NAME-AKASH KHANDELWAL

SEMESTER-5TH

SECTION-B

ROLL NO-131

TERM PAPER TOPIC-GEMS AND JEWELLERY INDUSTRY IN INDIA

SUPERVISOR-DIPA MA’AM
INTRODUCTION

Gems and jewellery form an integral part of Indian tradition. A legacy

passed from one generation to another. The components of jewellery
include not only traditional gold but also diamond, platinum
accompanied by a variety of precious and semi-precious stones.The
significance of the gems and Jewellery industry in the Indian economic
scenario is a development of the last three or four decades. India is a
leading player in the global gems and jewellery market. The gems and
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
studded as well as gemstone studded jewellery. A predominant portion
of the gold 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. The Indian gems and
jewellery industry is competitive in the world market due to its low cost
of production and the availability of skilled labour. In addition, the
industry has set up a worldwide distribution network, of more than
3,000 offices for the promotion and marketing of Indian diamonds. The
Indian diamond industry has the world's largest cutting and polishing
industry, employing around 800,000 people (constituting 94 per cent of
global workers) with more than 500 hi-tech laser machines. The
industry is well supported by government policies and the banking
sector with around 50 banks providing nearly $3 billion of credit to the
Indian diamond industry. India is expected to have its diamond bourse
functioning at Mumbai in 2006. India is therefore a significant player in
the world gems and jewellery market both as a source of processed
diamonds as well as a large consuming market. . In 1966-67, the export
turnover of the Gems & Jewellery industry was just Rs 220 m
representing a 3 per cent of total merchandise exports. However, it has
now grown to become one of the leading export oriented industries in
India recording an export turnover of around Rs 91617.53 Crore during
2008-09, making it a significant foreign exchange . The sector is largely
unorganised at present with a small but growing organised sector/The
Indian gems and jewellery sector is largely unorganised at present.
There are over 15,000 players across the country in the gold processing
industry, of which only about 80 players have a

turnover of over $4.15 million (Rs 200 million). There are about 450,000
goldsmiths spread throughout the country. India was one of the first
countries to start making fine jewellery from minerals and metals and
even today, most of the jewellery made in India is hand made. The
industry is dominated by family jewellers, who constitute nearly 96 per
cent of the market. Organised players such as Tata with its Tanishq
brand, have, however, been growing steadily to carve a 4 percent
market share. The India Brand Equity Foundation collates, publishes
and disseminates well-researched and comprehensive information on
the Indian economy and industry. We present excerpts from a report on
the Indian Gems and Jewellery sector prepared by KPMG for IBEF
REPORT.

DIAMOND INDUSTRY

Industry Flow Chart

This section will conceptualize the basic journey of a diamond from exploration to a
jeweler’s shelf.

Diamonds are truly a global industry. The diamond process begins in the mines of the
Republic of the Congo, Sierra Leone, Angola, Canada, and South Africa, among many
others. They are next sent to various places in the world to cut and polish. In most
cases, nine out of ten diamonds are cut and polished in India (Manjee). Once the
diamonds are beautified, they are sent to London, England where they are distributed
and sold to the international markets and wholesalers. The majority of diamonds are
likely to be sold in European or American markets.
The flow chart below identifies the scope of numerous economic and social
responsibilities along the chain of a diamond:

Diamond Process From Start To Finish

Exploration
Targeting and Review ?Discovery Processes ? Resources Development ? Handover
(Debeers). The first stage is to seek out and find diamond deposits. The final most
expensive process is drilling

Mining
A large amount of capital investment is required to develop, construct, operate and
maintain a mine (Debeers)

Categories of Diamond Mining Methods include: Open Pit, Underground, Alluvial,

Coastal and Marine.

Sorting
After mining the diamonds are sold to wholesalers who sort the diamonds according to
the 16 000 individual categories of shape, size, carat, color (Debeers).

Cutting and Polishing

The cutting of the diamond takes a tremendous amount of skill, which is usually passed
on from generation to generation. The rough diamond shape will determine how the
diamond will be polished and cut. The largest cutting and trading centers are in
Antwerp, Mumbai, Tel Aviv, New York, Johannesburg, China and Thailand (Debeers).
After the diamonds are polished they are sold in one of the 24 diamond bourses
worldwide (Debeers). A bourse is a term for a stock exchange usually in Europe.

Jewelry
After the Diamonds are sold, they are then made into jewelry in an infinite number of
ways limited only by the creativity of the jewelry maker.

Retail
Diamonds that are sold as retail are a worldwide 50 Billion USD industry (Debeers)

STAKEHOLDERS OF DIAMOND INDUSTRY

Below, the stakeholders for the diamond industry are listed, as well as their economic
and social responsibilities:

Miners
Miners, especially those in Africa, face poor working conditions. The economic
responsibilities of miners are to produce value to their employer in terms of a
reasonable profit.

The social responsibilities of miners is to, ideally, demand proper working conditions,
fair wages and rally for more valuable jobs in their respective countries. In reality this
may be highly improbable without foreign government intervention. However, this
should always remain a goal of the miners.

Customers
Customers in the international markets who buy diamond jewelry have the right to be
informed about the diamonds they buy. In most cases customers seek value for their
purchases. This can be identified as their economic responsibility.

The social responsibility of customers is not to buy diamonds based on price alone.
They should inquire the origin of the diamond to ensure that they are not inadvertently
buying a blood diamond.

