INDIAN DIAMOND JEWELRY INDUSTRY
The diamond jewellery 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 gold jewellery and diamonds. Gold jewellery forms around 80 per cent of the Indian jewellery market, with the balance comprising fabricated studded jewellery that includes diamond and gemstone studded jewellery. Besides, India is world's largest cutting and polishing Industry for diamonds, well supported by government policies and the banking sector with around 50 banks providing nearly $3 billion of credit to the Indian diamond industry.
A 20-40% portion of the diamond jewellery manufactured in India is consumed in the domestic market. However, a major portion of the rough, uncut diamonds processed in India is exported, either in the form of polished diamonds or finished diamond jewellery. The largest consumer of gold worldwide, India is also the leading diamond cutting nation.
Gems and jewellery is one of the fastest growing sectors in the Indian economy with an annual growth rate of approximately 15 per cent. The gems and jewellery industry accounts for nearly 20 per cent of the total Indian exports and employs over 1.3 million people, directly or indirectly.
The Gems and Jewellery (G&J) market is a significant contributor to the Indian economy, based on the size of the domestic market and through its contribution to the country’s exports. India is the largest consumer of gold (around 20 percent of global consumption) and also the largest diamond processor (around 90 percent by pieces and 55 percent by value of the global market).
Structure of the Industry:
India’s G&J industry is highly unorganized and fragmented with 96 percent of the total players being family owned businesses. The gold processing industry has around 15,000 players, with only 80 having revenues over USD 5 million. India is also home to around 450,000 goldsmiths, 100,000 gold jewellers along with 6,000 diamond processing players and 8,000 diamond jewellers.
Organised players such as Tata with its Tanishq brand, have, however, been
growing steadily to carve a 4 per cent market share.
In the global diamond market today, Indian diamonds account for 55 per cent share in value terms, 80 per cent share in caratage (weight) terms and 90 per cent share in volume terms. Today there is a ready availability of an entire range of diamonds in nearly every size, quality and cut.
Certification of Gems and Jewellery:
The Gems & Jewellery Promotion Council is India's certification authority. The government's Central Board of Excise and Customs has banned the import or export of rough diamond shipments, which are not accompanied by a Kimberley Process certificate launched in Switzerland. Certification for quality diamonds and jewellery has boosted exports and has resulted in greater acceptance of Indian products in the world market.
Regulating Bodies:
The Gem and Jewellery Export Promotion Council (GJEPC): This is the apex body of the gem and jewellery trade in India, which was set up in 1966 for promoting precious stones and jewelry exportations. With strength of 6,500 members spread all over the country, the Council is primarily involved in introducing the Indian gem & jewellery products to the international market and promotes their exports.
The Gem and Jewellery Trade Council of India (GJTCI): This council is established with the main aim of boosting the gem and jewellery trade of India. It plays an important role in showcasing the Indian gem and jewellery to the international market.
Market Trends:
The Indian jewellery market is one of the largest in the world, with a market sizeof $13 billion. It is second only to the US market of $ 40 billion and is followed by China at $11 billion. The gold jewellery market is growing at 15 per cent per annum and the diamond jewellery market at 27 per cent per annum.
The United States and Hong Kong were the largest importers of gems and jewellery from India, with a share of 26 per cent each, followed by UAE at 21 per cent.
India is the largest diamond cutting and polishing centre in the world - the Indian diamond cutting and polishing industry enjoys 60 per cent value share, 85 per cent volume share and 92 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.
With its cut and polished diamonds, colored gemstones, gold jewellery, pearls, non-gold jewellery and fashion jewellery, India accounts for almost 50% of the international market. The gems and jewellery sector contributes nearly 55% of the world’s net exports of cut and polished diamonds in value, 90% in terms of pieces and 80% in terms of carats. Every 11 of 12 diamonds sold around the globe are processed in India, irrespective of where these are mined.
In terms of carat, India's share in the diamond sector is about 80% of the world market. Employing over 90% of the global diamond industry workforce, India also accounts for 90% of the volume of diamonds processed in the world.
Foreign Direct Investment Policy:
· 100% FDI is allowed under automatic route for exploration and mining of
minerals other than diamonds and precious stones.
· For exploration and mining of diamonds and precious stones FDI is
allowed up to 74% under automatic route.
· For exploration and mining of gold and silver and minerals other than
diamonds and precious stones, metallurgy and processing, FDI is allowed
up to 100% under automatic route .
Exports and Imports:
The jewellery industry in India contributes over 15% of the country's total exports and provides employment to 1.3 million people directly and indirectly.
In 2011-13 India's gem and jewellery industry recorded exports of US$ 20.1 billion and exports of diamond merchandise alone touched US$ 15.77 billion.
In 2011-13, exports recorded a 22.27 per cent growth touching US$ 20.88 billion with diamonds accounting for 70.59 per cent of the total exports, gold jewellery accounting for 26.91 per cent, coloured gem stones and others accounting for 1.32 per cent and 1.16 per cent respectively.
The gem and jewelry sector accounted for 13.41 percent of India's total merchandise exports in 2011-13. In comparison, total imports of gem and jewelry provisionally rose to $18.5 billion in 2011-13, growing 32.5 percent from 2011-13.
The 2012-13 fiscal also started on a positive note, with the gems and jewellery exports rising by nearly 17 per cent to US$ 9.05 billion during April-August 2008, compared to US$ 7.74 billion in the corresponding period last year. Significantly, rough diamond exports stood at US$ 386 million while cut and polished diamond exports increased by 22 per cent to US$ 6.5 billion.
India's gem and jewellery exporters rely a lot on clients of the US, China, Russia,
Commonwealth of Independent States (CIS), and the UAE for a major portion of their revenue. While the US and Hong Kong account for 26 percent of total gem and jewelry exports, the UAE account for 21 percent, Singapore 9 per cent and Belgium 8 Per cent.
Composition of Exports:
· Gold Jewellery Exports: This segment registered a growth of 8.07 per cent
with the exports of US$ 5622.41 million during April 2012-March 2013 as
against US$ 14200 million during April 2012-March 2013.
· Cut and Polished Diamonds: The share of this segment in the exports
stood at US$ 14100 million (provisional) for the period April 2012-
March 2013.
· Coloured Gemstones: This segment accounted for exports worth US$
288 million (provisional) for the period of April 2012-March 2013. This
segment grew by 12.15 per cent in April 2012-March 2013
The major destinations for Indian jewellery exports have been the United States, UAE, Hong Kong, Singapore, Belgium and Israel.
Future of the Indian Jewellery Market:
· India’s growing importance in the global jewellery market is only expected
to increase in the future with total estimated jewellery sales of US$ 21
billion by 2010 and US$ 37 billion by 2015.
· Diamond jewellery consumption in India is also estimated to jump by 78
per cent in 2010.
· Branded jewellery is likely to be the fastest-growing segment in domestic
sales. The sector is expected to grow at 40 per cent annually to touch US$ 2.2 billion by 2010.
· Indian diamond jewellery industry is the third largest consumer of polished
diamonds after USA and Japan. Diamond jewellery consumption is likely
to jump to nearly 80 per cent in 2010 and over 95 per cent between 2010
and 2015.
· Various government incentives coupled with private sector initiatives are
projected to drive the sales of Indian gems and jewellery sector at a
CAGR of around 34% from 2007-08 to 2012-15.
· The organized gems and jewellery sector is anticipated to grow rapidly in
near future, accounting for nearly 24% of the total gems and jewellery
market by 2012-14.
· Various factors like cheap labor cost, better designs and manufacturing
practices, are making the country an attractive destination for cutting and
polishing of diamonds.
