Gems & Jewellery Market – India (Part I)

May 2010
Executive Summary

Gems and Jewellery (G&J) market in India was valued at USD 16 bn in 2008 and is expected to
grow at 9% CAGR
Market
G&J market includes – Gemstones like diamonds, colored stones and pearls; Precious metals and
Jewellery like gold & gold jewellery, silver jewellery and gemstones studded jewellery

Drivers: Mass appeal and growing income among households, low cost and abundance of skilled
labour, growing use of high-end technology, advantages of SEZs, changing consumer perceptions
Drivers and
and preferences, growing training institutes
Challenges

Challenges: Rising gold prices, competition from unorganized players, dependence on raw
material import, emerging threat from other countries

Growing organized retail space
Domestic players acquiring foreign companies

Trends
Aggressive marketing and advertising
Investments from PE firms

Large scale shows and exhibitions
Corporate houses enter the market

Government
Government has adopted various policies for the manufacturers in terms of Industrial Policy, FDI
Policy, Kimberley Certification Process and Hallmarking
Policies and

Initiatives of the Government include tax benefits, import duty relaxations, provisions for exports
Initiatives
and other initiatives

The market is largely dominated by the unorganized players making it very fragmented
Competition
Branded and designer jewellery is showing tremendous growth potential

Players are utilizing the high skilled labour available in India and are making considerable
improvements in their collections and services

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 2

•Introduction
•Value chain
•Market Overview
•Drivers & Challenges
•Trends
•Government Bodies, Policies and Initiatives
•Competition
•Key Developments

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 3

 Gold and diamond form the two major segments of Indian
gems and jewellery (G&J) market
• The industry can be classified into various sub segments like diamonds, coloured stones, gold and silver jewellery,
pearls, etc. However, the two major segments in India are gold and diamonds
• The industry is characterized by highly unorganized trade, labour intensive operations, working capital and raw
material intensiveness, price volatility of gold and export orientation

Gems & Jewellery

Precious Metals
Gemstones
and Jewellery

Gold and Silver and Gemstones

Colored
Diamonds Pearls Gold Silver Studded
Stones
Jewellery Jewellery Jewellery

Source: IBEF “Gems and Jewellery”

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 4

 Gemstones – Overview

Segment Description

• This industry mainly involves cutting, polishing and exporting diamonds

• India is the largest diamond cutting and polishing centre in the world
• More than 90% of diamonds in the world in terms of pieces, around 80% in terms of carats
Diamonds and around 55% in terms of volume are processed in India
• It is the 3rd largest consumer of polished diamonds after the US and Japan
• Surat is India’s diamond processing hub, accounting for over 80% of the country’s diamond
processing industry with annual revenue of around USD 13.03 bn

• This industry includes manufacturers and exporters of colored stones like Emeralds,
Sapphire and Rubies as well as semi precious stones like Tanzanite and Aquamarine
Colored Stones
• Exports of this segment reached USD 286.7 mn in 2009-10, an increase of 10.5% as
compared to the same period the previous year

• Hyderabad serves as the main trading and processing center within the country
Pearls • UAE is the biggest export market for Indian pearls followed by the US
• Major products include big pearl chains, earrings or pearls beaded on the dresses

Source: IBEF “Gems and Jewellery” Feb 2010; SME Times “Gems and jewellery exports grow by 16 pc”, Apr 2010; Indiabizclub “Gems and Jewellery-Overview”

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 5

 Precious Metals and Jewellery – Overview

Segment Description

• This segment includes branded as well non-branded jewellery and also gold bar and coins
• Gold jewellery forms around 80% of the Indian jewellery market
• India is the largest consumer of gold jewellery in the world, accounting for nearly 20% of
Gold and Gold
global gold consumption
Jewellery • Total demand for gold in India at 700 – 800 tonnes
• Gold consumption in India is primarily driven by its perception as a safe investment

Silver and • This industry includes silver bars, coins, jewellery made of pure silver as well as sterling
silver
Silver • India annually consumes around 4,000 tonnes of silver
Jewellery • It is the 3rd largest industrial user of silver in the world, after the US and Japan

Gemstones • Demand for diamond-studded jewellery has seen a sharp rise

• High designer collections are being exhibited by manufacturers that includes exclusively
Studded carved stones embedded in them
Jewellery • This segment has witnessed growth owing to the increasing price of gold

Source: IBEF “Gems and Jewellery”; Indiabizclub “Gems and Jewellery-Overview”

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 6

•Introduction
•Value Chain
•Market Overview
•Drivers & Challenges
•Trends
•Government Bodies, Policies and Initiatives
•Competition
•Key Developments

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 7

 Value Chain Analysis

Gemstone Jewellery Jewellery

Mining
Processing Manufacturing Retailing

India’s Involvement: India’s Involvement: India’s Involvement: India’s Involvement:

Low High Moderate Moderate

• India has significant • Cutting and polishing of • India has well- • Jewellery retailing in
reserves of gold, diamonds and other established capabilities India is undergoing
diamond, ruby and precious stones is one in making hand-made slow transformation
other gem stones of the oldest traditions ethnic jewellery, which from a largely
• However, slow progress in India has huge demand in unorganized sector to
on liberalization and • It has earned countries with Indian more organized one
unfavorable policies has considerable reputation immigrants • Family owned jewellery
prevented the private both in domestic and • It has also developed stores are the
sector from international markets capabilities in machine- predominant retail
undertaking major for its skills and made jewellery formats
exploration and mining creativity • Jewellers are focusing • New formats such as
activity on moving up the value boutiques,
chain, from being supermarkets and gold
polisher of rough souks are emerging as
diamonds to jewellery organized jewellery
manufacturers retail formats