Governments
Governments have an interest in the fair treatment of workers, the creation of jobs and
to ensure fair trade practices. The economic responsibility of governments is to collect
proper tax and ensure fair trade practices.

The social responsibility of governments is to inform society of any human rights

abuses

Shareholders
The economic responsibilities of shareholders are to realize a profit from their
investment.

The social responsibilities of shareholders are to ensure that their money is being
invested ethically. Additionally, they should ensure that they do not inadvertently
support organization or countries that deal in unfair trade practices or human rights
abuses.
Management
The economic responsibilities of management workers in the diamond industry want to
realize a return on investment for their spending. Moreover, they are interested in
preserving the continuity of their industry.

The social responsibilities of management are to look out for the long term growth of
their organization. To do so, management would need to consider the stakeholders
involved in their industry.

Jewelers
The economic responsibilities of jewelers is that they want brilliant stones for their
designs and also a steady, stably priced, supply of diamonds to make their jewelry.

The social responsibilities of jewelers are to demand that suppliers be able to certify
where their diamonds have come from.

Polishers
The economic responsibilities of polishers are to add value to the product which is a
rough diamond.

The social responsibilities of polishers to demand fair pay and working conditions. This
is similar to the realities and demands that miners face.

Suppliers
The economic responsibilities of suppliers are to make sure their products are used in an
environmentally and socially acceptable way. This would include chemicals used in the
mining process, and proper working conditions, among others.

The social responsibilities of suppliers are to provide only those diamonds with no
conflict history.

Press and Media

The economic responsibilities of the press and media are to acquire newsworthy stories.
Another economic responsibility is a duty to report and inform the public at large.

The social responsibilities of the press and media are to properly investigate claims
made by both sides and write responsibly to help influence society.

Celebrities
Celebrities have the power to influence societies buying decisions. The economic
responsibilities of celebrities are to maintain their glamorous image so that they
continue to be in high demand; thus being able to sell more products.

The social responsibilities of celebrities are to not support industries that participate in
human rights abuses. This can be very effective. The fur industry has been suppressed
from lack of celebrity support.

Environmental Groups
The economic responsibilities of environmental groups are to work with resource based
companies such as those in the diamond industry to come to a healthy balance.

The social responsibilities of environmental groups are to protect the environment.

Banks and Lenders

The economic responsibilities of banks and lenders are to ensure that they get a good
return on the money they invest.

The diamond industry’s dynamics of competition are shown by Porter’s Five Forces
Model:

Rivalry Among Competing Firms

The firms competing in the diamond industry are extremely strong and may even be
considered monopolies. This results in very little rivalry among competing firms. In fact
there is more evidence of cooperation than there is rivalry.

Potential Entry of New Competitors

Even though raw diamonds are plentiful, it is hard for a new competitor to enter into the
industry. This is a result of the fact that the diamond industry is primarily a protected
cartel. Diamond dealers and wholesalers work in a very close-knit, vertically integrated
chain which makes it hard for an outsider to penetrate.

Additionally, diamond mines are very capital intensive and are often in countries with
unstable political environments. This also leads to difficulties for new competitors.

Potential Entry of Substitute Products

According the diamond marketers there are no substitutes for diamonds as a symbol of
love and status. A diamond as jewelry has no value other than that created by the
marketing and brand of the product. Therefore, anything else that can be made to hold
similar value can break in the market.
Bargaining Power of Suppliers
Suppliers of the raw diamonds, such as DeBeers, have almost total bargaining power.
They are able to control the supply and flow of diamonds and therefore manipulate their
prices.

Bargaining Power of Consumers

Consumers have no physical need for diamonds as jewelry. However, a strong
association linked to the product for uses such as engagement rings, seventy-fifth
wedding anniversaries, et cetera.
India has always been center stage in the dramatic history of some of the world`s most
famous mesmerizing diamonds. India has been the earliest known source of diamonds.
Conversely, today India is precursor in the gem industry and a world leader in the
manufacturing of cut and refined diamonds. Diamonds used in jewelry worldwide, nine
out of every ten come from India.

Diamond industry of the Indian market is mainly involved with cutting, polishing and
exporting diamonds. Diamonds cut and polished in India are universally prized, and
India has emerged as the largest diamond-cutting center in the world. Although India
pioneered in the cutting of small diamonds yet today, its craftsmen are equally skilled at
cutting all shapes and sizes of stones, and even at faceting colored diamonds. Mumbai,
Surat, Ahmedabad, Bhavnagar and many small towns in Gujarat are the main polishing
centres of the country. The industry employs one million people, accounting for 95 per
cent of the workforce of the world`s diamond industry.
The Indian diamond industry today is a result of perseverance and hard work. After
India became independent in 1947, for several years, the nation`s economy was in the
depression. Several views for business and commerce opened up as new policies came
into place, journey towards progress and development also began for the diamond
industry.

The Indian diamond industry was a scattered cottage industry only three decades ago.
Now it gradually evolved into a modern, mechanized, large-scale operation. Today,
with state of the art laser machines, lathes and diamond-impregnated scaives, most of
the medium- and large-sized diamond factories are well operational.

In the world of jewelry industry, this structured and rapid growth of the Indian diamond
industry has a long-lasting impact. The Indian exports of diamonds increased and in
turn it reflected greater than before in the export of designed jewelry. There is an
evident fact that the Indian jewelry designs have for centuries spell bounded everyone,
from the Indian maharajas to the monarchs of faraway lands.

