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September 3, 2009 Individual Project
Export Market Research
(A report on export market research of gems and Jewellery to UAE) Submitted To: - Prof. P.K.Chugan
(A project report submitted in partial fulfillment of the requirements for the degree of
Master of Business Administration)
(MBA-II FT, 2008-10) Submitted by:Ritesh Baranwal (081231) MBA FT - II Section B
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Table of Contents
1. Introduction««««««««««««««« ««««««..«««««.. Page: 3 2. Industry Overview «««««««««««««««««««««««..« Page: 4 3. Current Export Scenario ««««««««««««««««««««««..Page: 7 4. Global Gems and Jewellery business: India¶s Core competency «««««««Page: 8 5. Government Initiatives «««««««««««««««««««««««.Page: 9 6. Major Players in the Jewellery Market «««««««««««««««««Page:10 7. Gem and Jewellery Export Promotion Council «««««««««««««..Page: 12 8. Latest Trade Data «««««««««««««««««««««««««Page: 14 9. Market search: why UAE «««««««««««««««««««««..Page: 15 10. Nature of Indo-UAE Bilateral Trade «««««««««««««««««..Page: 18 11. Distribution Channels: UAE ««««««««««««««««««««..Page: 20 12. Regulatory and Legal Requirements: UAE ««««««««««««««...Page: 21 13. Regulatory and Legal Requirements: India «««««««««««««««Page: 22 14. Our procedure to export Gems and jewellery products ««««««««««..Page: 26 15. References «««««««««««««««««««««««««««..Page: 29
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y y y Product: Gems and Jewellery Market: United Arab Emirates Objectives: 1. To identify an export market and sell the product at a good profit. 2. To ensure that the said export is a complete success both legally and commercially. 3. To identify and use the marketing infrastructure of the foreign nation and develop lasting relationship with the distributors which will help in long term.
Major elements taken into consideration for identifying the export market: 1. Size of the market 2. Credibility and transparency 3. Ease of access 4. Information availability
Based on the above criteria, the firm has decided to export its cars to United Arab Emirates.
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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.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. 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.
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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 look good with jewellery exports expected to touch $16 billion in 2010 according to industry estimates. Size
y y y y y y y
Large market for Gems & Jewellery with domestic sales of over $10 billion. 4% of the global Gems and Jewellery market . Exports of over $15.5 billion; over 18% of India¶s exports. India is the largest consumer of gold jewellery in the world. Accounts for about 20% of world consumption. India is the largest diamond cutting and polishing centerer in the world. 60% value share, 85% volume share and 92% share of the world market by number of pieces.
Third largest consumer of polished diamonds after USA and Japan.
Structure 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.
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100% FD is permitted in the Gems & Jewellery sector through the automatic route. SEZs and Gems and Jewellery Parks have been set up to promote investments in the sector.
Opportunity India is one of the largest exporters of gems and jewellery India is the diamond polishing capital of the world.
Outlook India is the fastest-growing jewellery market in the world.
y y y
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.
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Current Export Scenario
The market size of the Indian Gems and Jewellery (GJ) sector is driven by the demand from domestic and international market. Exports do mestic demand in the range of 10-20 per cent. According to ASSOCHAM, in the calendar year 2008, the domestic market size of GJ sector was USD 2,237.79 million and exports stood at USD 21,200.08 million. However, the total market size of the Indian GJ sector is estimated to shrink by 3.9 per cent to USD 22.3 billion in 2009 (January-December) from USD 23.43 billion in the calendar year 2008, according to an ASSOCHAM Eco Pulse stud y. Out of the total demand for Indian GJ in 2008 (January-December), 90.45 per cent was export driven and remaining 9.55 per cent came from domestic consu mers. However, as per ASSOCH AM¶s estimates, in the calendar year 2009, the share of domestic demand will increase to 10.81 per cent in total dem and for GJ and exports based demand will carve out a share of 89.19 per cent. based demand
comprises a larger share for the Indian GJ sector with 80-90 per cent as compared to
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Global Gems and Jewellery business: India¶s Core competency
India has several well recognized strengths which have made it a significant force in the global Gems and Jewellery business.
y y y y
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 world¶s largest and fastest-growing Gems and Jewellery markets.
Opportunity to leverage India¶s strengths to address the global market .
