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Gems and Jewellery is an important emerging sector in the Indian Economy. Ranked among the fastest growing sectors, it is also a leading sector for foreign exchange generation. The gems and jewellery industry is very much fascinating being traditionally glamorous and artistically modern. This business employees and engages millions; cover wide activities such as raw material procurement from far flung Africa, Australia, Canada and Russia, and transforming these into products in demand with the skills available in China, India, Italy and Turkey for the sophisticated markets in the USA, Europe, Far East, Middle East and Asia. The Indian gems and Jewellery sector is one of the fastest growing markets. The sector has witnessed a considerable growth in the last fiscal year, as its exports jumped from over US$ 29 billion in FY 2009-10 to US$ 43 bn in FY 2010-11, thus indicating a net increase of around 47% in overall gems and jewellery exports. The performance of this industry is critical as it is one of the India’s leading foreign exchange earning sectors with a contribution of 16.67% to India’s total merchandise exports. After the recession in 2008, investors have shown increased confidence for asset classes like Gold. India is the largest consumer and Importer of gold in the world. According to the World Gold Council (WGC), India accounted for 15% of the global demand in 2009. Even in the global market for diamonds, it emerged as the sixth-largest consumer. Today, Indian consumes about 4000 tones of silver every year. The RNCOS report, Indian Gems and Jewellery Market- Future Prospects to 2011, says the total size of Indian Gems and Jewellery market is projected to reach US$ 26 bn by 2012. This growth would be facilitated by two factors- improving lifestyle and availability of skilled labour. The market for gems and jewellery can be divided into two major categories: gemstones, and precious metals and jewellery. Gemstones include diamonds, colored stones and pearls, while precious metals include gold, silver etc. Gold and silver are sold in the form of coins, biscuits and bars apart from jewellery, and can be studded with gemstones also. India manufactures and exports coloured stones; such as; emeralds, sapphires and rubies. Hyderabad is the major centre for processing and trading of pearls. The two major segments of the jewellery business in India are gold and diamond jewellery. A predominant portion of gold jewellery manufactured in India is for domestic consumption. And, a major chunk of rough, uncut diamonds, processed in India the form of either polished diamonds or finished diamond jewellery, is exported.
Gem & Jewellery Sector –INDIA One of India’s leading foreign exchange earning sectors Gem & Jewellery sector accounted for 16.67% of India’s total Merchandise Exports. Volume of exports pegged at US $ 43139.24 million as of March 2011. The percentage increase over FY 2010-2011 is 46.89%.
A Global Perspective USA’s import of Gem & Jewellery from India increased by 50.5% in 2010 as compared to 2009. India Gems & Jewellery exports are expected to grow at a whopping 15 % – 20% in FY 2011-2012. At present India exports 95% of the world’s diamonds.
Global Objective Ascertain India’s Leadership Position in the Global arena. Establish ‘India’ as a ‘BRAND’ to reckon with in Gem & Jewellery Truly make India the World’s trading hub for the Gem & Jewellery Lead the industry in Driving Gem & Jewellery Sales worldwide
India's Position in Gems and Jewellery Sector Gems and Jewellery is one of India's leading foreign exchange earning sectors. It accounted for 16.7 per cent of India's total Merchandise Exports. USA’s import of Gem & Jewellery from India increased by 50.5% in 2010 as compared to 2009. India Gems & Jewellery exports are expected to grow at a whopping 15 to 20 per cent in FY 2011-2012. At present India exports 95% of the world’s diamonds.
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.
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.
Outlook 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 retail jewellery industry is comprised of five main segments:
Bridal jewellery (30%) Fashion jewellery (22%) Watches (18%) Precious stones (15%) Precious metals (15%)
Bridal jewellery Precious stones Fashion jewellery Precious metals Watches
15% 15% 18%
Growing organized retail sector
Aggressive marketing & advertising
Large scale shows and exhibitions
Domestic players acquiring foreign companies
Investment from PE firms
Corporate houses enter the market
Key Industry Components Diamonds:
Diamonds have always enjoyed a special place among precious gemstones. In the past, diamond jewellery was limited to a very small elite segment of the global population. However, over the past 50 years, diamonds have seen increasing democratization. Diamond jewellery has, therefore, emerged as a segment showing significant growth in some of the emerging markets.
Gold has always been the jewellers' favourite metal given its intrinsic lustre and ease of fabrication Gold jewellery enjoys the leading position in most markets across the world, and in many ways forms the backbone of the precious jewellery industry. Given the fact that gold is also one of the traded metals, gold jewellery consumption is also impacted by gold price movements.
Demand for Gold in India
According to the WGC, the consumption of Gold jewellery rose by 69% in 2010 to reach 745.7 tones and was worth Rs. 1,342.1 bn, while gold products like bars and coins grew by 60% to reach 217.4 tones and were worth Rs 391.3 bn. Preference for gold dominates the domestic jewellery demand. The domestic demand for gold jewellery was estimated by ICRA Management Consulting Services (IMaCs) Limited to be at Rs
670 bn in 2009, accounting for an estimated 78% of the Indian jewellery market of Rs. 860 bn. The balance comprised diamond jewellery (Rs 150 bn), and other fabricated jewellery (Rs 40bn). The year 2010 saw India emerge as the biggest market for gold. The total demand jumped by 66% to 963.1 tones, accounting for Rs 1,733.3 bn (about US$ 38.4 bn), according to WGC. This happened despite the high gold prices. India contributes about 25% of the global demand, which was estimated at 3,812 tones.
Item Gold Jewellery Gold Product(Bars, Coins etc) Total
Demand(Tones) 745.7 217.4 963.1
Value (Rs. In bn) 1342.1 391.3 1733.3
Growth (%) 69 60 66
Demand and Supply Scenario
Gold demand in 2010 reached a 10-year high of 3,812.2 tonnes, worth US$150billon, as a result of; o strong growth in jewellery demand; o the revival of the Indian market; o strong momentum in Chinese gold demand and o a paradigm shift in the official sector, where central banks became net purchasers of gold for the first time in 21 years. China was the world's largest gold producer with 340.88 tonnes in 2010, followed by the United States and South Africa. In 2010, India was the world's largest gold consumer with an annual demand of 963 tonnes. The total supply of gold coming onto the market in 2010 reached 4,108 tonnes, a rise of 2% from 2009 levels.
Global Scenario London is the world’s biggest clearing house. Mumbai is under India's liberalised gold regime. New York is the home of gold futures trading. Zurich is a physical turntable. Istanbul, Dubai, Singapore, and Hong Kong are doorways to important consuming regions. Tokyo, where TOCOM sets the mood of Japan. Indian Scenario
India is the largest market for gold jewellery in the world. 2010 was a record year for Indian jewellery demand; at 745.7 tonnes, annual demand was 13% above the previous peak in 1998. In local currency terms, Indian jewellery demand more than doubled in 2010. A 20% rise in the rupee price of gold combined with a 69% rise in the volume of demand, pushed up the value of gold demand by 101% to1, 342 billion. This compares with 2009 demand of 669 billion. The rising price of gold, particularly in the latter half of 2010, created a 'virtuous circle' of higher price expectations among Indian consumers, which fuelled purchases, thereby further driving up local prices. Factors Influencing the Market
Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans. Hedging interest of producers/miners. World macroeconomic factors such as the US Dollar and interest rate, and economic events. Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices. In India, gold demand is also determined to a large extent by its price level and volatility.