Indian jewelry was made scrupulously by hand and was traditionally crafted by family
jewelers skilled in a particular style. Large exports directed to the establishment of
factories, prepared with the latest modern machinery. It is the newest methods in the
manufacturing process that were employed. India`s artisans along with their traditional
skills dominated contemporary techniques to provide the world with jewelry that
conformed to international standards. There is a new generation of young designers
dominating the world market, apart from a host of established houses that design the
fashion jewelry. Today across India there are several jewelry design institutes,
encouraging fresh ideas and talent.
The Gem and Jewelry Export Promotion Council (GJEPC) is the zenith body of this
dazzling and growing industry. In 1966 the council was set up under the patronage of
the Ministry of Commerce and has helped to form a better understanding between the
diamond industry and the government. The chief function of the council is to develop
and promote the export of gems and jewelry from India and to contribute towards
establishing a code of ethics to ensure that fair trade practices are followed in the
jewelry arena.

The Indian diamond industry is again at the doorstep of expansion. In order to enable
diamonds to be brought into the country to be sold, the government has legitimated the
setting up of bonded warehouses. The unsold diamonds can then be exported without
any duty or tax. The government is also constantly slackening its policies. Creating the
Export Promotion Zones (EPZ) and Special Economic Zones (SEZ) in order to help and
promote the export of gems and jewelry from the country is undoubtedly a new step for
the betterment of the industry.

Types of diamonds

The Diamond industry is essentially broken up into 3 segments:

1. Industrial Diamonds—natural and synthetic diamonds that are used in a wide range
of manufacturing processes for their physical properties.
2. Jewelry Diamonds—rough diamonds cut for use as gemstones in jewelry.
3. Investment Diamonds—high-quality large gemstones, often with special
characteristics, purchased for investment.

The Jewelry and Investment segments together represent 83 percent of the value of
rough diamonds produced. The industry is controlled as a monopoly by the De Beers
diamond company which operates from South Africa and London. The wholesale trade
and cutting of diamonds is limited to only a few places in the world namely New York,
Surat, Tel Aviv, London, and Amsterdam and the most important being Antwerp. With
extensive research and sourcing, diamonds have been found in many parts of the
world

The hardest natural substance on earth has caused controversy since it was first mined
four thousand years ago. Diamonds are views as symbols of status and love. The
diamond industry has been very successful to paint a positive picture when it is evident
that the production of diamonds can be very detrimental to those involved in the
production process regardless of where they are in the world.

A competitive analysis using Porter’s Five Forces shows the diamond industry
producers to be exceptionally competitively strong. The only way to lessen the effects
of this strength is for consumers to be educated to make buying decisions based upon
how well an organization fulfills their social responsibilities.

In the past the major diamond cartels have ignored their stakeholders in favor of
economic gain. In order for major diamond producers to gain or maintain a competitive
advantage, they will have to take initiatives and invest in a Stakeholder Management
Process. To implement a Stakeholder Management Process, management would need to
identify and analyze stakeholders. The significant challenge is that large amount of
stakeholders over vast areas that are involved and have a stake in the diamond industry.
This is a result of globalization or economic internationalization.

Managers are challenged to strategically integrate the economic, social and

environmental responsibilities of the diamond industry. Evidence of Corporate
Responsibility in the diamond industry can be seen with the second largest diamond
producer in the world, Lev Leviev. He has shown significant changes in the production
of diamonds which have led to increased social and economic responsibilities of the
diamond industry.

As discussed throughout this paper, the major issue for the diamond industry is Conflict
Diamonds. Conflict Diamonds cause human rights abuses such as deplorable working
conditions and torture. The profits from these Conflict Diamonds fuel civil wars, and
possibly even terrorism.

By educating buyers and consumers about the processes of diamond production they
may realize that they can have an effect in stopping the production of Conflict
Diamonds. The Kimberly Process and media attention can help to educate consumers
and buyers. However, it should be noted that the Kimberly Process needs to improve so
that there is a proper regulatory body to provide reliable monitoring. Additionally, the
media has a means to effectively inform society by reporting and making films that
shed light on the negative aspects of diamond production.

There are various approaches managers might take to the strategic integration of
economic, social and environmental responsibilities. The Issues Management Process
should be used by managers to identify and plan for future crisis’ that can evolve from
stakeholders concerns. If the diamond industry had implemented the six steps Issues
Management Process, then it may have possibly identified that the production of
Conflict Diamonds may lower the demand of diamonds.

Benchmarking is another useful tool that managers in the diamond industry may use.
The process itself of conducting a benchmarking study sends a powerful message which
can aid management in reform and action (Dwyer). The diamond industry should
benchmark other natural resource industries that have been more successful in their
stakeholder management. Organizations in the diamond industry that do so will benefit
in the long run by forcing its managers to adopt a stakeholder approach.

If diamond companies invest in social responsibility and reporting, then they will help
to ensure their long term continuity. The diamond industry needs to recognize that is
not a zero sum game, economic and social responsibility can be achieved
simultaneously

http://www.websitemba.com/Diamond-Industry.php

SWOT ANALYSIS

SWOT Analysis of the Indian Diamond Industry:

SWOT analysis is the overall evaluation of an industry¶s Internal Environment

(strengths and weaknesses), and External Environment (opportunities and threats) to
understand the present status of the company and use it as an aid in strategic planning.

The Internal Environment: The internal environment analysis comprises of the

evaluation of a company¶s strengths and weaknesses, with a view to analyse it¶s current
status and the areas where it can correct or strengthen itself.

