gems and jewellery industry in india, indian, diamond, gold, sector
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Jewelery Industry In IndiaTRANSCRIPT
8/11/2015 Gems and Jewellery Industry in India, Indian, Diamond, Gold, Sector
http://www.ibef.org/industry/gemsjewelleryindia.aspx 1/3
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Indian gem and Jewelleryindustry contributed US$39.9 billion in terms offoreign exchange earningsin FY 201415.
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Introduction
The Gems and jewelry sector in India plays a significant role in the Indian economy, contributing around 67 per centof the country’s GDP. One of the fastest growing sectors, it is extremely export oriented and labour intensive. Thegovernment of India has declared the sector as a focus area for export promotion based on its potential for growthand value addition. The government has recently undertaken various measures to promote investments and toupgrade technology and skills to promote brand India in the international market.
The domestic gems and jewellery industry had a market size of Rs 251,000 crore (US$ 40.45 billion) in 2013, and hasthe potential to grow to Rs 500,000–530,000 crore (US$ 80.5985.43 billion) by 2018, according to a study by aleading industry body. The study also projected that the country's gems and jewellery market could double in the nextfive years. The growth will be driven by a healthy business environment and the government's investor friendlypolicies. India is deemed to be the hub of the global jewellery market because of its low costs and availability of highskilled labour.
India is the world’s largest cutting and polishing centre for diamonds, with the cutting and polishing industry being wellsupported by government policies. Moreover, India exports 95 per cent of the world’s diamonds, as per statisticsfrom the Gems and Jewellery Export promotion Council (GJEPC). The industry is projected to generate up to US$ 35billion of revenue from exports by 2015.
India's gems and jewellery sector has been contributing in a big way to the country's foreign exchange earnings(FEEs). The Government of India has viewed the sector as a thrust area for export promotion. In FY14, India's gemsand jewellery sector contributed US$ 34,746.90 million to the country's FEEs.
Market size
According to a report by Research and Markets, the Jewelry Market in India is expected to grow at a CAGR of 15.95per cent over the period 20142019.
The gold jewelry exports from India were US$ 554.45 million in December 2014, while silver jewellery exports wereUS$ 148.49 million, according to the latest data released by the Gems and Jewelry Export Promotion Council(GJEPC).
The cumulative foreign direct investment (FDI) inflows in diamond and gold ornaments in the period April 2000December 2014 were US$ 476 million, according to Department of Industrial Policy and Promotion (DIPP).
FY14 saw an increase of 12.65 per cent in export of cut and polished diamonds with the segment reaching US$19,635 million. The industry also witnessed a rise of 11.98 per cent in imports of rough diamonds with figures of US$
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16,716 million. India imported 163.11 million carats of rough diamonds worth US$ 16.34 billion and exported 36.46million carats of polished diamonds valued at US$ 20.23 billion in 2013. The country exported gems and jewelleryworth US$ 36.04 billion in 2013.
Also, platinum jewellery could breach the Rs 2,500 crore (US$ 402.95 million) mark in FY15, according to research byIKON Marketing Consultants.
Investments/Developments
The sector is witnessing changes in consumer preferences, as the westernisation of lifestyle is responsible forchanges in the buying habits of the consumer. Consumers are demanding new designs and varieties in jewellery, andbranded jewellers are able to fulfill their changing demands better than the local unorganised players. Increase in percapita income has led to an increase in sales of jewellery, as jewellery is a status symbol in India.
Jewellery major Joyalukkas has planned to invest Rs 1,500 crore (US$ 241.74 million) on its expansion plan thatentails setting up 20 stores in India and 10 overseas. The new stores, which will come up almost in an year’stime, will add to the Thrissurheadquartered company's existing 95 outlets.
Londonheadquartered Gemfields, a multinational firm specialising in colour gemstones mining and marketing, isplanning to acquire colour gemstone mines in Odisha and Jharkhand, and participate in the exploration of theKashmir sapphire mines in Jammu & Kashmir.
In one of the largest private equity (PE) deals in the jewellery manufacturing segment, the India arm of US privateequity (PE) firm Warburg Pincus has picked up a minority stake in Keralabased jewellery maker and retailerKalyan Jewellers for Rs 1,200 crore (US$ 193.41 million). The jeweller will use the proceeds from the deal to fundits retail and manufacturing expansion plans.
The government is discussing a plan to set up a special zone with tax benefits for diamond import and trading inMumbai, to try and develop the country's financial capital as a competitor to Antwerp and Dubai, which arecurrently trading hubs for the precious stone.
Wellknown jewellery retailer In India Tribhovandas Bhimji Zaveri Limited (TBZ) is inviting franchisees to be a partof its jewellery retailing business. Through the TBZ Franchising opportunity, entrepreneurs can open TBZTheOriginal stores across India and retail the brand's product, which includes over 20,000 inhouse designs. TBZ Ltdplans to open franchisees in cities across India where it is not present at this point of time through its exclusivebrand outlets (EBOs).
Government Initiatives
The Reserve Bank of India (RBI) has liberalised gold import norms. With this, star and premier export houses canimport the commodity, while banks and nominated agencies can offer gold for domestic use as loans to bulliontraders and jewelers. Also, India has signed a Memorandum of Understanding (MoU) with Russia to source data ondiamond trade between the two countries. India is the top global processor of diamonds, while Russia is the largestrough diamond producer. The Government of India is planning to establish a special zone with tax benefits fordiamond import and trading in Mumbai, in an effort to develop the city as a rival to Antwerp and Dubai, which arecurrently the top trading hubs for diamond.
In another significant development, the Gems and Jewellery Skill Council of India is planning to train over four millionpersons till 2022 as the sector is facing shortage of skilled manpower. The council aims to train, skill and enhance4.07 million people by 2022.The council will tieup with the existing training institutes including Gemological Instituteof America (GIA) and Indian Gemological Institute (IGI), alongwith setting up of new institutes in major diamondcutting and processing centres, Gems & Jewellery Export Promotion Council (GJEPC) said in a statement here.
Road Ahead
In the coming years, growth in the industry would be highly contributed with the development of the largeretailers/brands. Established brands are guiding the organised market and are opening opportunities to grow.Increasing penetration of organised players provides variety in terms of products and designs. These players are alsooffering financing schemes to consumers to further boost sales. Also, the relaxation of restrictions of gold import islikely to provide a fillip to the industry. The improvement in availability along with the reintroduction of low cost goldmetal loans and likely stabilisation of gold prices at lower levels is expected to drive volume growth for jewellers overshort to medium term. The demand for jewellery is expected to be significantly supported by the recent positivedevelopments in the industry.
Rate Used: INR 1= US$ 0.016 as on February 25, 2015
References: Media Reports, Press Releases, GJEPC Report
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