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The new Foreign Trade Policy 2009-2014 has presented the Indian gem and jewellery sector with a wide scope for growth in exports ± providing better diamond sourcing, supporting small and medium exporters, encouraging promotional leverages, grading and certification. The industry advantage is: Duty Draw back policy: Duty Draw Back policy is being announced for exports of gold jewellery. It will especially encourage small and medium exporters of the sector in non-metro and remote areas, to buy gold from the open market, manufacture and export jewellery, and claim import duty levied on the gold they bought from the open market. Increased value limits on personal carriage: The US$ 0.1 million limit on the worth of personal carriage for export promotion trips is now US$ 1 million. The US$ 2 million limit in case of participation in overseas exhibition is now is US$ 5 million. Multiple diamond bourses being set up: The setting up of new diamond bourses in key centers of the country would reduce the dependency of diamantaires to buy and sell rough and polished stocks in Antwerp, Hong Kong, China and Dubai, which was happening earlier despite of the existence of the Bharat Diamond Bourse (BDB) in Mumbai. The BDB was not able to handle needs of the Rs 80,000 crore industry. Import of cut and polished diamonds on consignment for grading and certification Grading institutions in India can see some benefit in import of cut and polished diamonds being permitted on consignment basis for grading and certification. Until the policy announcement, foreign companies were submitting their diamonds to Gemology Institute of America (GIA) and other foreign institutions for grading and certification, as import was not allowed.
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Major Players in the Jewellery Market
Of late, some of the world's biggest names in the jewellery and luxury items such as watches and cuff links are making inquiries to set up shop in India. Multi-national jewellery brands such as Tiffany, Cartier, Zales and Harry Winston are all said to be interested in coming here following the Government's decision to allow foreign direct investment of up to 51 per cent in single brand retail stores. Most of these stores have been sourcing cut and polished diamond and gold items from Indian firms. Now they are making inquiries for possible tie-ups in India.
Other existing and new foreign players are drawing plans for expansion and launch of their operations in India:
De Beers has got permission to survey for diamonds in Jharkhand, Italian luxury silverware manufacturer, Greggio Argento, will set up two exclusive stores in Mumbai and Delhi within the next three months, through a marketing tie-up with Gitanjali Lifestyle ± a subsidiary of Gitanjali Gems.
Swarovski, the global crystal goods manufacturer and marketer, is on an expansion spree in India and hopes to achieve 5 to 10 per cent of the global turnovers from the country in the next ten years. The company plans to set up 30 stores by 2009, from the current 13.
Damas India, part of one of the largest jewellery retail outlets in the world, is adding 16 new stores to its present dozen stores in India.
Simultaneously, domestic players are also drawing aggressive plans:
Shrenuj & Company Ltd has acquired 84.6 per cent stake in the US-based jewellery distributor Simon Golub & Sons Inc for US$ 22.7 million.
Kerala-based jeweller Malabar Gold will spend US$ 48 million over the next year in order to expand its presence in southern India as well as abroad.
Gitanjali Gems Ltd, a Mumbai-based jeweller, has incorporated a wholly-owned subsidiary in Dubai, Gitanjali Ventures DMCC, whose main activity is trading in diamonds, precious stones, diamond jewellery and pearls.
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Also, the Gitanjali Group has announced its foray into the luxury retail market through a new entity µLuxury Connexions'. The company will invest US$ 24.5 million over three years to set up luxury malls in eight leading cities across the country.
Two new special economic zones (SEZs) for gems and jewellery are to come up at Goregaon and Dhulia, both in Maharashtra. Also, the state-run Minerals and Metals Trading Corp. (MMTC), plans to establish a gems and jewellery special economic zone (SEZ) in partnership with a private company.
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Gem and Jewellery Export Promotion Council
Set-up in 1966, the GJEPC has over the years effectively molded the scattered efforts of individual exporters to make the gem and jewellery sector a powerful engine driving India's export-led growth. This apex body of the gem & jewellery industry has played a significant role in the evolution of the Indian gem and jewellery industry to its present stature. GJEPC is continuously working towards creating a pool of artisans and designers trained to international standards so as to consolidate the Indian jewellery industry and establish it as a prominent global player in the jewellery segment.
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. To achieve this, the Council provides market information to its members regarding foreign trade inquiries, trade and tariff regulations, rates of import duties, and information about jewellery fairs and exhibitions.
