GEMS AND JEWELLERY

PRESENTED BY-

RITIKA PURI A1802009130JATIN SETHI A1802009224 MUKESH KUMAR A1802009396SECTION ESEMESTER 4

AGENDA

Overview Production Centers Domestic Industry Trend in Export Major Export Destinations Export from India for last three years Major Competitors in the global market Provisions in India’s Foreign Trade Policy Quality Standards Problems / Challenges faced by the exporter Relevant News articles

OVERVIEW

SIZE

Large market for Gems & Jewellery with domestic sales of over $10 billion.

4% of the global Gems and Jewellery market . Exports of over $15.5 billion; over 18% of India’s

exports. 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

center in the world. 60% value share, 85% volume share and 92% share of

the world market by number of pieces. Third largest consumer of polished diamonds after USA

and Japan.   

STRUCTURE The Indian Gems & Jewellery industry is

highly fragmented with a large number of domestic private sector companies.

A large portion of the market is in the unorganized sector .

India is gaining prominence as an international sourcing destination for high quality designer jewellery.

Walmart, JC Penney etc. procure jewelery from India.

OPPORTUNITY India is one of the largest exporters of gems and

jewellery India is the diamond polishing capital of the world.

POTENTIAL India has several well recognized strengths which

have made it a significant force in the global Gems and Jewellery business.

Highly skilled, yet low-cost labor. Established manufacturing excellence in jewellery

and diamond polishing. India is the most technologically advanced

diamond cutting center in the world. Opportunity to address one of the world’s largest

and fastest-growing Gems and Jewellery markets. Opportunity to leverage India’s strengths to

address the global market.

Production and processing centers

DOMESTIC INDUSTRY India is a leading player in the global gems and jewellery

market.

The industry occupies an important position in the Indian economy. It is a leading foreign exchange earner, as well as one of the fastest growing industries in the country.

The two major segments of the sector in India are- 1. Gold jewellery 80% of market 2. Diamonds. The Indian G&J industry is competitive in the world market

due to its low cost of production and the availability of skilled labor.

The industry has set up a worldwide distribution network, of more than 3,000 offices for the promotion and marketing of Indian diamonds.

• India is far reached by any other country in terms of availability of skilled manpower for diamond processing

• The major drivers are generations of experience and capability to develop skills by a worker

• The resources pool scalable to catch-up with growing international and captive demandEstimated number of processor per

country

Abundance of skilled man power is available in the country to cater the international and domestic demand

• Cost of production in India is nearly 1/3rd of that in Russia

• The other competitive advantages include availability of skilled resources and superior infrastructure

India is the most economical center for diamond processing

Estimated cost of production per carat

COMPOSITION OF EXPORTS

Gold Jewellery Exports: Gold Jewellery exports, which primarily drove the growth in

the sector, witnessed an increase of US$ 6.86 billion during April 2008-March 2009 as compared to US$ 5.54 billion during the same period last year. The segment registered a growth of 23.64 per cent during same period over the previous year.

Cut and Polished Diamonds: During April 2008-March 2009, total exports of stood at US$

13.02 billion as compared to US$ 14.19 billion during the same period last year.

Coloured Gemstones: Exports of colored gemstones were registered at US$ 265.95

million during April 2008-March 2009 as compared to US$ 276.11 million during the same period last year. The segment showed a growth of 0.47 per cent during the same period over previous year.

Major Players in Domestic Market: Gitanjali Group Shrenuj & Company Suraj Diamonds and Jewellery Limited Rajesh Exports Asian Star Titan Industries (Tanishq into Retail), Bangalore Suashish Diamond Rosy Blue B. Vijaykumar Laxmi Diamond K Girdharilal C. Mehendra Exports J.B Brothers Tara - Ultimo Vaibhav Gems, Jaipur Sheetal Manufacturing

TREND IN EXPORTITEMS April'09 -January'10 April '08-January'09 % Growth / decline over

previous Year (Provisional) (Same ports as current year)

Rs. In Crores US $ in Million

Rs. In Crores US $ in Million

Rs. US $

Cut & Pol Diamonds *

65693 13790 55453.9 12458.7 18.46 10.69

(Quantity in Lakh Carats)

460.19   384.16   19.79  

Gold Jewellery-D.T.A

7958.04 1668.83 7919.18 1812.35 0.49 -7.92

SEZ / EPZ 28512.8 5977.65 25623.6 5596.84 11.28 6.8

Total 36471 7646.5 33543 7409.2 8.73 3.2Coloured

Gemstones 1159.82 243.31 1012.16 225.18 14.59 8.05

Others 1305.19 274.81 972.28 215.66 34.24 27.43

Net Exports 104629 21955 90981 20309 15 8.1Total Exports 107419 22539 93979 20982 14.3 7.42

Trends in export

Growing organized retail space.Aggressive marketing and

advertising.Large scale shows and exhibitions.Domestic players acquiring foreign

companies. Investments from Private Equity

firms.Corporate houses enter the market

TOP 10 EXPORT DESTINATIONS

Hong Kong USA UAE Belgium Israel Japan Thailand UK Singapore Australia

Gems and Jewellery Export April-December 2010 - US$ 8.89

billion 2009-10 - US$ 28.4 billion 2008-09 - US$ 24.4 billion

2010-2011 Quarterly 2009-10 2008-090

5

10

15

20

25

30

Chart Title

Figures in US$

FTP (2009-2014) INITIATIVE

Import of gold of 8k and above is allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content.

