this year.
3. Gold and Jewellery: This category represents the gold and Jewellery, which is used in the
manufacturing of various ornaments. Indian is the country that is the largest consumer of
gold in the world, In the year 2007 gold consumption in India was 850 tons 33% up from the
last year.
4. Synthetic Stones: Synthetic diamond is diamond produced through chemical or physical
processes in a laboratory. Like naturally occurring diamond it is composed of a three-
dimensional carbon crystal. Synthetic diamonds are also called cultured diamonds. Synthetic
diamond is not the same as diamond imitation, which can be made of other material. This is
an upcoming market in India.
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PRESENT STATE OF THE INDUSTRY:
The year 2007-08 has witnessed a growth in all the major segments of the Gem and Jewellery
industry and the total exports stood at Rs.67500 crore, a growth of 29.27% as compared to the
previous year. Exports of diamond have continued to rise and the Jewellery sector has turned in
another record-breaking performance. Indias share of the world's polished diamond market is 60
per cent in terms of value, 85 per cent in terms of volume and 92 per cent in terms of pieces.
Global gold Jewellery consumption increased 33% in the year 2005, the buoyant demand in
countries like India, the Gulf States, China and Turkey pulled up the overall figures. Since early
90's, the Jewellery has averaged a growth of over 30%, making India the fastest growing
Jewellery exporter in the world and also in the year 2004 the demand for gold Jewellery in India
increased by 29% in value to become the fastest growing Jewellery market in the world.
2004-05 2005-06 2006-07 2007-08
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Diamonds
India enjoys domination in the world cut and polished diamond market and smaller diamonds in
particular, which was amply reflected in the export growth of diamond industry with a total
export of US$ 11181.48 million (48000 crore) for the year ended 31st March, 2008 as compared
to US$ 8627.48 million (37000 crore) against the corresponding period in last year.
Jewellery
The year 2007-08 was a good year for the global Jewellery sales as well as to the Company.
Demand was fuelled by good economic growth and improved demand particularly from Asia and
the Middle East. Gold Jewellery sales in United States of America increased by 4% in 2007 to a
huge 73000 crore. The Jewellery sector recorded a massive growth of 49.23% for the year ended
31st March 2008. The demand for the diamond Jewellery will continue to grow stronger due to
continued marketing support by the industry especially in the U.S., India and China. The
Jewellery has an ever-increasing market abroad and the company with its manufacturing facility
comparable to international standards has been able to capture a reasonable portion of the same.
While opportunities are abundant, political uncertainty could affect this industry most.
FUTURE PROSPECTIVE:
With the world economy doing well and increase in the personal disposable income of the
general public demand for the gems and Jewellery has increased worldwide. This year Jewellery
sector grew by 49%. Exports contribute 70% of the total sales of the industry. With United States
contributing most (35%) in the export bill. With rupee value depreciating against the U.S. dollar
there may be a windfall increase in the profitability in the coming times for the industry. Many
companies are on the hunt for acquiring subsidiaries Indian companies will able to strengthen
their retail network. One of the areas of concern for the industry is the surge in the prices of
rough diamond pieces and India depends upon other countries but with the proposal of increase
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in the FDI limit on mining from 74% to 100%, dependence on the other countries will be
reduced. Overall with the economic fundamentals looking good, favorable government policies
and exploration of the newer markets industry looks all set for a good time ahead.
Government Policy:
Levy of two per cent excise duty on premium branded Jewellery.
100 per cent Export Oriented Units (EOUs) and units in the Export Processing Zones
(EPZs)/Special Economic Zones (SEZs), enjoy a package of incentives and facilities, which
include duty free imports of all types of capital goods, raw material, and consumables in
addition to tax holidays against export.
Currently 74% FDI in Mining, 100% proposed.
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COMPETITION AREA
India has been one of the most important countries for the production of Gems And Jewellery.
One of the highlights is the production of Studded Jewllery. Studded Jewellery trading in India is
age old as it is established by the fact that in 1650 A.D., sources report the employment of more
than 60,000 workers in the Eluru mines, where they dug and washed the precious stones. Today
though India has almost no raw Studded Jewllery left within her own soil still we produce 70%
of the World gems in terms of quantity and 45% in terms of value. India is the original country
which discovered gems and initiated gem craft. The gems produced here gave birth to a fabulous
industry and global trade.