Gold purity is measured in terms of karat and fineness: Karat: pure gold is defined as 24 karat Fineness: parts per thousand Thus, 18 karat = 18/24 of 1,000 parts = 750 fineness
Coloured gemstones: This segment includes all other forms of jewellery; precious gemstones (emeralds, sapphires, rubies and tanzanite) and semi-precious gemstones; silver, pearls, etc. The industry is highly fragmented making it difficult to track supply, demand and global trade.
RAW MATERIAL BASE:
GLOBAL SCENARIO Gold The major producer of gold in the world in the year 2008 was China with a production of 295 metric tones (growth rate of 7.3% over the previous year); China held a share of 18.9% of the total world production of gold during 2008, followed by South Africa (12.7%), USA (10.7%), Australia (9.9%) and Peru (9.7%). Compared to 2007, during 2008, countries such as Indonesia (23.7%), Australia (-8.5%), USA (-3.4%), Canada (-1%) and South Africa (-0.8%) witnessed a decline in production, and countries such as China (7.3%), Russia (5.1%) and Peru (2.9%), witnessed an increase in production of gold.
During the third quarter of 2009, the demand for gold has shown a decline in almost all the segments. This may be partially owing to global economic slowdown and increase in prices, reducing the disposable income with the consumers.
Diamond During 2007, Botswana was the largest diamond producing Country, in terms of value, estimated at US $ 2.96 billion, recording a decline in growth of 7.7% over the year 2006. Botswana constituted a share of 25% in the world production of diamonds. Botswana was followed by Russian Federation (21.7%), Canada (13.7%), South Africa (11.7%) and Angola (10.5%), as the world’s largest producers of diamond. Lesotho (growth of 96.4%), Canada (17.5%) and Sierra Leone (13%) were countries, which showed impressive growth rates in their production of diamonds during 2007. Russia was the largest diamond producer by volume with a production of 38.3 million (23% of world’s diamond production) carats in 2007, followed by Botswana (20%), Congo (17%), Australia (11%) and Canada (10%). In terms of growth in volume of production, Guinea recorded 115% growth in 2007 (over 2006), followed by Canada (28%) and Angola (5.7%). Silver, Gemstones and Platinum Major producers of silver in the world in the year 2008 include Peru (19%), Mexico (15.8%), China (13.7%), Chile (10.5%), and Australia (9.5%). There has been an increase in the production compared to the previous year in almost all the major countries, except USA and Australia, which witnessed a decline of (–) 11.1% and (–) 4.3%, respectively. In the case of gemstones (other than diamond), major producers of the world include: Botswana (26.5%), Russia (24.7%), Canada (19.1%), Angola (10.6%) and South Africa (6.5%). Though most of the countries haven’t shown an increase in its production in 2008, over 2007, some countries such as Sierra Leone (66.7%), Guinea (35%), Central African Republic (27%), and Angola (14.9%) have shown tremendous increase in production in the year 2008, over the previous year. Brazil (33.3%) and Australia (-0.4%) were the few major countries, which showed a decline in production, over the previous year. The largest producer of platinum in the world was South Africa, holding a share of 76.6% of the total world production, followed by Russia (12.5%), Canada (3.6%), Zimbabwe (2.8%) and USA (1.9%). However, major producers such as South Africa (–7.8%), Russia (– 7.4%) and USA (– 4.1%) have shown a decline in their production in 2008, over the previous year.
EXPORT AND IMPORT
During the Fiscal Year 2010-11, the total exports for gems and jewellery stood at US$ 43139.24 million as compared to US$ 29368.72 million during the fiscal year 2009-10. During the same period, the sector registered a growth of 46.89 per cent over the previous year. India is the largest market for gold jewellery in the world, representing an amazing 746 tones of gold in 2010. The net exports of gem and jewellery grew from US$ 22,616.35 in April-October 2010 to US$ 26,160.04 in April-October 2011.
India’s Gold and Jewellery Exports and Imports Export(bn) Rs 1973 1983 1993 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0.79 9.5 88.97 198.67 249.45 325.09 337.33 348.45 437.01 485.86 618.33 687.53 722.95 792.28 US$ 0.1 0.98 3.07 5.35 5.93 7.5 7.38 7.31 9.03 10.57 13.76 15.53 15.98 19.69 % of total Exports 4 10.8 16.66 15.3 17.8 20.4 16.6 16.7 17.1 16.6 16.5 15.1 12.6 12.1 Import(bn) Rs 0.42 7.29 70.73 124.21 158.2 235.56 219.63 220.45 293.41 327.57 423.38 404.41 338.81 321.14 US$ 0.05 0.75 2.44 3.34 3.76 5.44 4.81 4.62 6.06 7.13 9.42 9.13 7.49 7.95 Trade Balance % of (bn) total Imports Rs US$ 2.2 5.1 11.2 8.1 8.9 10.9 9.5 9 9.9 9.1 8.4 6.1 4 3.2 0.37 2.21 18.24 74.46 91.25 89.53 117.7 128 143.6 158.29 194.95 283.12 384.14 471.14 0.05 0.23 0.63 2.01 2.17 2.06 2.57 2.69 2.97 3.44 4.34 6.4 8.49 11.74
768.23 16.33 5.7 603.77 12.67 Source: IMaCs report, The Indian Gems & Jewellery Industry. Note: Import exclude gold & silver.
Composition of Exports
Cut and polished diamonds: The export of cut and polished diamonds grew manifold
in 2010-11 as compared to 2009-10. In 2010-11, the export of cut and polished diamonds was US$ 28251.92 million as compared US$ 18237.56 million, recording a growth of 54.91 per cent.
Coloured Gemstones: Export of coloured gemstones was registered at US$ 314.54
million in 2010-11 as compared to US$ 286.78 million in 2009-10, showing a growth of 9.68 per cent.
Gold Jewellery: Export of Gold jewellery also grew in 2010-11, registering US$
12885.59 million as compared to US$ 9669.10 million in 2009-10. A growth of 33.27 per cent was recorded.
INDIA’S OVERALL BALANCE OF PAYMENTS
2009-10 PR 2010-11 P 2008-09
US $ million
2009-10 PR 2010-11 P
1 CURRENT ACCOUNT 1 Exports, f.o.b. 2 Imports, c.i.f.
3 Trade Balance
2 8,57,960 14,05,412
3 8,62,333 14,23,079
4 11,39,517 17,34,545
5 189,001 308,521
6 182,235 300,609
7 250,468 380,935
4 Invisibles, Net a) ‘Non-Factor’ Services of which : Software Services b) Income c) Private Transfers d) Official Transfers
4,19,821 2,48,406 2,12,242 -32,923 2,03,209 1,129
3,80,120 1,69,843 2,35,161 -38,000 2,47,113 1,164
3,92,494 2,17,058 2,68,538 -67,734 2,43,102 68
91,605 53,916 46,300 -7,110 44,567 232
79,991 35,726 49,705 -8,040 52,055 250
86,186 47,664 59,001 -14,863 53,368 17
5 Current Account Balance CAPITAL ACCOUNT 1 Foreign Investment, Net (a+b) a) Direct Investment of which : i) In India Equity Re-invested Earnings Other Capital ii) Abroad Equity Re-invested Earnings Other Capital b) Portfolio Investment In India Abroad 2 External Assistance, Net Disbursements Amortisation
3 Commercial Borrowings, Net
22,685 87,734 1,70,819 1,25,621 41,541 3,657 -83,085 -63,889 -4,986 -14,210 -65,049 -64,200 -849 11,558 24,435 12,877 36,530 70,846 34,316 -13,288 -19,205 20,430 -471 -11,791 26,018 4,498 -97,115 97,115 0
2,43,641 89,675 1,57,894 1,09,349 41,125 7,420 -68,219 -44,331 -5,143 -18,745 1,53,966 1,53,885 81 13,612 27,863 14,251 13,183 70,371 57,188 34,878 9,844 14,254 -452 -62,574 2,52,132 -7,269 64,237 -64,237 0
1,72,154 32,776 1,06,598 62,970 42,937 691 -73,822 -34,946 -4,939 -33,937 1,39,378 1,44,679 -5301 22,480 35,868 13,388 54,336 1,05,152 50,816 50,177 22,025 14,822 -313 -47,726 2,73,133 -11,152 59,449 -59,449 0
5,785 19,816 37,672 27,863 9,032 776 -17,855 -13,688 -1,084 -3,083 -14,031 -13,854 -177 2,441 5,232 2,791 7,862 15,223 7,361 -1,985 -3,246 4,290 -100 -3,990 6,768 1,067 -20,080 20,080 0
51,167 18,771 33,124 22,907 8,668 1,549 -14,353 -9,314 -1,084 -3,955 32,396 32,376 20 2,893 5,898 3,005 2,808 14,954 12,146 7,558 2,084 2,924 -97 -13,016 53,397 -1573 13,441 -13,441 0
37,434 7,142 23,364 13,792 9,424 148 -16,222 -7,674 -1,084 -7,464 30,292 31,471 -1,179 4,941 7,881 2,940 11,927 23,089 11,162 10,991 4,963 3,239 -69 -10,440 59,747 -2416 13,050 -13,050 0