The role of GJEPC can be broadly classified under the following categories:
Trade Facilitator: The Council undertakes direct promotional activities like organizing joint participation in international jewellery shows, sending and hosting trade delegations, and sustained image building exercises through advertisements abroad, publications and audio-visuals. GJEPC also invites countries to explore areas of co-operation in supply of rough diamonds and rough colored stones as well as offers co-operation in jewellery manufacturing. The Council regularly communicates with Indian Embassies, trade bodies and associations in various countries. And finally, GJEPC also organizes seminars, buyer-seller meets, symposiums.
Advisory Role: A crucial area of activity of the Council has also been aiding better interaction and understanding between the trade and the government. The Council takes up relevant issues with government and agencies connected with exports and submit documents for consideration and inclusion in the Exim Policy. The Council also grants membership, registration certificates and performs other roles as per the Exim Policy.
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Nodal Agency for Kimberly Process Certification Scheme: GJEPC works closely with the Government of India and the trade to implement and oversee the Kimberly Process Certification Scheme. To that effect, the Council has been appointed as the Nodal Agency in India under the Kimberly Process Certification Scheme.
Training and Research : The Gems & Jewellery Export Promotion Council runs a number of institutes that provide training in all aspects of manufacture and design in Mumbai, Delhi, Surat and Jaipur. These training programs are being conducted to ensure that the Indian industry achieves the highest levels of technical excellence.
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Latest Trade Data
India's gem and jewellery exports rose by 7.05 per cent at Rs 72,529.67 crore in the April 08January 09 period, according to data from the Gems and Jewellery Export Promotion Council (GJEPC). Exports of gem and jewellery stood at Rs 67,754.95 crore in the April 07-Jan 08 period. However, exports in dollar terms declined by 2.29 per cent at USD 16,387.18-million as compared to USD 16,771.03 million in the same period last year. The exchange rate stood at Rs 44.26 per US dollar in the April 08-January 09 period as compared to Rs 40.40 per US dollar in the April07-Jan 08 period, it said. The cut and polished diamond exports increased by 6.43 per cent at Rs 48,775 crore in April 08January 09 as against Rs 45,827 crore in the same period last year. The export of rough diamonds also increased by a whopping 67.10 per cent at Rs 2,958 crore as compared to Rs 1,770 crore.
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Market search: why UAE
THE UAE's economic, political and cultural links with India, which date back to more than a century ago, are matured and multi-dimensional. Bilateral trade has been steadily growing over the years and people-to-people contacts are constantly on the increase. Close bonds between the Indian community and the nationals can be judged from the fact that the Indian community is the largest expatriate community in the UAE, numbering about 1.5 million. Strong bonds of friendship between the UAE and India are poised to be further diversified and strengthened in months and years to come. Relations between the UAE and India are strong and based on cultural contacts between the peoples of the two countries. India-UAE relations are on the upswing. The two countries share bonds of cultural affinity and have strong commercial and cultural linkages. Our expanding ties cover the full range of economic, technical, social and cultural fields that are mutually beneficial for both peoples. A momentum to the growing relationship of India with the Gulf countries, especially the UAE, was provided by the visit of Foreign Minister Shaikh Abdullah bin Zayed Al Nahyan to India in June. During the visit, both sides had fruitful and substantial discussions on a wide range of subjects, including bilateral relations, regional situation, security, defence and renewable energy. From the Indian side, the then Minister of External Affairs Pranab Mukherjee and Commerce and Industry Minister Kamal Nath had visited UAE in May and_April 2008, respectively.
Developments in the fields of business and commerce between the two countries: India and the UAE are making robust efforts to renew and strengthen the bilateral economic and trade relations. The relationship between the two countries has evolved into a significant partnership in the economic and commercial sphere, with UAE emerging as the second largest market globally for Indian products. At the same time, Indians have emerged as important investors in the UAE, and India as an important export destination for the UAE manufactured goods.
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Thus, exports to the UAE have, in effect, opened up a huge regional market for Indian products.