The strong areas of the Indian Diamond Industry include the large workforce of skilled
craftsmen (about 800,000), lowest manufacturing and labour costs, a well-distributed
marketing network and supportive governmental policies

Weaknesses of the Indian Diamond Industry include areas where it can correct itself,
such as low levels of productivity as compared to places like China, huge stocking of
inventory and thus handling costs and high working capital to be maintained.

The External Environment: The analysis of the external environment is related to the
opportunities and threats that the industry should be prepared for.
The opportunities the Indian diamond industry could utlise include the growing
domestic demand for diamond jewellery and tapping potential newer markets in Europe
and Latin America

The threats facing the Indian Diamond Industry include the entry of countries such as
China, Sri Lanka and Thailand in the small-sized diamond segment, the over
dependence on single-channel suppliers such as the Diamond Trading Company (DTC,
the marketing arm of the De Beers Group) and most importantly, the emergence of
newer substitutes such as synthetic diamonds (cubic zircon, HPHT etc.) which are much
cheaper than the real diamonds.

India is already the largest diamond cutting and polishing centre in the world²the Indian
diamond cutting and polishing 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. But
now, thanks to positive government policies such as 100 per cent Foreign Direct
Investment (FDI) in gems and jewellery through the automatic route, India is on the
verge of becoming the focal point of the global gems and jewellery industry.

‡ Total gems and jewellery exports from India stood at US$ 20.88 billion for 2007-08, a
growth of 22.27 per cent over US$ 17.08 billion the previous year, as per the Gems and
Jewellery Export Promotion Council (GJEPC).

‡ 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.
‡ Gold jewellery exports increased from US$ 5.2 billion in 2006-07 to US$ 5.6 billion
2007-08.
‡ The domestic market for gems and jewellery is likely to increase to US$ 20 billion by
2010 and
US$ 30 billion by 2015.

‡ India is the largest consumer of gold in the world, followed by China and Japan. India
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.
‡ 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.

‡ The 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.

‡ Indian industry has the best skilled manpower for designing and producing high
volumes of
exquisite jewellery at low labour costs.

‡ The Indian gems and jewellery industry has been gaining prominence as an
international sourcing destination for high quality designer jewellery. International
stores such as Wal-Mart and JC Penney are increasingly procuring jewellery from India.

IBEF REPORT

The Indian gems and jewellery industry has significant potential

India offers attractive opportunities across the industry value chain.

India's strengths offer attractive opportunities across each of the

elements of the value chain.

Mining

India has significant reserves of gold, diamond, ruby and other gem
stones. Key
States with gem stone reserves and mining potential are Maharashtra,
Madhya
Pradesh, Orissa, Chattisgarh, Bihar and Andhra Pradesh. Orissa has
deposits of ruby and has about 20 varieties of various gemstones such
as rhodoline, garnet, aquamarine etc. Andhra Pradesh has gold and
diamond bearing areas, as well as occurrences of semi-precious and
abrasive stones spread over different districts.
 Recognizing the potential of the large unexplored gemstone
reserves, the Government of India as well as different state governments
have been taking initiatives to open up the sector for exploration by
global players.

Gemstone processing

India was the first country to introduce diamonds to the world - the
first to mine, cut and polish them as well as trade them. The cutting
and polishing of diamonds and other precious stones is one of the
oldest traditions in India and the country has earned a considerable
reputation both in the domestic and international markets for its skills
and creativity.
In the global diamond market today, Indian diamonds account
55 percent share in value terms
80 per cent share in cartage (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.
India offers the twin advantages of skilled labour
and low cost in the area of gemstone processing. India's significance in
the global gems and jewellery industry can be largely attributed to its
strength in diamond processing. Value enhancement by the Indian
diamond processing industry is the highest among other countries, with
a value addition worth $1.48 billion in 2004 compared to $840 million
in 2003.

Jewellery manufacturing

India has well-established capabilities in making hand-made jewellery

in traditional as well as modern designs.
Indian hand-made jewellery has always had a large ethnic demand in
various countries with sizeable Indian immigrant populations such as
the Middle East, South-East Asian countries, the USA and Canada. In
recent times, India has also developed capabilities in machine-made
jewellery. With imported or domestic processed studding, Indian
machine made jewellery is expected to generate demand from non-
ethnic jewellery markets as well. The share of gold jewellery in India's
exports of gems and jewellery increased from 9 per cent in 1994 to 22
per cent in 2004, an indication of growing acceptance in the world
market.
In the area of diamonds, Indian jewellers have been
focusing on moving up the value chain, from being polishers of rough
diamonds to the manufacturing of jewellery. Exports of Gold and
diamond Jewellery are expected to increase in the future. The central
and various state governments in India have come out with policy
incentives to promote jewellery manufacturing.

Certification

Following the World Diamond Council's statement on adopting credible

and effective measures against the trade in conflict gems, the Indian
government
has tightened its certification process for international trade. 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 given
a fillip to exports and has resulted in greater acceptance of Indian
products in the world market.

Technology

The Indian gems and jewellery industry has made rapid strides in
design, powered by a new generation of young, professionally trained,
technology driven designers. Many of India's jewellery manufacturing
facilities are equipped with the latest CAD / CAM and other advanced
design systems. Technology solutions are also available for production
control, supply chain
and inventory management in the jewellery industry. The Special
Economic Zones and Gems and Jewellery Parks developed in various
states offer technology-enabled environments that are conductive to
growth and quality production.
The gems and jewellery industry in India is a good
blend of modern manufacturing and design techniques with the
traditional skills of the Indian artisan. The Indian industry is also
compliant with international norms such as the Kimberly Process and
the Patriot Act. With well-established capabilities across the value
chain, India is an attractive potential market in the gems and jewellery
sector.

