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India: Gems and Jewellery Industry

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By Ranjeet R Iyer 5/3/12

Test your brand knowledge!

Which couple are the Brand Ambassadors of Tanishq diamonds? Sonakshi Sinha is the Brand Ambassador of which diamond brand? Which Jewellery player has its tagline as 5/3/12 The original since 1864? 22

Introduction
India- one of 8 key markets in the world for Gems and Jewellery. Indias domestic jewellery market expected to soar to US$ 25.2 bn by 2012-2013. The industry has grown at an average CAGR of 5.2% since 2000. India is 2nd largest consumer of gold in the world. 5/3/12 33 China recently piped India to become

Introduction (contd)

India is estimated to hold nearly 16,000 tonnes of gold and consume 4000 tonnes of silver! India is the largest diamond cutting and polishing centre in the world. Surat- world's largest cutting and polishing centre. 11 out of 12 diamonds in the world pass through India.
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Introduction (contd)
Consumption of silver in India grew 80% in FY11. Rising silver and gold prices has increased the investment demand in these metals. Investment in Platinum jewellery is also increasing. Platinum jewellery consumption rose 40-50% in 2011. India's platinum market is still small 5/3/12 55

Introduction (contd)

One piece of jewellery is sold every three minutes online on eBay India. Retail Jewellers on the rise and are worth over Rs. 50k crore! The total jewellery industry in India is estimated at Rs 150k crore! Indias men's jewellery market is estimated at approximately Rs 954 crore!
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History
Indiahas the longest continuous legacy of jewellery making anywhere sinceRamayanaandMahabharata times. One of the first to start jewellery making were the peoples of theIndus Valley Civilization. By 1500 BC, the people of the Indus Valley were creating gold earrings 5/3/12 77

History (contd)
Mughal reign was the most significant period of time in relation to jewellery. Before the liberalization in 1991, only the MMTC and the SBI were allowed to import gold. Abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely and retail outlets started sprouting. 5/3/12 88

Structure of the Industry

Highly unorganized and fragmented with 96 percent of the total players being family owned businesses. Gold processing industry has around 15,000 players, with only 80 having revenues over USD 5 million. India also has around 450,000 goldsmiths, 100,000 gold jewellers along with 6,000 diamond processing players and 8,000 diamond jewellers. 5/3/12 99

Structure of the Industry (contd)

Even today, most of the jewellery in India is hand made. Some of the large International retailers like WalMart and JC Penney import exclusive jewellery items from India.

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Key processes in G&J industry

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Value chain of G&J sector

Source: NSDC Report on H.R and Skills requirement in G&J Industry sector (2022)

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Certification of Gems & Jewellery

The Gems & Jewellery Promotion Council is India's certification authority. Certification has boosted exports and has resulted in greater acceptance of Indian products in the world market.

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Regulating Bodies

The Gem and Jewellery Export Promotion Council (GJEPC). The Gem and Jewellery Trade Council of India (GJTCI). The Bureau of Indian Standards.

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Government Initiatives

Surat, Gujarat has been given the recognition of a town of export excellence. 51 per cent FDI in multi-brand and 100 per cent in single brand retail market. To promote the exports of gems and 5/3/12 1515 jewellery, the government has set up

Government Initiatives (contd)

FTP 2009-14 has identified the G&J sector as a thrust area with prospects for export expansion and employment generation. Value addition norms were reduced in the FTP 2009-14.

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Factors determining gold rate in India

Source: http://www.goldbullionpro.co m/top-10-factors-affectinggold-price-in-india-today/

Historical high demand for gold in India. Increasing gold investment in India. The value of the US dollar is one of the major factors affecting goldprice inIndia. Any favorable or unfavorable Government gold policy. 5/3/12 1717 Worlds overall economic situation.

Gold Prices in India

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Silver Prices in India

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Latest rates

Gold rate (as on 24th April 2012)- Rs. 2917.5/ 10 gms (24 K)- Mumbai.

Silver rate (as on 24th April 2012)Rs. 57320/kg.- Mumbai.

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Factors determining the Source: diamond price http://www.diamondvirgin.

com/pages/diamondpricing .aspx

Demand and supply levels. Macro-economic factors. Fundamental characteristics of diamond. (4 Cs- Cut, Carat, Color and
Clarity)

Gemological characteristics of diamond:

a. Polish and Symmetry. 5/3/12b. Cut grade,
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Kimberley Process Certificate Scheme

The Kimberley Process came into force in South Africa in May 2000. Was set up to discuss ways to stop the trade in conflict diamonds and to ensure that diamond purchases did not fund violence. Kimberley Process Certification Scheme was implemented in India on January 1, 2003 to verify the legitimacy of the import / export of 5/3/12 2222

Significance and SocioEconomic Contribution

The sector currently provides employment to around 1.8 million. Additional employment for around 1.1 million people in the next 5 years! Second largest foreign exchange earner in the country.
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Impact of Union Budget 2012-13 on G&J sector

Hike in customs duty on gold import from 2% to 4%. Excise duty of 12% on all type of jewellery for non-branded jewellery from 10%. This will lead to atleast 7-8% of increase in the prices for customers! A minimum increase of Rs.800 per 5/3/12 2424 sovereign is expected. (1 sovereign in

Impact of Union Budget 2012-13 on G&J sector (contd.)