Indian Gems and Jewellery Industry have achieved a premier position in the International
market. Today India has been recognized as a significant manufacturing exporting center apart
from its traditional strengths in handmade jewellery, the country has niche for itself in machine
made commercial jewellery arena. The export industry has come of age and is now entering a
new phase of development. Gearing up to achieve further growth, the industry has already
captured a 55% share of world market by the turn of this century.
India is a primary source of imports for the developed countries, mainly because of abundant
availability of skilled and cheap labor, but now this no longer remains the competitive edge for
India as heavy competition is faced by various countries like China, Thailand and Sri Lanka.
But at the same time, India has managed to keep its position healthy and have brighter prospects
ahead.
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GEMS & JEWELLERY SECTOR IN INDIA
Gems and jewellery play a significant role in Indian customs and traditions, making this sector
integral to the economy and one of the fastest growing industries in the country.
Worldwide, the gems and jewellery industry has been growing at a good pace and is currently
estimated at over US$ 130 billion. In India, it accounts for nearly 20 per cent of total Indian
exports. It provides employment to 1.3 million people directly and indirectly.
Apart form being the worlds largest diamond processing (cutting and polishing) country with an
80 per cent share in world market Indias favorable trade policies have made India the hub for
gems and jewellery.
Leading Branded jewellery is the new mantra in the market, having rapidly acquired a niche over
the past few years. Increasing purchasing power and disposable incomes of Indias middle class
has resulted in consumption growth of this industry by about 11 per cent in the five-year period
preceding 2006-07. Add to that the insatiable Indian craving for gems and jewellery, and the
demand will skyrocket to US$ 20 billion by 2010 and US$ 30 billion in 2015, according to
industry experts.
Indias gems and jewellery industry has been allowed 51 per cent foreign direct
investments by the government in single brand retail stores attracting both global and
domestic players to this sector. The burgeoning retail industry in India is instrumental
in innovatively marketing and branding diamonds and traditional jewellery, making
inroads in this sector and contributing to the nations economy. According to a report
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released by Technopak Advisors on Changing Retail Landscape in India, the jewellery and
watches market is pegged at about US$ 13.52 billion. It is expected to register a 12 per cent
growth by 2012, touching US$ 23.54 billion.
Indias economic boom in the country has translated into a large consumer market for jewellery
and other luxury products, offering a lucrative opportunity for major brands to make their foray
into the Indian market and establish their presence. Experts believe that by 2013, India will
become the biggest consumer of jewellery.
The history of the Indian gem and jewellery, a $30-billion industry, began and flourished in the
two leading States of Maharashtra and Gujarat. Exports from the industry fetched $17.1 billion
in 2006-07 against $16.64 billion in 2005-06, showing a growth of 26 per cent. But in past 1 year
we have seen some decline due to recession.
The journey of a diamond is said to begin with mining of roughs followed by sourcing them by
trading firms after which they trade it with the processors who then process the rough diamonds
to manufacture cut and polished diamonds which then end with the trade of the polished
diamonds.
Forecast
India and China together are predicted to emerge as a market equivalent to that of the US by
2015, according to the KPMG report on the global gems and jewellery industry Vision 2015:
Transformation for Growth. The industry can see capital infusion of around $ 10 billion,
according to experts.
As per forecasts, by the year 2015, the industry will witness a good fragmentation in the
jewellery retail business while keeping the area of diamond mining, sourcing, processing within
the confines of either niche or mass players.
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Mining is at the heart of the gem and jewellery industry as the activity is the only
natural source of raw material for the industry. The Geological Survey of India has
stated that India has a great potential for diamond deposits. Based on this and
independent analyses, some of the diamond exploration companies are making efforts
to make India another target destination for diamond exploration. Maharashtra features on the
list of potential states for diamond exploration.