DIFF SEGMENT OF GEMS & JEWELLERY SECTOR

The gems and jewellery sector in India has been growing across all key
segments, as detailed below.

Precious Metals

Gold

India is one of the largest bullion markets in the world. It has been until
now, the undisputed single-largest Gold bullion consumer.

Gold imports stood at 739 tonnes during April 2009-March 2010.

According to Sanjiv Batra, Chairman and Managing Director, MMTC Ltd
- the country's top gold importer, stated that the company is likely to
import 200 tonnes of the precious metal in the current fiscal year.

The net imports of gold bars during April-June 2010 was estimated at
US$ 11.36 billion (provisional), as compared to US$ 16.66 billion the
first quarter of last fiscal.

In the world official gold holdings ratings, India stood at 11th position
with 557.7 tonnes of gold reserve as of June 2010, as per the World
Gold Council.

According to a release by the World Gold Council, during the first

quarter of 2010 (Jan-Mar) India was ranked as the strongest performing
market on the back of increase in consumer demand. The country
registered an increase of 698 per cent to 193.5 tonnes.

The current consumption of gold in India is estimated at

over 900 tonnes, used mostly in 20 / 22 carat jewellery. Nearly 95 per
cent of gold is used to manufacture gold jewellery for the domestic
markets and the remaining 5 per cent is exported. Gold consumption in
India is primarily aimed at investment.

Silver

India annually consumes around 4,000 tonnes of silver.

Silver jewellery and other articles for personal use, account for the bulk
of the sales especially in the rural areas. India is also the third largest
industrial user of silver in the world, after the US and Japan.

Platinum

Platinum or white gold, targeted at the premium jewellery segment, is

gaining
Preference among designers and consumers globally. While India's
share in the
Global platinum jewellery market is growing by 19 per cent annually; it
continues to be less than one per cent in the global platinum jewellery
market. Given the Global growth and the maturing of the Indian market
to international trends, this

Represents an area of potential growth in India. Due to the increasing

gold prices, platinum jewellery has gained momentum in the past few
years not only worldwide but also in India. As per the Platinum Guild
International (India), the number of outlets selling platinum jewellery
increased from 12 in 2000-01 to over 300 currently. It is predicted that
the number of outlets selling platinum jewellery would increase to
around 1,000 outlets in the next 2-3 years. Most platinum jewellery
manufacturers are targeting consumers in the age group 20-40 years
with high disposable income.

Gemstones

Due to the popularity of gemstone studded jewellery across the globe,

India's gemstone industry has been growing with an estimated turnover
of
$0.22 - 0.26 billion.

Jewellery

The Indian jewellery market is one of the largest in the world, with a
market
Size of $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 emergence of branded jewellery is a new trend that is shaping the
Indian Jewellery market. Branded jewellery is a relatively new concept
in the sector, and has positioned itself on the quality, reliability and
wearability factors. The branded jewellery market in India is estimated
at $111.6 million per annum. Trends also show that traditional
handcrafted jewellery is slowly giving way to machine made jewellery.

Costume Jewellery

The Indian costume jewellery market is also witnessing growth in the

international market, as per the Export Promotion Council for
Handicrafts. The industry body further stated that the Government is
also working towards formulating an international compliance code for
manufacturing costume jewellery.

The current global costume jewellery and accessories market is

estimated at US$ 16.3 billion, of which India only exports around US$
53 million, thereby, providing a huge opportunity area for the Indian
costume manufacturers.

Government Initiatives
In order to open a new avenue for the bullion trader community with
improved trading practices and increased delivery centres, the recent
strategic tie-up between Bombay Bullion Association (BBA) and Indian
Commodity Exchange Ltd (ICEX) has opened an avenue to harness the
huge investment potential lying with the small and the unorganised
players. It further offers membership to all the BBA members. It
further, jointly deepens the markets in order to encourage wider
participation, by providing multiple delivery centres across the country
by leveraging on MMTC's and BBA's pan-India network. BBA will be an
important stake holder in exchange's efforts in strengthening the
delivery infrastructure and also in launching customised contracts
suited to requirements of Indian markets.

In a move to boost the industry, the government has

formulated new rules for faster clearance of import and export
consignments of specific goods including jewellery and gems.

Furthermore, the government has incorporated some other measures

like providing interest subvention of 2 per cent to labour intensive
export sectors and duty drawback facilities, in order to promote gems
and jewellery export From January 1, 2008. It has also made the
import of polished diamonds completely duty free. This will facilitate the
sector towards evolving from being just a manufacturing centerer to
becoming a global trading hub for diamonds,
The committee appointed to study India's National Design Policy is
likely to recommend the setting up of four additional National Institutes
of Design (NIDs), along the lines of the existing Ahmadabad-based NID,
whose curriculum includes, among other disciplines, jewellery design.
THE govt of india took several initiative to stimulate growth given
the industry’s critical importance in indian exports. This include
duty free import of rough diamonds and waiver of custom duty on
coloured rough gemstones and semi processed, half cut and
process diamonds. The EXIM policy for 2002-2007 focused on
exports of gems and jewellery through market access initiative
schemes, duty free imports and adjustment in value addition
norms. There was a reduction of import tariff on cut and polished
diamonds and gemstones from 15% to 5% which enable indian
jewellers to import expensive, large-sized diamonds and export
them after value addition through the manufacture of studded
jewellery.