C. D. E. F.
Disbursements Amortisation 4 Short Term Credit, Net 5 Banking Capital of which : NRI Deposits, Net 6 Rupee Debt Service 7 Other Capital, Net @ 8 Total Capital Account Errors & Omissions Overall Balance [A(5)+B(8)+C] Monetary Movements (F+G) IMF, Net
97,115 -64,237 -59,449 20,080 -13,441 -13,050 of which : SDR allocation – -24,983 – – -5,160 – P : Provisional. PR : Partially Revised. @ : Includes delayed export receipts, advance payments against imports, net funds held abroad and advances received pending issue of shares under FDI. Note : 1. Gold and silver brought by returning Indians have been included under imports, with a contra entry in private transfer receipts. 2. Data on exports and imports differ from those given by DGCI&S on account of differences in coverage, valuation and timing.
Reserves and Monetary Gold (Increase -, Decrease +)
Net Exports of Gems and Jewellery items during April-October 2011
The summary of export of gems and jewellery items during April 2010-March 2011 as compared to same period last year
April-October 2010 % (Same ports as Growth/decline current year) over previous Year US$ in Million 14807.71 1209.24 5535.29 6744.53 158.45 284.18 9.08 22003.95 580.44 31.96 22616.35 US$ 2.62 12.24 43.97 38.28 18.13 36.15 92.95 14.13 71.53 --15.67
US$ in Million Cut & Pol Diamonds Gold Jewellery-D.T.A 15195.08 1357.28
SEZ/EPZ (included Gold Jewellery & 7968.97 Gold Medallions and coins) Total Coloured Gemstones Silver Jewellery Others * Net Exports Exports of Rough Diamonds Others Total Exports 9326.25 187.17 386.92 17.52 25112.94 995.65 51.45 26160.04
Source: The Gem & Jewellery Export Promotion Council (GJEPC) (As per RBI average exchange rate) Above figures does not include data for Costume/ Fashion Jewellery, and Sales to foreign tourists
Table XI.10 : Foreign Exchange Reserves (` crore) Item As on 30-Jun-10 1 Foreign Currency Assets (FCA) Gold Special Drawing Rights (SDR) Reserve Position in the IMF* Total Foreign Exchange Reserves (FER) 2 11,64,431.33 92,704.13 22,718.63 6,117.62 12,85,971.71 30-Jun-11 3 12,68,743.82 1,10,317.23 20,631.97 13,302.68 14,12,995.70 Variation Absolute 4 1,04,312.49 17,613.10 (-) 2,086.66 7,185.06 1,27,023.99 Per cent 5 8.96 19 (-) 9.18 117.45 9.88
*: Reserve Position in the International Monetary Fund (IMF), which was shown as a memo item from May 23, 2003 to March 26, 2004 has been included in the reserve from the week ended April 2, 2004
India imports rough diamonds mainly from Belgium, UK, Israel, UAE, etc while gold jewellery is imported from Switzerland, South Africa, Australia, UAE etc. Raw pearls, precious & semiprecious stones are imported from Belgium, the UK, Hong Kong etc. Europe has been the largest importing destination for India followed by the Middle East, Oceania and Asia.
Import duty on gold and silver up
Import Duty Status Current Earlier Gold 2% of the value Rs 300/10 gm. Silver 6% of the value Rs. 1500/kg. Excise Duty Gold 1.5% of the value Rs 200/10 gm. Silver 4% of the value Rs 1,000/kg.
India increases import duty on gold by 2%, silver 6 % in 2012 Indian government has raised the import duty on gold and silver on Tuesday. Import duty on Gold has
been increased to 2% of value from the earlier flat Rs. 300/ 10 gm and that of silver to 6 % of value from Rs. 1,500/ kg. The government has raised the import duty because of soaring demand for gold and silver in India, the world's biggest consumer of bullion. The duty changes could nearly double duties on both gold and silver. Prices of gold on the MCX advanced after the duty hike with the February gold contract gaining as much as 1% to Rs. 27,760 while silver for March delivery increased more than 2% at Rs. 53,361/kg. Earlier in 2009-10, the Indian government had increased import duty on gold bars from Rs. 100/10gm to Rs.200/10gm, while duty on other forms of gold (excluding jewellery) was increased from Rs. 250/10gm to Rs. 500/10gm and silver was increased from Rs.500/kg to Rs. 1,000/kg.
The industry reaction to import duty hike was mixed with manufacturers arguing that the hike could have been avoided while traders and importers felt the move could have little impact on consumption in India.
The government had raised the import duty of gold and silver to curb import of precious metals which result in huge outflow of dollars outside the country.
The Gems & Jewellery Export Promotion Council (GJEPC) has termed the decision to hike import duty as an unfriendly move towards industry. Nilesh Parekh of Shree Ganesh Jewellery has said in an interview that the raised import duty will have no impact on business as Indians like to buy gold when the yellow metal is expensive
“This will have no major impact on consumption pattern in India considering people’s inherent passion towards the precious metals,’ said Suresh Hundia, one of India’s largest bullion importers. When presenting the Budget 2009-10, Finance Minister Pranab Mukherjee had increased import duty on gold bars from Rs 100 per 10 gram to Rs 200 per 10 gram, while duty on other forms of gold (excluding jewellery) was increased from Rs 250 per 10 gram to Rs 500 per 10 gram. The customs duty on silver was increased from Rs 500 per kg to Rs 1,000 per kg. The duty on gold and silver was not been reviewed since 2004 even though prices have increased manifold, the finance minister then said. Further in 2010 annual budget, the government increased the import duty on gold for the second time to Rs 300 per 10 grams from Rs 200 earlier, and import duty on gold raised to Rs 1,500 per kg from Rs 1,000 earlier.
% Share of Export Basket (2010-11)
Cut & Pol Diamonds Gold Jewellery Colour Gemstones Roug Diamonds Others
1% 3% 2%
Gems and Jewellery Export (2009 vs. 2015)
INTERNATIONAL TRADE IN PRECIOUS METALS, GEMS AND JEWELLERY
Exports and Imports of Precious Metals and Stones
The largest exporter of gold in the world in the year 2007 was USA with a share of 19.9% in total world exports, followed by Australia (15.9%), Canada (9.3%), Hong Kong (7.3%) and Peru (7.1%). The world’s largest importers of gold include Switzerland (25.7%), UK (19.6%), USA (8.4%), India (7.5%), and South Africa (4.4%).