The Gem and Jewellery Export Promotion Council (GJEPC) is primarily involved in introducing
the Indian gem & jewellery products to the international market and promoting exports. To
achieve this, the Council provides market information to its members regarding foreign trade
inquiries, trade and tariff regulations, import duties, and information about jewellery fairs and
exhibitions. It also takes up relevant issues with government and agencies connected with
exports and submit documents for consideration and inclusion in the EXIM Policy. There are a
lot of opportunities from setting up factories to retailing through showrooms for a prospective
investor
SIZE
Large market for Gems & Jewellery with domestic sales of over $10 billion
4% of the global Gems and Jewellery market
Exports of over US $15.5 billion; over 18% of Indias exports. According to recent statistics
of the Gems & Jewellery Export Promotion Council (GJEPC), India's exports of gems &
jewellery (GJ) aggregated Rs. 15787.09 Crores (US$3958.64million) during the month
April-May- 08.
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India is the largest consumer of gold jewellery in the world
Accounts for about 20% of world consumption
India is the largest diamond cutting and polishing centre in the world, i.e., 60% value share,
85% volume share and 92% share of the world market by number of pieces
The Indian domestic diamond jewellery market was estimated at around Rs. 76 billion during
2005.
China ranks sixth in the world in terms of diamond jewellery retail value, ahead of India
which is in seventh place. India ranks third in terms of diamond value, while China holds the
seventh position.
Indian diamond jewellery industry is the third largest consumer of polished diamonds after
USA and Japan
Structural Characteristics
The Indian Gems & Jewellery industry is highly fragmented with a large number of
domestic private sector companies. The bulk of the GJ industry in India is concentrated in the
unorganised sector.
The majority of Indias diamond workforce is employed by small units that process
diamonds on a job-lot basis. The number of gold jewellery manufacturing units is put at 0.1
million.
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India is the largest diamond cutting & polishing centre in the world, followed by Israel
and employs an estimated 2 million workers serving over 0.45 million goldsmiths, and
around 0.1 million diamond processing units.
India has several well recognised strengths which have made it a significant force in the
global Gems and Jewellery business, like i) highly skilled, yet low-cost labour, and ii)
established manufacturing excellence in jewellery and diamond polishing.
POLICY
In 1990, the Gold (Control) Act was abolished, which had forbidden the holding of gold
in bar form.
In 1993, the GOI also permitted non-resident Indians (NRIs) to bring 5 kg of gold into
the country twice yearly on the payment of import tax of Rs. 250 per 10 grams; this
allowance was raised to 10 kg per trip in January 1997. In 1997, the GOI also permitted
import and export of gold under Open General Licence.
In the trade policy (2004-09) issued in April 2006, the GOI has allowed import of
precious metal scrap and used jewellery for melting, refining and re-export of jewellery for
higher utilisation of melting, refining and jewellery-making production capacity.
Jewellery is permitted to be exported on a consignment basis, allowing exporters who
have had to deal with the problem of unsold jewellery in foreign markets to now re-import
the unsold pieces. steps taken include allowing exporters to re-import the rejected precious
metal jewellery subject to refund of duty exemption benefits on the inputs only and not the
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duty on jewellery as was being done earlier; reduction in value addition norms for export of
gold & silver jewellery from 7% to 4.5%.
100% FDI is permitted in the Gems & Jewellery sector through the automatic route
SEZs and Gems and Jewellery Parks have been set up to promote investments in the
sector
Cutting and polishing of gems and jewellery treated as manufacturing for the purposes of
exemption under Section 10A of the Income Tax Act
Outlook
India is the fastest-growing jewellery market in the world
Branded jewellery likely to be the fastest-growing segment in domestic sales
The sector is expected to grow at 40% p.a. to $2.2 billion by 2010
Exports expected to grow from $15.5 billion in 2005 to over $25 billion by 2010
India is the most technologically advanced diamond cutting centre in the world and has
the opportunity to address one of the worlds largest and fastest-growing Gems and Jewellery
markets
Indian industry has been gaining prominence as an international sourcing destination for
high quality designer jewellery
Wal-Mart, JC Penney etc. are increasingly procuring jewellery from India
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MARKET PLAYERS IN GEMS & JEWELLERY INDUSTRY
In the recent years a large number of players have been attracted to the Indian gems and
jewellery retail sector:
Reliance Retail is planning an aggressive entry into the jewellery retail market through its
about 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 its present dozen stores in India.