INITIATIVES BY GOVT OF GUJARAT

(A) Cluster development scheme-

1) 25% contribution to the project proposal for training programmes

2) Contribution of 25 – 50% of the cost component of the proposal in

other
Matters

(B) Financial assistance to industrial parks

Industrial Park

Provision for the location of minimum 30 industrial / service units –

20% of
Fixed capital investment upto maximum of INR 100 lacs

Mini Industrial Park (Minimum 11 units)

25% of fixed capital investment upto a maximum of INR 100 lacs

Exports

Exports rose to US$ 8.89 billion during April-June 2010 from US$ 5.3
billion in the corresponding period last year, registering 67.6 per cent
growth in the total gem and jewellery exports, as per data released by
the Gem and Jewellery Export Promotion Council (GJEPC).

The figures for export of gold jewellery in June 2010stood at US$

610.40 million representing a growth of 39.6per cent as compared to
US$ 437.24 million in June 2009.

The export of coloured gemstones stood at US$ 60.88 million reflecting

a growth of 5.22 per cent in April-June 2010 as compared to US$ 57.86
million during the same period last year. During June 2010, US$ 23.94
million worth of coloured gemstones were exported.

The rough diamond exports stood at US$ 247.94 million whereas the
cut and polished diamond exports posted a growth of 85.37 per cent
with US$ 5.9 billion worth of exports during the first quarter of 2010-
11. In June 2010 itself, cut and polished diamond exports stood at US$
2.2 billion.

Future Outlook

The future of the industry is quite promising. More and more buyers
across
the world are turning to India as their preferred source for quality
jewellery.
The Gems and Jewellery Export Promotion Council (GJEPC) is looking
at
exploring new markets, such as Latin American countries. The industry
also

plans to make India a trading centre for cut and polished diamonds,
and is closely working with the government of India in this regard. The
long term prospects looks good with jewellery exports expected to touch
$16 billion in 2010 according to industry estimates. The country-
specific trade centre of India, the India Trade and Exhibition Centre
(ITEC), will start functioning in Sharjah from October 2010. ITEC will
be a one-stop-shop for Indian businessmen and small and medium
enterprises (SMEs), which will assist them to explore potential markets
and opportunities in the UAE, Gulf Cooperation Council (GCC) nations,
the Middle East and North African region. ITEC will organise exhibitions
every month till June next year with focus on gems and jewellery being
showcased in April 2011. The exhibitors who will showcase their
products in these exhibitions will be organised through the export
promotion council.

The Gems and Jewellery Export Promotion Council has initiated IIJS
Signature to promote India as the preferred source for jewellery and
eventually build Brand India. Signature was conceptualised to
showcase India's ability to produce quality jewellery that will match the
lifestyle trends world ov

Important facts

Gujarat accounts for 72% of the world’s share of processed

diamonds and 80% of total diamonds processed in India
Almost 8 out of 10 diamonds in the world today are processed in
Gujarat
Diamonds processed in Gujarat were estimated to be worth USD
9000 million (2004-05), constituting 80% of India’s total diamond
exports
90% of total diamonds in Gujarat are processed by about 10,000
Diamond units located in and around Surat
Surat is referred to as the “Silky City Sparkling with Diamonds”
The State is home to several Centers of Excellence such as the
Indian
Diamond Institute, which offer courses related to the Gems &
Jewellery
Industry
Surat, Ahmedabad and Rajkot are the major gems & jewellery
clusters
Rajkot is internationally known for its unique hand made gold and
Silver ornaments which constitute 85% of the total jewellery

Assaying & Hallmarking Centers in Gujarat

Surat
Rajkot Vadodara
Ahmedabad

Gems & Jewellery Clusters

Ahmedabad Hallmarking Center

Parkar Gold Ahmedabad
National Center for Hallmarking Surat
MMTC Ltd. Ahmedabad
VG Gold Assaying & Rajkot
Hallmarking Centre
Indian Diamond Institute Surat
Gujarat Gold Centre Vadodara
Kesar Hallmarking Centre Ahmedabad
Gujarat Gold Centre Ahmedabad

VALUE ANALYSIS

Jeweller

GEMSTONE PROCESSING

JEWELLERY MANUFACTURING

JEWELLERY RETAILING
 DIAMOND, GEMSTONE, GOLD PLATINIUM,

CUTTING, POLISHING

DESIGN AND FABRICATION

STUDDED JEWELLERY

Leading Industry Players

SANGHAVI EXPORTS

The group’s core business is the export of polished diamonds &

diamond studded jewellery and manufacture of diamonds & jewellery
The group has a large network of marketing offices spanning across
USA, Hong Kong, Belgium, Japan, Australia, Canada & Singapore.
Sanghavi Exports has a hi-tech diamond manufacturing factory,
Sanghavi Diamond Manufacturing at
Surat, which is one of the largest units in Asia. The group
manufactures polished diamonds and diamond jewellery

VENUS JEWEL

Founded in 1969, the Company is based in Surat, and its business

includes diamond processing
They manufacture a wide array of diamonds including round
brilliants, emeralds, radiants, ovals, pears, and marquises, ranging
from 0.50 cents to 5 carats and above, D to K colours and IF to 13
purities
In 1996, Venus Jewels developed a grading system – the Venus
Grading System based on Standardization in grading and rational price
structure