Israel (with a share of 19.7%), Belgium (19.6%), India (14.3%), USA (12.8%), and UK (9.1%) were the largest exporters of diamond in the world, in the year 2007. The largest importers of diamonds include: USA (17.7%), Belgium (16.2%), India (13.1%), Israel (13%), and Hong Kong (12.9%). India was an exporter as well as an importer of diamonds, with a respective share of 14.3% and 13.1% in the world. This may be because, India imports rough diamonds, for value addition, and exports as cut and polished diamonds.
Hong Kong, USA, Switzerland, Thailand and India were among the leading exporters, as well as importers of precious stones (other than diamond) in the world in the year 2007. Hong Kong was the largest exporter of precious stones (other than diamonds) with a share of around 17.1% of the total world exports, and was followed by USA (13.2%), Switzerland (12.7%), Thailand (12.2%), and India (9%). In the case of imports, the leading importers include: USA (26.5%),Hong Kong (14.4%), Switzerland (9.2%), Thailand (7.2%) and India (6.3%).
In the case of Pearls, Hong Kong was the largest exporter, with the exports valued US $ 482.92 million constituting a share of 30.2%, in the world exports of pearls in the year 2007. Japan, China, Australia, and French Polynesia were the other major exporters of pearls. Hong Kong was the largest importer with a share of around 33.2%, followed by Japan (18.3%), USA (15.8%), Germany (4.4%), and Australia (4%).
South Africa, constituting a share of 32.5% was the largest exporter of platinum in the world in the year 2007. UK, USA and Germany were the other major exporters. USA was also a major importer of platinum constituting a share of 24.4% in the world, followed by Japan (19.2%), Germany (12.7%) and UK (8.6%).
Major exporters of silver in the year 2007 include: China, with a share of 15.9% in the world, followed by Mexico (11.2%), Hong Kong (8.7%) and Germany (8.1%). USA, Hong Kong, UK, Germany and India were the major importers of silver in the world. Exchange rate used: INR 1= US$ 0.0203728 as on February 28, 2012
Currently the major destinations for India's gems & Jewellery exports
Belgium Singapore 9%
8% United States 28%
India is the largest market for gold jewellery in the world, representing a staggering 746 tonnes of gold in 2010.
China is the fastest-growing market for gold jewellery in the world, accounting for 400 tonnes of demand in 2010.
The US accounted for 129 tonnes of gold in jewellery during 2010.
India is the largest market for gold jewellery in the world, representing a staggering 746 tonnes of gold in 2010. Indian consumers are actively engaged in considering their next piece; 75% of women say they are constantly searching for new designs. Whilst over 50% of gold jewellery is bought for weddings, the wedding anniversary has now become the most aspirational occasion for receiving gold today, extending a couple’s relationship with gold beyond the marriage ceremony. The festival of Dhanteras, the most auspicious day in the calendar just before Diwali, has traditionally created a strong seasonal surge in sales. However, the strategic development of the Akshaya Tritiya festival in May, together with leading trade partners, has seen phenomenal recent success; sales during that period grew over 28% in the last year. India’s culture and mythology embrace gold. And India’s traditions of unparalleled craftsmanship and skill are exemplified by the country’s gold jewellery manufacturing, with the majority of pieces still made meticulously by hand. Each region’s symbols and designs are reinterpreted in gold which is overwhelmingly high in caratage.
China is the fastest-growing market for gold jewellery in the world, accounting for 400 tonnes of demand in 2010. Chinese consumers look for the very highest level of purity; more than 80% of gold jewellery in China is made from pure 24 carat gold. In today's China, gold takes centre stage in the wedding ceremony as a promise of a long and happy future together; this year, around 6.6 million brides will receive gold at the centre of their rituals. Indeed, as a result, over 75% of all urban Chinese women now own more than one significant piece. As the Chinese economy radiates wealth into rural communities, we anticipate that levels of ownership and participation in gold jewellery will continue to rise across the nation. Two thirds of Chinese women regard gold jewellery to be as much an investment as a statement of personal style; consumers are keenly aware of the value of what they own. But the same majority also state that wearing gold jewellery every day makes them feel wonderful; in China, the logic of gold seems to be perfectly complemented by its magic. In collaboration with leading manufacturers and jewellers, the World Gold Council launched Kgold, a branded expression of 18 carat gold, as a catalyst for new concepts and designs. K-gold
meets the desires of younger consumers and ensures that gold's traditions are matched by our innovations
The US accounted for 129 tonnes of gold in jewellery during 2010, making it one of the world’s most significant consumer markets. The US market is dominated by gifting where over 50% of the total value of gold jewellery at retail is created by pieces over $1,000. Unsurprisingly, two thirds of American women say they think of their gold jewellery as an investment, but one to be treasured and handed down to future generations. 72% of US women feel that gold is an everlasting gift. Birthdays, anniversaries and the traditional holiday season dominate occasions for gifts of gold but there is a sustained trend towards a gift for “no special occasion”. Perhaps men have begun to see gold, unlike other forms of jewellery, as spontaneous and profound; increasingly, the intimate, personal nature of gold jewellery combines a public statement with a tender, private message. The rituals and traditions of gold are still very much alive in America. Over three quarters of American brides say “I do” with a ring of gold. Moreover; the custom of the groom receiving and wearing a wedding band began in this culture in the first half of the twentieth century.
Foreign Direct Investment Policy
At present, the Indian government allows 100 per cent foreign direct investment (FDI) in gems and jewellery through the automatic route. For exploration and mining of diamonds and precious stones FDI is allowed up to 74 per cent under the automatic route. For exploration and mining of gold and silver and minerals other than diamonds and precious stones, metallurgy and processing, FDI is allowed up to 100 per cent under the automatic route.
Kimberley Process (KP)
The Kimberley Process came into force when the South African diamond producing nations met at Kimberley in South Africa in May 2000. The Kimberly Process was set up to discuss ways to stop the trade in ‘conflict diamonds’ and to ensure that diamond purchases did not fund violence. As of November 2008, the KP had 49 members, representing 75 countries. The Kimberley Process Certification Scheme (KPCS) was implemented in India on January 1, 2003 to verify the legitimacy of the import / export of rough diamonds as per the UN resolution and to curb the entry of conflict diamonds into the global trade flow. The system of verification and issuance of KPC is administered from the Mumbai and Surat offices of GJEPC. In India’s Foreign Trade Policy 2009-14, the following measures related to the Kimberley Process Certification Scheme (KPCS) have been adopted:
No import or export of rough diamonds shall be permitted unless accompanied by the KP certificate as specified by the GJEPC.
The export and import of rough diamonds to and from Venezuela has been prohibited by the Indian government owing to the voluntary separation of Venezuela from the KPCS.