Swarovski, the global crystal goods manufacturer and marketer plans to set up 30 stores by
2009, from the current 13.
The Gitanjali Group bought 'Nakshatra', the premium brand of jewellery promoted by
Diamond Trading Company (DTC)
Mumbai-based Vardhaman Developers plans to build four more jewellery malls in the city
and is already set to launch Jewel World-Mumbais first jewellery mall.
Dubai-based Joy Alukkas has recently opened its largest showroom in Chennai.
Viswa and Devji Diamonds a partnership between the Indian group and the top jewellery
retailer in UAE opened its first diamond retail outlet.
Gitanjal Gems Ltd opened its first luxury jewellery mall in Gurgaon, where a number of
international brands have started their retail business.
Gold Souk India has plans for bringing 100 Souks in 100 months
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DATA PRESENTATION
SWOT ANALYSIS OF INDIAN GEMS & JEWELLERY INDUSTRY:
Strengths:
About one million craftsmen are associated with this industry. Their skills can be utilized for
designing and making modern Jewellery
Availability of abundance of cheap and skilled labor in India.
Presence of excellent marketing network spread across the world.
Supportive government industrial/ EXIM policy.
Weaknesses:
Small firms lacking technological/ export information expertise.
Low productivity compared to labor in china, Thailand and Sri Lanka.
As the major raw material requirements need to be imported, companies normally stock huge
quantities of inventory resulting high inventory carrying costs.
Opportunities:
New markets in Europe & Latin America
Growing demand in South Asian & Far East countries.
Rupee value depreciating resulting in a windfall increase in the profitability.
Industry moving from a phase of consolidation
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Threats:
China, Sri Lanka and Thailand's entry in small diamond segment
Infrastructure bottlenecks, absence of latest technology
Unusual increase in the prices of gold and rough diamond
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CONCLUSION
Growth in global demand for jewelry may slow from the 5.2 percent Compounded Annual
Growth Rate (CAGR) it registered since 2000, to 4.6 percent by 2010 or 2015, unless
appropriate collective action is taken by players in the industry.
The projection is based on an assessment of the impact of eight key business trends that the two
bodies believe will affect the performance of the industry. These trends include: the local
beneficiation in the mining countries; fragmentation of supply sources and an increase in rough
supply; consolidation across the value chain; rise of new centers for jewelry manufacturing;
growth in the use of synthetics and non-precious metals in jewelry; a decline in demand for plain
gold jewelry; organization and consolidation in the emerging markets of India and China; and
intense competition from other luxury goods.
Based on the findings, the report estimates that worldwide jewelry sales will rise from $146
billion in 2005 to $185 billion in 2010 and $230 billion in 2015. However, it stresses that if the
industry as a whole focuses on growing demand for jewelry as a category and strengthening
industry-level and enterprise-level capabilities in the next 12-18 months, sales could reach
$280 billion in 2015, registering a CAGR of 6.7 percent.
Some of the statistical highlights include:
Gold and diamond jewelry will continue to dominate the market, accounting for about 82
percent of overall market share
Diamond jewellery will be the slowest growth segment at a Compounded Annual Growth
Rate of 3.3 percent
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Synthetics will have sales of close to $2 billion at wholesale price by 2015, and will
impact sales of natural diamond jewelry to the extent of $6 billion at the retail level
Palladium is expected to establish itself as an alternative metal for jewelry fabrication
China (13 percent) and India (12 percent) together will emerge as a market equivalent to
that of the US share (26% percent)
Middle East (9 percent) will be another large market
China, Turkey and India will emerge as new centers for jewelry fabrication
Value addition in diamond processing will increase from 29.3 percent to 34.1 percent
Indias share in diamond processing will drop from about 57 percent by value to 49
percent
Chinas share in diamond processing will rise to 21.3 percent
About 9 percent of worlds diamond will be processed locally by mining countries
Centralized distribution of rough will drop from 55 percent in value to 40 percent
Rough sold through traders will account for 45 percent
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BIBLIOGRAPHY
www.google.co.in
www.eximpolicy.com
www.gjepc.org
Text book
http://www.google.co.in/http://www.eximpolicy.com/http://www.gjepc.org/http://www.google.co.in/http://www.eximpolicy.com/http://www.gjepc.org/