Economic indicators The GDP growth rate was very high during the last decade. From 2009 it would decrease due to fall is oil prices and the international crisis. The economy of United Arab Emirates (UAE) depends to a large extent on the production of oil and gas (around 33% of the GDP) and has thus been booming these last few years (specially since 2003) because of the increase in global oil prices and the increase in OPEC quotas. UAE has the 4th highest GDP per capita in the world. Inflation was high in 2007 and 2008. However it should decline from 2009, because of the international financial crisis. The Emirates government has implemented economic reforms on several fronts. One hand, other than oil, it is trying to develop other sectors as tourism, financial services and real-estate. In this perspective, the Emirate of Dubai has multiplied the creation of free zones and is becoming a platform for re-export in the region. Moreover, among themselves, the Emirates are in a phase of significant economic liberalization. Since 2003, along with other countries of the Gulf Economic Cooperation Council, they have created a Free Trade Zone. Despite these efforts, some markets such as insurance and banking remain closed. Moreover, some restrictive legislation does not encourage foreign direct investments, which remain low in the country. The unemployment rates remain quite low. UAE is politically a very stable country. However, the large immigrant population originating from India and Pakistan can play a destabilizing role. Consequently, the government formulated a turn-over policy in 2002 to diversify the origin of migrants.
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Main indicators 2006 GDP (billions USD) GDP (constant prices, annual % 9.4 change) GDP per capita (USD)
Inflation rate (%) 9.3 Current Account (billions 37.08 USD) Current Account (in % of 22.6 GDP)
Consumer profile and purchasing power: People from Emirates are a young population. They have very high standard of living. They are curious vis-a-vis new technologies and products. They are always looking for the most modern equipment particularly in the field of mobile telephony and information technology. From another point of view, they are very conscious of brand image for luxury products and everything
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Nature of Indo-UAE Bilateral Trade
UAE is India¶s topmost trading partner in the entire WANA region. UAE alone represents 70% of India¶s export to GCC countries.
y y y
Indian exports to UAE accounts for 6% of India¶s global exports. Dubai is a major export trade center and a gateway for the whole of Arab world. Revival of oil prices since late 1999 has strengthened the trading position of GCC countries in general and UAE in particular.
Oil & gas production are the main stay of UAE¶s economy. To reduce dependence on oil & gas, Abu Dhabi has planned large scale privatization program in all fields, especially the power & water sectors.
UAE market being an entrepreneur of trade center is characterized by tough competition and hence price sensitive.
Over 12,000 firms and companies registered in Dubai have Indian ownership. Around 19 percent of the companies in Sharjah are Indian entities.
India leads all other countries in the world in the number of industries that have set up operations in the Jebel Ali Free Trade Zone (in Dubai), Al Hamariya Free Trade Zone of Sharjah and the Ras Al Khaimah Free Trade Zone.
Today, UAE is perhaps the third largest destination for India¶s exports after the US. Again, India¶s exports of $12 billion in 2006-07 to the UAE constitute a 40 percent increase over the previous year¶s figures.
INDIA-UAE TRADE 1998-99 1999-2000 2000-2001 2001-02 2002-03 (Apr.-Feb)
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Exports from India Imports by India Total Trade
Major Items of Exports from India:
y y y y y y y
Gems & jewellery Textiles Manufacture of metals Machinery & instrument Plastic & linoleum products Tea Marine products, etc.
Major Items of Imports by India:
y y y y y
Pearls, precious / semi precious stones, gold Pulp & waste paper Sulphur & unroasted iron pyrites Metalifer ore & metal scrap Organic / inorganic chemicals, etc.
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Distribution Channels: UAE
There are a number of selling methods possible in Emirates and among them direct selling can be pointed out. However this mode remains very less widespread. The most widespread custom is to market your products through local commercial agent. It is recommended to choose from different distributors or commercial agents in each Emirate. Imports and exports of food products are typically entrusted to companies specialized in this field. This market is dominated by 5 or 6 companies. However, a growing number of food distributors import directly themselves become a distributor and a wholesaler for other more modest establishments. Finally, the companies have the tendency to use the geographical position of Dubai, which is in fact a regional hub, for stocking their goods in this Emirate before re-export to other markets as those of India or Iran. Moreover the use of franchise has witnesses a significant expansion.