Pioneered the concept of online stock for increasing sales

FOREVER DIAMONDS

Key manufacturer and exporter of diamond jewellery

The Company’s products include diamond jewellery, gold jewellery &
loose diamonds

KARP

The group manufactures polished diamonds and diamond jewellery

Karp’s diamond manufacturing facility is located at Surat

SMALL INDUSTRY CLUSTERS

REGION GEMS & JEWELLERY CLUSTER

Valsad Jewellery

Khambhat Gemstone (Agate)

Rajkot Gold & Silver Jewellery

Navsari Diamond processing

Bhavnagar Diamond processing

Palanpur Diamond processing

Surat Diamond processing, Jewellery

Ahmedabad Diamond processing, Gold & Silver jewellery

SPECIAL ECONOMIC ZONES

Developer
1-:) Diamond and Gem
Development Corporation
Sachin, Surat

Major clients

Adani Exports, Zaveri Exports, KK Jewels, Gem Star Co. Pvt.

Ltd., Himson International, Schurter Electronics, Ginza
Industries, Royal Home Textiles etc.

Major Industries

Textiles, Garments, Made ups (pillows, quilts, bed sheets, etc.),

IT Hardware, Engineering Goods, Pharmaceuticals, Chemicals,
Gems & Jewellery, Diamonds, Tobacco

Availability of
Infrastructure-:

Support Infrastructure such as power, water, drainage,

Common Effluent Treatment Plants (CETPs)
Jewellery Training Institute in the premises
140 residential dwelling units, School, Medical Centre,
Recreational facilities
Connectivity

Nearest NH/SH: National Highway 8 (13 km), Navsari- Surat

State Highway (3 km)
Nearest Rail Head – Sachin (1 km)
Surat Airport – 15 km
Nearest Port (JNPT) - 260 km

2--) Gems & Jewellery SEZ Gujarat Hira Bourse Ichhapore, Surat
Surat Co
Connectivity-

Nearest NH/SH: NH No. 6 (Extension) , SH ONGC – Magdalla

Nearest Rail Head – Surat (18 km), 8 km from Surat Airport

Other Provisions available-

Training facilities for skilled manpower, Medical Facility,

Recreational Facility, Health Club, Creche etc.

EDUCATIONAL INFRASTRUCTURE

Major institutions offering courses specific to Gems & Jewellery

Indian Diamond Institute (IDI), Surat

National Institute of Fashion Technology (NIFT),
Gandhinagar
National Institute of Design (NID), Ahmadabad

Graduate and Diploma Level programmes offered by Indian Diamond
Institute include

Diamond Sorting and Grading

Gemology
Jewellery Designing, Manufacturing and Appraising
Jewellery Business Management
Gem Diamond Identification and Grading

INDIA GEMS AND JEWELLERY INDUSTRY OVERVIEW

India has a very large market for Gems and Jewellery with domestic
sales of over 10 million dollar.

India nearly occupies about 4% of total global gems & jewellery market

India exports nearly 15.5 billion dollar worth of gems and jewellery

India is the largest consumer of Gold jewellery in the world and

accounts for 20% of world consumption.

India is the largest diamond cutting and polishing centerer in the world

India is the 3rd largest consumer of polished diamonds after U.S.A &
Japan.

POTENTIAL

India have several well recognized strengths which have made it a

significant force in the global Gems & jewellery business. The main
salient potential of the India Gems and Jewellery market are as
follows-:

1) Highly skilled yet low cost labour

 2) Established manufacturing excellence in jewellery and diamond
polishing.

3) India is the most technologically advanced diamond cutting center

in the world.

4) It Highly skilled, yet low-cost labour.

5) Established manufacturing excellence in jewellery and diamond

polishing.

6 )India is the most technologically advanced diamond cutting

center in the world.

7) Opportunity to address one of the worlds largest and fastest

growing Gems and jewellery markets

8) Opportunity to leverage Indian strength to leverage the global

market.

India is the fastest-growing jewellery market in the world.

 Branded jewellery likely to be the fastest-growing segment in

domestic sales.
 Expected to grow at 40% p.a. to $2.2 billion by 2010.
 Exports expected to grow from $15.5 billion in 2005 to over $25
billion by 2010
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 jewellery from India.

Retail sector

The Indian gems and jewellery market continues to be dominated by the unorganised sector. There are over 2.5
million jewellery shops in India and most of them are family run. 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. With an increasing number of
jewellery houses entering the branded jewellery sector, retail of jewellery is becoming organised. Moreover, the
government allows 51 per cent FDI in single brand retail outlets, attracting both global and domestic players to this
sector. Plus Indians love for jewellery ensures that the gems and jewellery market continues to be lucrative.
According to an ASSOCHAM report, the increasing purchasing power parity of the middle class and surging income
levels have resulted in an increase in the consumption of gems and jewellery by around 11 per cent in the five year
period preceding 2006-07. Not surprising then, 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. According to Ajay Mitra, managing director
of the World Gold Council¶s India office, the coins business would see revenues of about US$ 63. 54 million - US$
105.90 million over the next six months on sales of about 75-76 tonnes.