Foreign Trade Policy (2009-2014) Initiatives
Foreign Trade Policy has identified the gems and jewellery sector as a thrust area with prospects for export expansion and employment generation. The highlights of the policy are: a. Import of gold of 8 carat and above allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content. b. Duty Free Import Entitlement (based on FOB value of exports during the previous financial year) of consumables and tools, for: 1. Jewellery made out of: i. Precious metals (other than gold and platinum) – 2% ii. Gold and platinum – 1% iii. Rhodium finished silver – 3% 2. Cut and polished diamonds – 1% 3. Duty free import entitlement of consumables for metals other than gold, platinum will be 2% of FOB value of exports during the previous financial year. c. Duty-free import entitlement of commercial samples shall be Rs 300,000. d. Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports. e. Import of diamonds on consignment basis for certification/ grading and re-export by the authorised offices/agencies of Gemological Institute of America (GIA) in India or other approved agencies will be permitted. f. To promote export of gems and jewellery products, the value limits of personal carriage of gems and jewellery products in case of holding/participating in overseas exhibitions increased to US$ 5 mn and to US$ 1 mn in case of export promotion tours. Further, the limit in case of personal carriage, as samples, for export promotion tours, has been increased from US$ 0.1 mn to US$ 1 mn. g. Extension in number of days for re-import of unsold items in case of participation in an exhibition in the US increased to 90 days. h. In an endeavour to make India a diamond international trading hub, diamond bourses will be planned. Gems and jewellery units may sell up to 10% of FOB value of exports of the preceding year in Domestic Tariff Area (DTA), subject to fulfilment of positive Net Foreign Exchange (NFE). In respect of sale of plain jewellery, recipient shall pay concessional rate of duty as applicable to sale from nominated agencies.
In order to boost the gems and jewellery sector, the value addition norms were reduced in the FTP 2009-14. Earlier, owing to abrupt fluctuation in gold prices, exporters were unable to comply with the previous high value addition norms. Under the scheme for export of jewellery, value addition shall be calculated as per paragraph 4 A.6 of FTP. Minimum value addition shall be:
Jaipur is a key centre for polishing precious and semi-precious gemstones. Delhi and its neighbouring states are famous for manufacturing silver jewellery and articles. Calcutta is popular for its lightweight plain gold jewelry. This category of jewellery finds a large market in Tamil Nadu. Hyderabad is the centre for precious and semi-precious studded jewellery. Nellore is a source for hand made jewellery that has been supplying the Chennai market for quite a few decades. Belgaum in Karnataka and Nellore together, specialise in studded jewellery using synthetic or imitation stones. Coimbatore in Tamil Nadu specialises in casting jewellery. Trichur in Kerala is another source for lightweight gold jewellery and diamond cutting. Mumbai is the centre for machine made jewellery. The city is also India’s largest wholesale market in terms of volume.
Major Players in Indian Gems and Jewellery
Gitanjali Group Shrenuj & Company Suraj Diamonds and Jewellery Limited Rajesh Exports Asian Star Titan Industries (Tanishq into Retail), Bangalore Suashish Diamond Rosy Blue B. Vijaykumar Laxmi Diamond K Girdharilal C. Mehendra Exports J.B Brothers Tara - Ultimo Vaibhav Gems, Jaipur Sheetal Manufacturing
Top 10 Buyers of Indian Gems and Jewellery
United Arab Emirates (U.A.E.) Hong Kong United States of America Belgium Israel Singapore Thailand United Kingdom Japan Australia
MAJOR BUYERS 2010-11
Singapor 1% Israel 3% Belgium 5%
Japan Australia 1% 1% Thailand Uk 1% 1%
UAE 47% USA 11%
Hong Kong 22%
Market Structure of the Gems and Jewellery sector
Major Production Clusters A geographical map of the Gems and Jewellery clusters in India is as shown in the following figure:
The centre of the trade in India’s Gems and Jewellery industry is Mumbai. Most imports of gold and rough diamond arrives in Mumbai. However, most of the processing of diamonds takes place in the neighbor state of Gujarat. The Gems and Jewellery cluster in Gujarat are as shown in the figure:
Gujarat along accounts for an estimate 80% of the Diamonds processed in India. Of this, 90% are processed by diamond units located in and around Surat along. The rest of the diamond units are located in Ahmadabad, Palanpur, Khambhat, Rajkot, Bhavnagar, Valsad and Navsari.The Diamond processing industry has spread from Gujarat to other states. Many diamond processing units have been set up in Mumbai in Maharashtra. There are also jewellery units in Trishur in Kerala, Coimbatore in Tamil Nadu, Jaipur in Rajasthan, and Goa. Mumbai continue to be main diamond trading center of India accounting for the dispatch of 93% of diamond exports.
Hallmark Importance: Hallmark on gold jewellery lends credibility to the purity of gold. It tells you the percentage of purity, among other things. The percentage of purity is important as the price that you pay hinges on it. Also, hallmarked jewellery is much easier to sell since the buyer is assured of the quality. Here is how you can decode the hallmark. Hallmark In India, Bureau of Indian Standards (BIS) is the accreditation agency which certifies and hallmark gold jewellery and other precious metals. A hallmark consists of carat, stamp of BIS, year of mark and jeweller’s identification mark. HALLMARK CERTIFICATION • Hallmarking is the accurate determination and official recording of the proportionate content of precious metal in gold. Hallmarks are thus official marks used in many countries as a guarantee of purity or fineness of gold jewellery. • BIS was named as the sole agency in the country for Hallmarking of gold jewellery under the provisions of the BIS hallmark Act, 1986. • BIS, as the National Standards Body of India is primarily engaged in the preparation and promotion of standards and operation of different quality certification schemes. In this context, the BIS Precious Metals Sectional Committee (MTD 10) has formulated and published the following Indian Standards on Gold and Gold Alloys: • a) IS 1417 Grades of gold and gold alloys, Jewellery/ArtefactsFineness and Marking b) IS 1418 Assaying of Gold in Gold Bullion, Gold alloys and Gold Jewellery/ Artefacts - Cupellation (Fire Assay Method) c) IS 2790 Guidelines for manufacture of 23,22,21,18,14 and 9 carat gold alloys d) IS 3095 Gold Solders for use in manufacture of Jewellery
Carat Carat indicates the percentage of purity of the metal. For instance, the purest form of gold is one which is 24 carat, or 24k. So a 24k means that the gold content is 100%. However, to lend some strength to the metal, ornaments are made of gold whose purity ranges from 18k to 22k. In percentage terms, 18k would mean 75% purity (denoted by 750) and 22k would mean 91.6% (denoted by 916) purity. Carat can also help in determining the price of a jewellery. Good retail shops, who don’t sell on maximum retail price, will have the bullion rate on display for 24k, 22k and even 18k gold. Apart from the bullion price, jewellers also charge making charges which can be bargained. Stamp of BIS and year of mark These are other prominent inscriptions on your ornament. Stamp of BIS, i.e a triangle, means that the jewellery has been assessed and stamped by the authority and hence you can be sure of the purity. BIS also stamps the year of hallmarking the jewellery. Jewellers also carry their personal hallmark which includes year of make and purity of the metal. However, look for the BIS stamp as it is widely accepted.
Jeweller’s identification mark The BIS hallmark also carries the jeweller’s stamp to indicate that the jeweller is BIS certified. BIS certification is very cheap compared with what you pay for the precious metal. It is around Rs 2 per g of gold. A jewelry hallmark is the engraved stamp that is often found on authentic pieces of jewelry, denoting the weight of the metal used in producing that particular item. While it is a mark often found on pieces of jewelry, other items made of precious metals often also carry a hallmark to signify the quantity and quality of the metal used. The jewelry hallmark on an item assumes extreme significance for the purchaser for several reasons: To Judge Authenticity: While jewelry hallmarks themselves can be faked or duplicated, and therefore do not provide an infallible testimony to the quality or authenticity of the articles on which they are embossed, they are often the easiest way to judge the age and genuineness of a particular item. While there is no way to be absolutely sure about the dependability of such a hallmark, it is the closest one can get to a guarantee of quality and authenticity that remains with the item even if it's passed from one owner to another. Through re-selling and alteration, the piece of jewelry can still retain the original hallmark that is embossed upon it upon being manufactured. Indicative of Content: For an individual looking to buy jewelry from a reputable jewelry store or reliable manufacturer, the hallmark is simply a way of determining the metal content of the piece since it indicated the constituency and sometimes age of the item. Since jewelry is often an investment on the part of the customer, the fact that the hallmark can provide an estimate of the content and therefore value of the item they are about to purchase, becomes extremely significant to the buyer.