Jewellers fear illegal imports because of this increase! Nation-wide protest by Jewellers from 17th March 2012 for 3-days to oppose the hike which only increased to 21 days. The FM has promised a roll-back on the duties.
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Major Diamond Producers (1995-2011)

Source: http://geology.com/articles/g em-diamond-map/

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Indias G&J exports

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Potential (or Strengths) of G&J sector

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 worlds largest and fastest-growing Gems and Jewellery markets. 5/3/12 2828

Key Issues
Un-organised sector- 90% players operate in un-organised sector. Threat from China- China already piped India. Dominance of US. Exchange rate risk. High level of inventories. Decreasing Diamond reserves. Global economic slowdown. 5/3/12 2929 Synthetic diamonds.

Key Issues (contd.)

Modern retail players have only 4%6% share, which is perhaps one of the lowest. Apparel (20%), Footwear (35%), Books and Music (11%) and CDIT (7%).

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Current Trends (2009-till date)

Southern India Accumulates 40 Percent of Overall Gold Demand in 2011.Source: Karvy Private Wealth.

Tamil Nadu is the leading state with the highest gold consumption. The low VAT of 1-2 percent on gold in three states except Kerala has also helped in promoting sales. Out of the total Indian gold demand, 5/3/12 3131 gold jewelry contributes to around 75

Current Trends (2009- till date) (contd)

Gold investment has gone up by 23 percent. Gold consumption in India in 2011region wise was as follows:

A. 10-15% in Eastern region. B. 25-30% in Western region. C. 25-30% in Northern region. D. Approx. 40% in Southern 5/3/12 3232 region.

Current Trends (2009- till date) (contd)

Diamonds worth $ 3.37 bn were absorbed in India in 2010 as compared to $ 1.69 bn in 2009- a steep rise of almost 100%! With gold prices increasing sharply, many have moved to diamonds in a bid to spread their non-dollar investment risk. But estimation of value of diamonds still remains ambiguous. 5/3/12 3333

Current Trends (2009- till date) (contd)

India is also the third largest consumer of polished diamond after US and Japan. Source: gjepc.org Jan 16th 2012. The worlds largest diamond market has recently opened in Mumbai. The Bharat Diamond Bourse (BDB) is spread over 20 acres, with eight towers of nine storeys each. The exchange has 2,500 offices, four walkin vaults, 24,500 safe 3434 deposit 5/3/12

Major Players

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P.P Jewellers Asian Star Co. India Ltd. Gitanjali Gems Ltd. Rajesh Exports Ltd. Suashish Diamonds Ltd. Su-Raj Diamonds and Jewellery Ltd. Tanishq- (Titan Industries Ltd.) Hindustan Diamond Company Vaibhav Gems Ltd.
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Major Players (contd)

Ddamas. Joy Alukkas. Kalyan Jewellers. Bhima GRT Malabar Reliance DeBeers. Swarovski. 5/3/12

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Indian Retail Jewellery Overview

Yesterday
Unbranded. Branded.

Today

Silver and Gold jewellery.

Gold and Diamond jewellery.

Investment.

Investment + Fashion.

Traditional design.

Fashionable + Innovative design.

Marriage and Festival 5/3/12

Wearability and Gifts 3737

Top 10 gold consumers in the World in 2011 china.org.cn Source:

Rank 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. India China United States Germany Turkey Switzerland Thailand Vietnam Russia Saudi Arabia 5/3/12 Country Total consumption in tonnes 933.4 811.2 194.9 159.3 144.2 116.2 108.9 100.3 75.1 72.2 3838

Top 10 Buyers of Indian Gems and Jewellery

United Arab Emirates (U.A.E.) Hong Kong United States of America Belgium Israel Singapore Thailand United Kingdom Japan 5/3/12 3939

Webliography
http://www.rncos.com/Blog/report_list .php? year=http://www.rncos.com/Blog/blo g_report.php&month=06&blog_page name=Indian-Gems-JewelleryIndustry-Sales-to-Grow-50-by-2013 http://www.ibef.org/artdispview.aspx? in=25&art_id=31108&cat_id=439&p age=2 http://www.nsdcindia.org/pdf/Gems5/3/12 4040

Webliography (contd.)
http://www.prlog.org/10093218indian-gems-jewellery-market.html http://www.eximbankindia.com/op/op 138.pdf http://jewellery.indiabizclub.com/info/ gem_and_jewellery_industry_overvie w http://new.emmeplus.eu/wpcontent/uploads/2010/01/indianjewellery-industry_emc.pdf 4141 5/3/12

Webliography (contd.)
http://progressivemaharashtra.com/O ther/gems-and-jewellery.html http://www.dnb.co.in/IndianGemsandJ ewellerySector/issues.asp http://msmestartupkit.com/sites/defa ult/files/knowledge_base/reports/Rep ortonGemsandJewellery.pdf http://www.indiainbusiness.nic.in/ind ustry-infrastructure/industrialsectors/gems-jewellery1.htm 5/3/12 4242

Webliography (contd.)

http://www.ficciprogressivemaharashtra.com/attach ments/019_FICCI-Technopak.pdf http://www.ficciprogressivemaharashtra.com/attach ments/019_FICCI-Technopak.pdf

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