Duty Free Import Entitlement [based on Free On Board (FOB) value of exports during previous financial year] of consumables and tools, for:

1. Jewellery made out of: Precious metals (other than gold & platinum) - 2% Gold and platinum - 1% Rhodium finished silver - 3%

2. Cut and polished diamonds - 1% 3. Commercial samples shall be US $ 6,187.94.

Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports.

Import of diamonds on consignment basis for certification/ grading & re- export by the authorized offices/agencies of Gemological Institute of America (GIA) in India or other approved agencies will be permitted.

Personal carriage of gems & jewellery products in case of holding/participating in overseas exhibitions increased to US$ 5 million and to US$ 1 million in case of export promotion tours.

Extension in number of days for re-import of unsold items in case of participation in an exhibition in USA increased to 90 days.

In an endeavour to make India an international trading hub for diamond, it is planned to establish "Diamond Bourse (s)".

INVESTMENT OPPORTUNITIES Gemstone Processing (Cutting and Polishing) Jewellery Manufacturing and Retailing Jewellery Certification Branded Jewellery

ADVANTAGE INDIA Gems and Jewellery hub Rich tradition / heritage of craftsmanship with high level

of skills Low production costs Effective worldwide distribution network for promotion

and marketing. Diamond polishing capital of the world. Manufacturing excellence

FUTURE PROSPECTIVE With increase in the personal disposable income, demand for

G&J has increased worldwide. This year Jewellery sector grew by 49%.

Exports contribute 70% of the total sales of 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 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 % EOUs and units in the EPZs/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.

Comparative jewellery Market Sizes

QUALITY STANDARDS

Hallmark has been acting as a safeguard to purchasers of gold and gold articles for centuries in various countries.

Hallmark consists of five components i.e. BIS Mark, the Fineness number (corresponding to given caratage), Assaying and Hallmarking Centre's Mark, Jeweler's Mark and year of Marking denoted by a code letter and decided by BIS 

CONT’D

The Gems & Jewellery Promotion Council is India’s certification authority.

Certification for quality diamonds and jewellery has given a fillip to exports and resulted in greater acceptance of Indian products in the world market.

The Indian gems and jewellery industry has made rapid strides in design, powered by a new generation of young, professionally trained, technology driven designers.

Problems and Challenges

Challenges: Rising gold prices, Dependence on raw material import. Emerging threat from other

countries. The majority of players operating in

the sector have still not adopted the best practices from the corporate culture.

Contd..

 The major problems faced by gem and jewellery exporters in sourcing their capital requirements are as follows:

High interest rate being charged by the banks on export credit.

Scarcity of dollar credit for sourcing of rough diamonds.

Reduction in sanction on extension of credit limits to gem and jewellery exporters.

Biased rating of gem & jewellery firms by Credit rating agencies in India.

Major competitors in the global market

o Italy:- 1. World’s largest producer of fine jewellery,

with about 8,200 factories annually producing an estimated US$ 6.4 billion worth.

2. Italy’s strength lies in plain gold jewellery.o Hong Kong/China:- 1.Produces a substantial portion of the world

jewellery market· 2. China and Hong Kong are plain gold

jewellery. strong in both gold and studded jeweller

Cont’d

o Thailand:- 1.Major global supplier of quality jewellery

over the last two decades. 2.Thailand’s strength is the domestic

market keeps in gemstone jewellery.o United States:- While a growing number of American

manufacturers export their goods around the world, the sheer size of the domestic market keeps a large portion of the goods at home.

RECOMMENDATIONS

1. Potential Assessment and Strengthening Consumer Understanding.

2. Invest in Retailing and Brand.3. Improve Skill Sets & Quality of

People.4. Enhance Product Design &

Manufacturing Quality Standard.5. Co-operative Use of Resource

News articles

Belgium seeks strong ties with India in IT, gems & jewellery(Economic Times-4th Dec 2010)

Focus on AP Jewellery Park Gems, jewellery

exports up by 31 per cent at Rs 12,979.19 cr in October

Gems and jewellery exports continue to glitter

REFERENCES· Daily newspapers· www.indiabulls.com· www.myiris.com· www.moneycontrol.com· www.google.com· www.altavista.comhttp://commerce.nic.in/ftpa/default.asphttp://www.ibef.org/download/GemsandJewellery_sectoral.pdfhttp://www.commodityonline.com/learning_sub.php?id=32

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