On the part of the purchaser, it is simply a matter of turning the item over in order to check the hallmark, since it is usually stamped into the underside of a piece of jewelry. Maker's Mark: Sometimes, though not always, pieces of jewelry also carry a mark or stamp of the manufacturer who produced it. More famous jewelry designers and artifact stores usually put their own symbol all hallmark on their items alongside the jewelry hallmark. If you're looking to buy jewelry by a particular designer or company, this stamp is also extremely important. Not only does it guarantee the quality of the item since the manufacturer is automatically responsible for any lapse, it also adds to the resale value of the piece, since it can be traced back to a reliable source. Jewelry Dating: The jewelry hallmark also helps date a particular piece of jewelry, and to place it in a historical context if it's ancient. One can determine the time in which the item was crafted, by studying the jewelry hallmark on it. Although this takes expertise and a good eye, some people are experienced enough to place a piece of jewelry in terms of when it was produced, and by whom, simply by looking at the jewelry hallmark. If you are looking to purchase jewelry from a particular period, the jewelry hallmark must be taken into account before you make your purchase, since it provides an insight into the history of the jewelry in question, aside from providing a guarantee of its authenticity.
Value chain of the Gems and Jewellery sector
The overall value chain of the Gems and Jewellery sector is as depicted below: Figure: Value chain of the Gems and Jewellery sector
Extraction of gold Extraction of diamonds. by pipe mining / alluvial mining
Planning of cut Cutting of diamonds. Polishing of diamonds.
Melting of gold Setting diamonds / colored gemstones into gold Polishing and finishing the final jewellery product
Customer-facing Marketing & branding Selling
Demand Drivers of the Gems and Jewellery sector
Demand drivers of the Jewellery Segment
The demand drivers for the jewellery fabrication segment are as below:
Continuous traditional demand Demand
Drivers of the
Demand drivers of Diamond Jewellery The demand drivers for the diamond processing and jewellery sector are as below:
participation of women in the domestic Increasing purchases of diamond jewellery in the domestic market workforce Year-on-year growth of exports through increasing value-addition
Demand Drivers of
Drivers of competitiveness of the Gems and Jewellery Sector
Industry standards, certification, and hallmarking: By and large, the Gems and Jewellery industry in India has been indifferent to the adoption and establishment of formal or informal industry standards. However, as the industry has grown and more and more businesses have started transacting on a global basis, a need has arisen for establishing standards. However, in India, one of the largest markets for precious jewellery, quality standards are conspicuous by their absence. Hallmarking is restricted to a minor portion of
sales, with the bulk of the consumers unaware of the exact caratage of the jewellery they buy. It is expected that the industry will see an increasing level of adoption of hallmarking in gold and certification in gemstones and this is critical to its competitiveness.
Processing of larger size diamonds: The Indian Gems and Jewellery
industry has been built on polishing lower size and quality stones. Looking forward, since India already enjoys domination in the world CPD market in general, and for smaller-sized diamonds in particular, the scope for significant increase in market share and growth in the traditional small-size diamond exports is limited. Industry leaders are now seeking further growth through processing of larger size stones, and manufacture of diamond jewellery. Indian industry can now increasingly process the full range of sizes and qualities of stones utilising not only a cheap and abundant workforce, but also advanced technologies. Future growth is likely to be largely driven by the cutting and polishing of medium and large stones (currently dominated by Belgium and Israel), with consequently higher unit realisations. The Indian Gems and Jewellery GJ industry is already reporting increased growth in the larger-size segment. Export data from the GJEPC also reports a gradual shift in Indian exports to higher value segments, reflected in higher per carat realisations. Larger-sizes command higher per carat realizations and profits.
Availability of labour at competitive wages: Labour is a critical component in the value chain of the Gems and Jewellery sector. Labour in India, as compared to other countries, is cheap, and India thus stands at an advantage over its global competitors in this industry. Availability of skilled manpower is a key strength that has enabled growth in India’s Gems and Jewellery sector. India has a large pool of skilled artisans with vast traditional knowledge and expertise in jewellery making. It also has the largest resource pool in diamond cutting and processing. India also has a good blend of technically trained designers who are well-versed in latest 2D and 3D design software. India also has one of the lowest costs in diamond cutting. Government Support: The Indian Government has supported the Indian Gems and Jewellery sector with policies such as waiver of
customs duties on the import of rough diamonds, permission for personal carriage of jewellery through Hyderabad and Jaipur Airport as well, in addition to Delhi, Mumbai, Kolkata, Chennai and Bangalore, establishment of Gems and Jewellery SEZs, etc. This continued support is critical to the competitiveness of this industry.
Drivers of competitiveness of the Gems and Jewellery Sector
Sources of competitive advantage
Segments Diamond Processing Jewellery Fabrication
Industry standards, certification and hallmarking Processing of larger size diamonds Availability of labour at competitive wages Government Support
C C C C
Current employment pattern in Gems and Jewellery industry
Breakup of employment in Gems & Jewellery sector in India
Gemstone Processing Unit Others 5% 3%
Diamond Processing Units 23%
Jewellery Manufacturing Units 35%
Jewellery Retailers 34%
Key Success Factors and Risk Factors of the Gems and Jewellery sector
Key Success Factors
Movement from unbranded to branded jewellery and increase in fashion dictated buying: Over 90% of the jewellery sold in India, is mainly sold by traditional ‘“family jewellers’” and the unorganised sector contributes to about 96% of the total jewellery sales in the country. Thus, currently the Indian market remains highly fragmented. This scenario is seen to be changing, though slowly, with the entry of players such as Tanishq and Gitanjali, and the trend of supermarkets like Lifestyle and Shoppers Stop having jewellery outlets. Hallmarking and Certification: Increasing consumer awareness and need for certification by BIS and hallmarking have served as a means for firms to differentiate themselves in the market. Increased use of technology: The Gems and Jewellery business had traditionally involved a large content of manual labour. Though this still remains the case, a greater use of technology is seen in this industry. For example, factories have started using more machinemade designs, laser soldering is replacing manual soldering, investments in modern manufacturing and quality systems is increasing, etc. Transformation from family owned businesses to professionally managed businesses: Traditionally in India, the majority of India’s diamond workforce is employed by small units that process diamonds on a job-lot basis. At the low-end, family units processes diamonds/ make jewellery. Even at the retail end of the value chain, people in India generally buy jewellery from their ‘family jewellers’. This structure makes it less possible to bring in professionalism into the industry, which will be key going ahead given the threats from other diamond processing/jewellery making nations. Thus for firms in the Indian Gems and Jewellery sector to
prosper, a transformation from family owned businesses to professionally managed businesses is critical.
Key Risk Factors
Limited Standardization: In India, jewellery consumption is primarily of gold. The bulk of the Indian jewellery buying is still rooted in tradition, and jewellery is sold in traditional designs. Gold jewellery is also bought as an investment. In the present system of selling gold jewelerry in India, the purity may or may not be standard and the buyer can lose - cheating on caratage (and purity) is widespread. Possible Long-Term Threat from China: Although India currently enjoys dominance in the world’s cut and polished diamonds market, China may emerge as a viable rival, if not in the near term, certainly in the longer term. An increasing number of diamond processors from Israel and Belgium, and even India, are setting up facilities in China, for reasons like the cheap and disciplined labor force, significant increase in potential consumers in the highincome segment within the country and the steadily improving quality of Chinese workmanship. Technology is another area where the Indian industry faces a long-term threat from china. Threat from polishing in Producing Nations- The preference for polishing diamonds in the producing countries has been seen to be growing. There has been increase political pressure by major diamond producing countries in Africa to gain further economic benefits from diamond production through jobs creation in domestic cutting and polishing industry.