Top Diamond Brands in India

Branded Jewelry has transformed the Indian jewelry market significantly and hopes to do well in
future too. Some of the top diamond brands in India include:
y

Adora is as diamond jewelry brand, which was launched by a Mumbai based Jewelry

Corporation. The brand is themed on love and celebration of life and is trusted by many celebrities. The list includes
µthe Nightingale of India¶, Lata Mangeshkar. An exclusive collection Swaranjali was designed for the admirers of the
legendary singer as well for all music lovers. Adora boasts of about 65 outlets in 35 cities.
y

Tanishq is one of the most popular diamond jewelry brands in India and is known for its

innovative designs. It is the jewelry of Titan Industries Ltd, which is promoted by the TATA group. It was launched
in 1995 and boasts of 84 outlets in 61 cities. Tanishq introduced the µcollections¶ strategy in jewelry.
y

K iah is another brand which is deemed stylish, light weight and yet striking. It was
launched by Sheetal manufacturing company in October 2004. Celebrating womanhood, the brand name, Kiah stands
for µbeautiful place¶. It even won the Best showroom in DTC Diamond Season 2005-2006.
y

Nirvana Diamonds were launched in in 1987. Implementing the state of the art

technology, the collection is targeted at fashion conscious, modern and independent women. To prove its
authenticity, Nirvana even offered lifetime warranty to its customers.
y

D'damas is one of the oldest diamond houses of India. It forms a part of the Gitanjali
Digico Group and was founded in 1966. The brand offers world class cutting and
polishing facilities at five locations in the country

COSPI GEMS AND JEWELLERY COMPANIES INDEX

YEAR NO OF COMPANIES

1992 8

1993 8

1994 13

1995 14

1996 24

1997 8

1998 3

1999 8

2000 14

2001 8

2002 6
2003 7

2004 13

2005 17

2006 21

2007 19

2008 19

2009 19

BIBLIOGRAPHY

http://jewellery.indiabizclub.com/info/gem_and_jewellery_industry_overview

http://www.ibef.org/artdispview.aspx?in=25&art_id=26735&cat_id=439&page=2

.
http://books.google.co.in/books?
id=soSAme16NsMC&pg=PA89&dq=tradition+gems+and+jewellery&hl=en&ei=5
XCxTOjtOZC2vQOfrpjwBg&sa=X&oi=book_result&ct=result&resnum=6&ved=0
CE8Q6AEwBQ#v=onepage&q=tradition%20gems%20and%20jewellery&f=false

www.economywatch.com/.../gems-jewellery-industry.html

www.business-standard.com/india/.../gemsjewellery-industry.../on

www.iloveindia.com/trade-shows/gems-jewellery/index.html

IBEF REPORT
http://www.scribd.com/doc/36078832/Diamond-Retailers

http://www.scribd.com/doc/13925863/Swot-Analysis-on-Diamond-Cutting-
Industries

DATA ANALYSIS

1. production is the dependent variable (y) and export quantity is the independent variable (x).
The following regression equation is constructed
Export quantity = y=1.593596+11119.1+1.593596(production)

In the above equation b= 5088998 and a= 0.003155992

The hypothesis test with the regression equation is as follows

H01- EXPORT QUANTITY does not have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

H11- EXPORT QUANTITY does have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

At 95% confidence level the R2 value is 0.862472.This means that 86% of the production is influence by the
export quantity

The p-value is small (p-value = 3.64E-05) and the value is less than 0.05 and hence we may reject the null
hypothesis and should accept the alternative hypothesis.

2. production is the dependent variable (y) and export value is the independent variable(x)

The following regression equation is constructed

Production (y) = 19977.6 + 1.341525 * export value (x)

In the above equation a=19977.6 and b=1.341525

The hypothesis test with the regression equation is as follows

H01- EXPORT VALUE does not have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

H11- EXPORT VALUE does have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

At 95% confidence level the R2 value is 0.861162.This means that 86% of the production is influence by the
export value

The p-value is small (p-value = 3.8E-05) and the value is less than 0.05 and hence we may reject the null
hypothesis and should accept the alternative hypothesis

3. . production is the dependent variable (y) and import quantity is the independent variable(x)

Production (y) = 120550.3 + 0.511521 * import quantity (x)

In the above equation a120550.3 =and b=0.511521

The hypothesis test with the regression equation is as follows

H01- IMPORT QUANTITY does not have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

H11- IMPORT QUANTITY does have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.
At 95% confidence level the R2 value is 0.964852.This means that 96% of the production is influence by the
import quantity

The p-value is small (p-value = 7.51E-08) and the value is less than 0.05 and hence we may reject the null
hypothesis and should accept the alternative hypothesis

4. . production is the dependent variable (y) and import value is the independent variable(x)

Production (y) = 15556.2+ 1.573373* import value (x)

In the above equation a=15556.2 and b=1.573373

The hypothesis test with the regression equation is as follows

H01- IMPORT VALUE does not have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

H11- IMPORT VALUE does have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

At 95% confidence level the R2 value is 0.819988.This means that 81% of the production is influence by the
import value

The p-value is small (p-value = 0.000125) and the value is less than 0.05 and hence we may reject the null
hypothesis and should accept the alternative hypothesis

5.production is the dependent variable (y) and sales value is the independent variable(x)

Production (y) = 5000 + 5.507169* sales value(x)

In the above equation a=5000 and b=5.507169

The hypothesis test with the regression equation is as follows

H01- SALES VALUE does not have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

H11- SALES VALUE does have a significant effect on the PRODUCTION of the GEMS AND
JEWELLERY in India.

At 95% confidence level the R2 value is 0.846743.This means that 84% of the production is influence by the
sales value

The p-value is small (p-value = 5.98E-05) and the value is less than 0.05 and hence we may reject the null
hypothesis and should accept the alternative hypothesis
HYPOTHESIS