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Regulatory and Legal Requirements: UAE
Customs duties and taxes on imports: Since the adoption of a common tariff for the GCC countries, the customs duty is 5% of the CIF value of the product. Import procedures You must furnish: - Delivery order from a shipping agent addressed to a licensed company by licensing agencies in UAE; - Original bill of lading (for seaports); - Original invoice from the exporter addressed to a licensed importer in the country detailing total quantity, goods description and total value for each item (3 exemplaries); *
- Copy of the trade license of buyer and seller; - Certificate of origin approved by the chamber of commerce at the country of origin detailing the origin of goods; - Transport certificate;
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Regulatory and Legal Requirements: India
Scheme for Gems: Exporters of Gems and Jewellery can import / procure duty free and Jewellery inputs for manufacturing. Replenishment: Exporters may obtain Replenishment (REP) Authorisations from RA Authorisation in accordance with procedure specified in HBP v1. Schemes for Gold: Exporters of gold / silver / platinum jewellery and articles thereof Silver / Platinum may import their essential inputs such as gold, silver, platinum, Jewellery mountings, findings, rough gems, precious and semi-precious stones, synthetic stones and unprocessed pearls etc. in accordance with the procedure specified in this behalf. A bank authorised by RBI is allowed export of gold scrap for refining and import standard gold bars as per RBI guidelines. Items of Export: Following items, if exported, would be eligible for facilities: (a) Gold jewellery, including partly processed jewellery and articles including medallions and coins (excluding legal tender coins), whether plain or studded, containing gold of 8 carats and above; (b) Silver jewellery including partly processed jewellery, silverware, silver strips and articles including medallions and coins (excluding legal tender coins and any engineering goods) containing more than 50% silver by weight; (c) Platinum jewellery including partly processed jewellery and articles including medallions and coins (excluding legal tender coins and any engineering goods) containing more than 50% platinum by weight.
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Value Addition: Value Addition (VA) for gems and jewellery sector shall be as per paragraph 4A.2.1 of HBP v1. It would be calculated as under: A±B VA = ²²²²² x 100, where B A = FOB value of the export realised / FOR value of supply received. B = Value of inputs (including domestically procured ) such as gold / silver / platinum content in export product plus admissible wastage along with value of other items such as gemstone etc. Wherever gold has been obtained on loan basis, value shall also include interest paid in free foreign exchange to foreign supplier. Wastage Norms: Wastage or manufacturing loss for gold / silver / platinum jewellery shall be admissible as per paragraph 4A.2 of HBP v1. Export against Supply: Where export orders are placed on nominated agencies / status by Foreign Buyer holder / exporters of three years standing having an annual average turnover of Rs. Five Crores during preceding three licensing years, foreign buyer may supply in advance and free of charge, gold / silver / platinum, alloys, findings and mountings of gold / silver / platinum for manufacture and export. Such supplies can also be in advance and may involve semi-finished jewellery including findings / mountings / components for repairs / re-make and export subject to minimum value addition of 10%. However, if so imported semi finished gold / silver /platinum jewellery is exported as studded jewellery, value addition of 15% shall be achieved. In such cases of export, wastage of 2% may be permitted. Exports may be made by nominated agencies directly or through their associates or by status holder / exporter. Import and Export of findings shall be on net to net basis. Export Against 4A.9 Exporter may obtain gold / silver / platinum as an input for export Supply by products from nominated agencies in advance or as replenishment Nominated Agencies
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after exports, in accordance with specified procedure. Export Against: An Advance Authorisation may be granted for duty free import of advance Authorisation: (a) Gold of fineness not less than 0.995, and mountings, sockets, frames and findings of 8 carats and above; (b) Silver of fineness not less than 0.995, and mountings, sockets, frames and findings containing more than 50% silver by weight; (c) Platinum of fineness not less than 0.900, and mountings, sockets, frames and findings containing more than 50% platinum by weight. Diamond & 4A.19 Firms and companies dealing in purchase / sale of rough or cut and Jewellery polished diamonds / precious metal jewellery plain, minakari and / Dollar Accounts or studded with / without diamond and / or other stones, with a track record of at least 3 years in import or export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery, and having an average annual turnover of Rs. 5 crore or above during preceding three licensing years, may also carry out their business through designated Diamond. Dollar Accounts (DDA). Dollars in such accounts available from bank finance and / or export proceeds shall be used only for: (i) Import / purchase of rough diamonds from overseas / local sources; (ii) Purchase of cut and polished diamonds, coloured gemstones and plain gold jewellery from local sources; (iii) Import / purchase of gold from overseas / nominated agencies and repayment of dollar loans from the bank; and (iv) Transfer to Rupee Account of exporter.