Key Issues of the Sector Unorganised Sector The gems and jewellery sector in India is unorganised and fragmented. Around 90% of the players operate in the unorganised sector mostly in family-run operations. The nature of the sector prevents it from achieving economies of scale. Also, being largely unorganised, the sector mainly uses labour-intensive and indigenous technology that affects their growth prospects. Further, the sector finds it difficult to enhance their global competitiveness due to difficulties in adopting technologies as a result of inadequate financial capital and high labour costs per unit. Threat from China Currently, China is the second-largest diamond processing centre in the world after India; however, it is slowly catching up and is threatening to displace the Indian gems and jewellery sector from its dominant position in the world. The labour cost in China is the lowest, just like in India; however, the gap between the two countries is narrowing slowly. Besides, the Chinese economy is growing rapidly and is creating a demand for gems and jewellery in the domestic market. Further, many diamond manufacturers from Belgium and Israel are setting up manufacturing plants in China. India also faces threat from China in terms of technology adoption, which allows China to process diamonds at a more competitive price. Predominance of the US market The Indian gems and jewellery sector is pre-dominently dependent on the US markets, which is its top export destination. The growth of gems and jewellery sector is heavily dependent on the growth of demand in the US market. However, the recent appreciation of the rupee vis-à-vis the US dollar and a slowdown of the US economy have aggravated the concerns for the sector. All these factors necessitate India’s venture into other geographical locations. During FY07, the exports to the US market registered a growth of 14% over exports of FY06; however, owing to the
slowdown in the US economy, the exports grew only 1.15% in FY08 over the previous year. In the current situation the heavy dependence on the US market has affected the exporters as they are facing a drop in orders and delayed payments. Exchange Rate/Currency Risk The gems and jewellery sector is affected by the rupee/dollar exchange rate because it is export-oriented. Any volatility in the exchange rates affects the margins of the players. For instance, the recent appreciation in the rupee against the dollar had made the exports of gems and jewellery less competitive in its key export destinations. High Level of Inventories As the gems and jewellery sector is highly dependent on imports for its raw materials, the players have to maintain a high level of inventory. However, maintaining this inventory becomes difficult for the players during the slack season, as it carries inventory price risk. For instance, due to the current recessionary trends, the demand slumped and inventory piled up much to the chagrin of the players. Decreasing Diamond Reserves The supply of rough diamonds is expected to fall in the near future as the diamond reserves are decreasing. There has been no major diamond reserve discovery since 2003, when reserves were last discovered in the Diavik Diamond Mine in Canada. The reduced supply will push up the prices of rough diamonds, which will further put pressure on margins. Future supply levels are largely dependent on the industry’s ability to identify new diamond deposits. Competition from Other Luxury Goods With the increase in disposable income and the change in standard of living, the demand for luxury goods such as perfumes, consumer electronics, leather, automobile, gadgets etc are also increasing. The
gems and jewellery sector is experiencing competition from these luxury goods, which is eating into the market share of the sector. Beneficiation in Mining Countries India is facing a threat from the emerging cutting and polishing centres in the diamond-producing countries such as South Africa, Ghana, Angola, Botswana, Namibia etc. The local government is increasingly pressurising the African countries for processing locally-mined materials such as diamonds within the country itself to increase earnings through value addition to the vast natural resources that these countries possess. South Africa has launched a draft Beneficiation Strategy for the minerals industry of South Africa in March 2009. The newly-formed African Diamond Producers Association (ADPA) is advocating establishing a joint policy that would support beneficiation across Africa. This could lead to fewer rough goods being made available on the open market and in creating a threat to the existing diamond processing centres such as India, as new processing centres comes up. Global Economic Slowdown The global economic slowdown has hit the Indian gems and jewellery sector hard. As the sector was primarily dependent on exports to the US and European countries, the meltdown in these countries affected the gems and jewellery sector to a great extent. The players faced issues relating to inventory build-up and liquidity pressure. A number of diamond units in Gujarat were shut down that rendered thousands of workers jobless. Further, the bank finance, which was largely in dollar terms, also faced a setback due to foreign exchange rate fluctuations. This further added to the woes of the players who were struggling to come out of the global recession. Even though the sector is in the recovery mode, owing to a gradual recovery of global markets, the credit cycle of the sector has changed drastically. The delayed payments from customers have raised the interest outflows for the companies.
Synthetic Diamonds The sector also faces a challenge in the form of integration of synthetic or man-made diamonds. With the advent of technology, it is difficult to differentiate between natural and synthetic diamonds. It may so happen that the synthetic diamonds are passed on as real diamonds and in the long run, this could affect the credibility of the sector. Further, as synthetic diamonds are much cheaper and identical to the man-made diamonds, these diamonds may find a clientele that is a substitute to the natural diamond and may end up eating into the market share of the diamond industry. Issue of Conflict Diamonds India is the largest importer of rough diamonds and a leading player in cutting and polishing of the same, therefore, it runs the risk of dealing with conflict diamonds. Conflict diamonds are those that are mined illegally in African countries such as Angola, Liberia, Sierra Leone and the Democratic Republic of Congo to fund illegal military wars. In spite of the KP certification, there are issues related to fake KP certificate. These fake certificates put diamond importing countries at a risk of dealing in conflict diamonds.
Opportunities for the Sector Future Forecast
The future growth of Indian jewelry industry lies in finding new markets and in adding value. Worldwide, jewelry is a big business, which is extremely lucrative as margins are high compared to diamonds, as branding can demand high premiums. India was a late entrant to the global jewelry market and its industry took off after establishment of the export processing zones in 1990, especially the special economic zone in Mumbai that accounts for 40 % of India's exports. It has taken the country a few years to incorporate international designs, styles and finishes.
The outlook for the industry is bright, but how much of this amazing performance will actually translate into improved bottomlines will lie in the capability of individual businesses to harness the potential of new markets and products. With intense competition in market, the stock performance will depend on how efficiently, in terms of both cost and marketing, companies can cut and polish diamonds and also venture into the lucrative but difficult jewelery industry
Gemstone Processing (Cutting and Polishing) Jewellery Manufacturing and Retailing Jewellery Certification Branded Jewellery
Entering New Markets The US has been the major market for Indian gems and jewellery sector over the years. However, with the current global slowdown, the dependence on the US market has affected the Indian gems and jewellery sector tremendously. The sector is exploring new locations to diversify business and to minimise the risk. Russia, Middle East and China are few of the emerging destinations that are witnessing an increase in jewellery demand. The Indian gems and jewellery players can tap these countries to diversify and increase their business.