Source: Law Offices report; IBEF “Gems and Jewellery”

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 8

 Traditional pockets of jewellery manufacturing are present
across the country
City Well known for
Jaipur Sourcing and polishing of precious and semi-precious gemstones
Delhi and NCR Manufacturing silver jewellery and articles • Clusters with specializations
Lightweight plain gold jewellery (This category of jewellery finds a have evolved over a period
Kolkata of time based on
large market in Tamil Nadu)

Availability of raw material
Surat Diamond manufacturing
Skilled labor

Market potential
Hyderabad Precious and semi-precious studded jewellery, Pearls
• Government support
Hand made jewellery through SEZs and cluster
Nellore (Belgaum in Karnataka and Nellore together, specialize in development programmes
studded jewellery using synthetic or imitation stones) have helped in further
Coimbatore Casting jewellery development and has given
Indian players a globally
Trichur Lightweight gold jewellery and diamond cutting competitive edge
Machine made jewellery
Mumbai
( It is also India’s largest wholesale market in terms of volume)

• Rajasthan is recognized as the diamond polishing state of India

• It is gaining prominence as an international sourcing destination for high quality designer jewellery
• Its G&J manufacturing capacity accounts for 17% of India’s export

Source: Ibef (KPMG), Rajasthantour4u “Gems and Jewellery Sector Makes Rajasthan Highly Prominent as an International Destination, Jan 2010

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 9

•Introduction
•Value Chain
•Market Overview
•Drivers & Challenges
•Trends
•Government Bodies, Policies and Initiatives
•Competition
•Key Developments

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 10

 G&J market shows great potential for higher penetration
and increased revenues for players
Overview Total G&J Market – Size and Growth
• Globally, India’s jewellery market is 2nd only to the US
USD bn
• Presence of highly skilled, low-cost labor enables 30.0
30 +9%
India to design and make high volumes of exquisite
25
jewellery at relatively low costs 20.0
20 16.0
• Emergence of branded jewellery is a new trend that 13.5
15
is shaping the Indian jewellery market
10
• Traditional handcrafted jewellery is slowly giving way
5
to machine-made jewellery
0
• Indian diamond jewellery market stands at USD 4.2 2006 2008 2010e 2015e
bn in 2009 and is expected to grow to USD 6.4 bn by
2012 owing to the rising prices of gold Segmentation of Jewellery Market
• Low penetration of diamond jewellery provides Others
opportunities to the players Diamond Jewellery 5%
• Prices of gemstones like diamonds are generally fixed 15%
and as such high-end consumers are showing greater
interest in this category
• Surat has emerged as the biggest diamond
processing hub with US consuming most of the Indian
80%
gems
Gold Jewellery

Source: Gem & Jewellery Export Promotion Council; The Times of India “Diamond jewellery consumption to increase in India”, Aug 2009; IBEF “Gems and Jewellery”; Prime
Broking “Gitanjali Gems Limited”, Apr 2008; IBEF “Gems and Jewellery”; Indiabizclub “Gems and Jewellery-Overview”

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 11

 G&J export is increasing steadily with growing popularity of
gemstone-studded jewellery across the globe
Export – Overview
• Total exports increased by 20%, in the fiscal year 2009 over 2008
• UAE is the main export destination accounting for 31% of the total exports followed by Hong Kong at 25% and US at
20% in 2008
• G&J sector contributed 15% of the country's total merchandise export in 2008-09
• Exports of gems and jewellery from India primarily take place from units based in the Special Economic Zones (SEZs)
and Export Promotion Zones (EPZs)

USD bn +17%
30 28
25 3% 1% 1% Others
25 21 3% 1% 1%
33% Coloured Gemstones
20 1% 3% 1% 35%
27% Rough Diamonds
15
Gold Jewellery
10 62%
68% 59% Cut & Polished
5 Diamonds
0
FY08 FY09 FY10
Others include: Pearls, Synthetic Stones, Costume/Fashion Jewellery, Non-Gold Jewellery
Source: Gem & Jewellery Export Promotion Council; Livemint “Gems and jewellery exports up 55% up in November”, Dec 2009; The Economic Times” Gems and jewellery
exports continue to glitter”, Apr 2010; SME Times ” Gems and jewellery exports grow by 16 pc”, Apr 2010; Workosaur “Gems and Jewellery”, May 2009

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 12

 Raw materials import constitutes a substantial portion of
the total imports in the G&J sector
Import – Overview
• India’s gems and jewellery industry is highly dependent on the raw material that is imported. These include:

Rough diamonds

Recycled gold bars and gold bars
• Minimal mining is done within the country
• With limited domestic sources of diamond roughs and gold, India imports a large portion of its raw material from
countries like the US
• However, the industry and Government have sought to mitigate the risks by trying to directly source raw materials
from the producing countries

USD bn
30 +23% 27
Others*
2%
25 23 Gold Bar
7% 25%
20 18 Rough
4% 20%
12% 33% Diamonds
15
35% Cut & Polished
10 54% Diamonds
5 39% 40%
30%
0
FY08 FY09 FY10
*Others include: Coloured Gemstones, Raw Pearls, Rough Synthetic Stones, Silver Bar & Platinum
Source: Gem & Jewellery Export Promotion Council

GEMS & JEWELLERY MARKET IN INDIA 2010.PPT 13

 Thank you for the attention
The Gems & Jewellery Market report is part of Research on India’s Consumer Goods industry.
For more detailed information or customized research requirements please contact:
Gagan Uppal Gaurav Kumar
Phone: +91 96191 00122 Phone: +91 98303 09715
E-Mail: gagan.uppal@netscribes.com E-Mail: gaurav.kumar@netscribes.com

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