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A non DDA holder is also permitted to supply cut and polished diamonds to DDA holder, receive payment in dollars and convert same into Rupees within 7 days. Cut and polished diamonds and coloured gemstones so supplied by non-DDA holder will also be counted towards discharge of his export obligation and / or entitle him to replenishment Authorisation. Gems and Jewellery exporters shall be allowed to export cut and polished precious and semiprecious stones for the treatment and re-import as per customs rules and regulations. In case of reexport, the exporter shall be entitled for duty drawback as per rules. Import of precious 4A.21 Import of precious metal scrap / used jewellery shall be allowed for metal scrap / used melting, refining and re-export of jewellery as per the procedure jewellery for melting laid down in HBP v1. However, such import shall not be allowed and re-export of through hand baggage. Re-import of 4A.22 Gems & Jewellery exporters shall be allowed to re-import rejected jewellery precious metal jewellery as per para 4A.32 of HBP v1. Export on 4A.23 Gems & Jewellery exporters shall be allowed to export diamond, consignment gemstones & jewellery on consignment basis as per HBP v1 and basis Customs rules and regulations.
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Our Procedure to export Gems and jewellery products
1. Setting up an appropriate business organization The first and the foremost question you as a prospective exporter has to decide is about the kind of business organization needed for the purpose. You have to take a crucial decision as to whether a business will be run as a sole proprietary concern or a partnership firm or a company. The proper selection of organization will depend upon
y y y y
Your ability to raise finance Your capacity to bear the risk Your desire to exercise control over the business Nature of regulatory framework applicable to you
Types of business organizations: y y y Sole proprietary firm Partnership Firm Company
Comments: Being an starter and very small firm We would first get registered as a sole proprietor and business demands or grows then we would look for potential partner or a private limited company. 2. Choosing appropriate mode of operation: y Merchant Exporter
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Comments: Since we are new to the overseas Gems and Jewellery market and having limited knowledge and financial power, we would export through merchant exporter. 3. Registration with regulatory bodies y y Registration with Reserve Bank Of India: No longer required. Registration with Regional Licensing Authorities: (obtaining IEC Code Number): For obtaining IEC number we would apply to Regional Licensing Authority. Before applying for IEC number it is necessary to open a bank account in the name of your company / firm with any commercial bank authorized to deal in foreign exchange. The duly signed application form would be supported by the following documents o Bank Receipt (in duplicates)/Demand Draft for payment of the fee of Rs. 1,000/ o Certificate from the Banker of the applicant firm o Two copies of Passport size photographs of the applicant duly attested by the banker to the applicants. o A copy of Permanent Account Number issued by Income Tax Authorities. o In case the application is signed by an authorized signatory, a copy of the letter of legal authority may be furnished. o Declaration that the proprietors/partners/directors of the applicant firm/company, as the case may be, are not associated as proprietor/partners/directors with any other firm/company which has been caution-listed by the RBI. The IEC No. is allotted with a condition that he can export only with the prior approval of the RBI. o Exporter's Profile. The Regional Licensing Authority concerned will on merits grant an IEC number to the applicant. The number should normally be given within 3 days provided the application is complete in all respects and is accompanied by the prescribed documents. An IEC number allotted to an applicant shall be valid for all its branches/divisions as indicated on the IEC number. 4. Registration with export promotion council In order to enable to obtain benefits/concession under the export-import policy, we will register our
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firm with Gem and Jewellery Export Promotion Council. 5. Export license An application for grant of export license would be made to the Director General of Foreign Trade and shall be accompanied by the documents prescribed therein. 6. Export Credit Insurance We would obtain Export Credit Insurance from the Export Credit and Guarantee Corporation of India Limited. 7. Arranging Finance We would apply to EXIM bank to finance our venture. 8. Other activities: There will be many more activities which are very much essential for our export venture. Following are some of them. We would take utmost importance of these activities and perform them as per the requirements. y y y y Procuring / Manufacturing Goods Quality Control & Pre shipment Inspection ISO 9000 certification Labeling Packaging Packing and Marking goods
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y y y y http://jewellery.indiabizclub.com/info/gemstones http://www.gjepc.org/news/view.aspx?NewsId=7154 http://ibef.org/download/ibef_%20jewellery_06.pdf http://www.diamondworld.net/contentview.aspx?item=4149
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