Commodity Online
The Indian gems and jewellery industry is one of the fastest growing segments in the Indian economy with an annual growth rate of approximately 15 per cent.
The domestic market is estimated to be around US$ 16.1 billion and the All India Gems and Jewellery Trade Federation, a nodal agency representing 300,000 jewellers across the country, expects it to grow to US$ 25.2 billion in two to three years.
The country is also the largest consumer of Gold in the world. It consumes nearly 800 tonnes of gold that accounts for 20 per cent of world gold consumption, of which nearly 600 tonnes go into making jewellery.
India is also emerging as the world's largest trading centre for gold targeting US$ 16 billion by 2010. The industry has the best skilled manpower for designing and producing high volumes of exquisite jewellery at low labour costs.
Diamonds
India is the largest diamond cutting and polishing centre in the world—the industry enjoys 60 per cent value share, 82 per cent carat share and 95 per cent share of the world market in terms of number of pieces. In other words, nearly 9 out of 10 diamonds sold worldwide are cut and polished in India. India exported cut and polished diamonds worth US$ 14.18 billion in 2007-08.
Retail Sector
The Indian gems and jewellery market continues to be dominated by the unorganised sector. However, with the Indian consumer becoming more aware and quality conscious, branded jewellery is becoming very popular and the market for branded jewellery is likely to be worth US$ 2.2 billion by 2010, according to a McKinsey report.
Moreover, the government allows 51 per cent FDI in single brand retail outlets, attracting both global and domestic players to this sector.
According to a report released by Technopak Advisors on the Changing Retail Landscape in India, the jewellery and watches market is pegged at about US$ 13.70 billion. It is expected to register a 12 per cent growth by 2012, touching US$ 23.60 billion.
The World Gold Council recently estimated the size of India's gold coin market at about US$ 2.11 billion.
In order to increase the demand during recession, jewelers are concentrating on newer designs in light weight jewellery.
Exports
According to the figures released by the Gem & Jewellery Export Promotion Council (GJEPC), India's gem and jewellery exports posted a modest growth of 1.45 per cent during 2008-09 at US$ 21.1 billion, primarily driven by Gold jewellery exports, including medallions and ornaments. The country exported US$ 20.8 billion of gem and jewellery in 2007-08.
Gems and jewellery worth US$ 17.79 billion was exported during April 2008 to February 2009. Significantly, rough diamond exports stood at US$ 712.09 million, an increase of 43 per cent over the corresponding period last year.
The United Arab Emirates (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 25 per cent and the US with 20 per cent. The gem and jewellery sector accounted for 13 per cent of India’s total merchandise exports.
The export industry mainly comprises of small-to-large units based in various special economic zones (SEZs) supplying primarily diamond-studded jewellery.
India Government Initiatives
The Indian government has provided an impetus to the booming gems and jewellery industry with favourable foreign trade policies:
**100 per cent foreign direct investment (FDI) in gems and jewellery through the automatic route is allowed.
**The government has lowered import duty on Platinum and has exempted rough coloured precious gems stones from customs duty.
**Rough, semi-precious stones are also exempt from import duty.
**Duty-free import of consumables for metals other than gold and platinum up to 2 per cent of freight on board (f.o.b) value of exports.
**Duty-free import entitlement for rejected jewellery up to 2 per cent of f.o.b value of exports.
**Import of gold of 18 carat and above under the replenishment scheme.
**Setting up of SEZs and gems and jewellery parks to promote investment in the sector.
**In May 2007, the government abolished import duty on polished diamonds.
**The government has raised the limit value of jewellery parcels for export through foreign post office (including via speed post) from US$ 50,000 to US$ 75,000 and the time period for re-import of branded jewellery remaining unsold has been extended from 180 days to 365 days.
**The export of coloured gemstones on a consignment basis has been allowed.
Courtesy: Report from Indian Brand Equity Foundation