Cutting and Polishing of Large-Sized Diamonds India is one of the leading diamond processing centres of the world. India’s vast, low cost and extremely skilled workforce provides it with a competitive edge over other countries. However, it is predominantly
involved in cutting and polishing of small-sized diamonds, which weigh less than one carat. India's cut and polished diamond exports have a high global share in terms of number of pieces; however, in terms of value the share is much lower. By moving up the value chain and processing larger stones India can further increase its value share in total exports. Large diamonds are less commonly found in nature, therefore, the price of a diamond rises exponentially with its size. Indian exporters who have dominance in processing of small stones have already started moving into cutting of large and medium size stones. For moving up the value chain, the industry should try forward and backward integration. Hence strategic alliances with producers of roughs and retailers of jewellery could lead to higher market share. Given India’s low cost and skill labours, there exists an opportunity for processing large stones, which will provide the players with higher margins as well as rise in realisations on capex. Value Addition There exists a huge opportunity for Indian players to do value addition to the processed diamonds and to export diamondstudded jewellery. India is already a leader in processing small-sized diamonds and it also has inherent capabilities of manufacturing hand-crafted jewellery. Further, with its dominance in processing small diamonds, India has an advantage of manufacturing affordable diamond jewellery for the world market. Jewellery Retail The Indian retail sector is growing rapidly. This provides an excellent opportunity for the Indian players to manufacture and sell their jewellery through the retail channels that are fast catching up in the Indian markets. Further, this move will also provide an organised structure to the largely unorganised gems and jewellery sector and lead to further growth of the sector. Outsourcing Hub
India can become an outsourcing hub for designing and manufacturing jewellery. There is an increased trend of outsourcing designing and manufacturing of jewellery from India by global retail players such as Wal-mart and JC Penny. The players in the sector can tap this opportunity to diversify business, reduce risk and increase revenues. Outlook The outlook for the gem and jewellery sector is positive. On account of the global recovery, the Indian gems and jewellery sector is also on a recovery mode. In December 2009, the exports from the sector grew by 45.35% as compared with the same period in 2008. According to GJEPC, the players received good orders for Christmas in 2009, which indicates a gradual recovery for the sector. The positive trend is expected to continue, as major economies are showing signs of recovery, which is resulting in fresh orders for the sector. Further, the gems and jewellery sector is also expected to grow in the domestic market, going forward. As the per capita consumption of jewellery is low in India, there exists an attractive opportunity to tap the domestic market.
Future Forecast The future growth of Indian jewelry industry lies in finding new markets and in adding value. Worldwide, jewelry is a big business, which is extremely lucrative as margins are high compared to diamonds, as branding can demand high premiums. India was a late entrant to the global jewelry market and its industry took off after establishment of the export processing zones in 1990, especially the special economic zone in Mumbai that accounts for 40 % of India's exports. It has taken the country a few years to incorporate international designs, styles and finishes.
The outlook for the industry is bright, but how much of this amazing performance will actually translate into improved bottomlines will lie in the capability of individual businesses to harness the potential of new markets and products. With intense competition in market, the stock performance will depend on how efficiently, in terms of both cost and marketing, companies can cut and polish diamonds and also venture into the lucrative but difficult jewelery industry
Gem and Jewellery Export Promotion Council (GJEPC) The Gem and Jewellery Export Promotion Council is a representative body of trade. The following initiatives have been taken by the council in order to enhance competitiveness such as:
Preparation of a medium term exports strategy for various sectors including gems and jewellery by the Ministry of Commerce. Exploring the possibility of direct procurement of rough diamonds from mining countries. Promotion of Indian diamonds and jewellery abroad through advertisements, publicity and participation in international fairs, buyer-seller meets and direct approach to market retailers. Market study through experts in the field to identify new markets.
Promotion of export of 'hallmark' jewellery from India to assure foreign customers of quality and purity of jewellery made in India.
ROLE OF EXIM BANK IN SUPPORTING INDIAN GEMS AND JEWELLERY INDUSTRY Exim Bank of India seeks to create an enabling environment to promote two-way transfer of technology, trade and investments and operates a wide range of lending, service and support programmes. The Bank has a variety of loan products to cater to the financing requirements of various enterprises. The credit facilities are available for financing at all stages of export cycle of Indian firms. The Bank’s Lines of Credit (LOC), extended to commercial banks, financial institutions, regional development banks, and entities overseas, serve as a market entry mechanism to Indian exporters, and provide a safe mode of non recourse financing option to Indian exporters. Apart from LOC, the Bank offers buyer’s credit and supplier’s
credit for exports on deferred payment terms. These facilities help companies, especially the SMEs, to offer competitive credit terms to the buyers and to explore new geographical markets. Exim Bank has extended supplier’s credit, pre shipment credit, post shipment credit, and foreign currency packing credit (FCPC), to the firms engaged in the gems and jewellery sector, among others. Exim Bank has signed an MOU with the Indian Diamond Institute, which envisages development of human resources through professional training, and thereby support the export efforts of the industry. Exim Bank has provided grant to IDI for upgrading LRS (Laser Raman Spectroscopic Machine) equipment in order for the Institute to provide training to carry out in-depth study of all types of gems. The MOU will also enable the institutions to exchange literature, data, information and research output on the gems and jewellery industry, and also help in exchange of foreign experts between the two institutions, in organizing their respective training programmes. MARKET ANALYSIS The product-country analysis shows that USA, EU, Japan and Hong Kong are the leading importers of major gems and jewellery products. These countries have been sourcing their jewellery import requirements mainly from countries such as Hong Kong, China, Italy, USA, Germany and UK, of which USA, UK and Germany are importers as well as exporters. Hong Kong appears to be more of a trading hub in the Asian continent. India served as one of the major source countries for diamonds, as also for articles of jewellery for select countries. In the case of diamonds, India is one of the major importers of rough diamonds, and one of the major exporters of cut/polished diamonds. India’s exports of cut and polished diamonds have been to all major markets in the world. India is also a major exporter of articles of jewellery and parts, and the exports have been to all the major importers in the world. However, some of the markets are not well-explored by Indian gems and jewellery exporters. For example, India may endeavour to concentrate on markets like: UK and Switzerland for articles of jewellery of gold and platinum group of minerals (HS code 711319); USA, Germany, UK and Switzerland for articles of jewellery made of silver (HS code 711311); USA, Japan, Switzerland and UAE for articles of natural and cultured pearls (HS code 711610); Switzerland, UK and Japan for articles of semi-precious stones (HS code 711620); and USA, Germany, France, UK and Italy for articles of imitation jewellery (HS code 7117). India may leverage its traditional craft-skills, low-cost labour, and fabrication techniques in some of the jewellery products (such as processing of small-sized diamonds), and replicate such advantages in the production of other products, and thereby become a global player across the gems and jewellery segments.
MMTC Limited, a public sector undertaking is India's largest trading company with a turnover of over RS. 35,000 crores during 2008-09. It is also India's largest importer of gold. During the year 2008-09, its gold imports and distribution into india is over 145 tonnes. it is also very active in silver, importing and distributing into India over 1,250 tonnes. MMTC is also actively involved in manufacture and sales of silver products including Dieties. It also has its own medallion unit for making medallions/bars ranging from 0.5 gms. to 100 gms. and 10 gms. to 1 kg. in silver. It is setting up a Joint Venture with M/s Pamp SA, Switzerland, world leaders in the field of production of medallions, for refining of gold/silver which is expected to be operational by the end of this year. It is actively involved in retail sales of these items. Sanchi is MMTC's brand of Silverware specifically introduced for the quality conscious consumer. MMTC has introduced sterling silverware (92.5%) for the discerning customers. Sanchi is known for its purity, quality and design. The designs are simple yet elegant and appealing. These products are available at MMTC owned retail showrooms and Stockist showrooms. For bulk requirment enquires please contact any of our offices or email at - firstname.lastname@example.org.
Product Medallions - Silver Medallion Religious Products - Idols Collections Decorative Products - World - Lamps Heritage Sites Medals Silver - Pooja - World - Idols/Statues Accessories Heritage Sites Medals Gold - Miscellaneous - World - Jewel Boxes Heritage Sites Medals Brass - Photo Frames - Watches - Flower Vases Miscellaneous Utility Table Products Accessories - Gifts - Bowls And Glasses
- Gold Medallion
- Candle Stand
- Plates, Thalis & Trays
- Tea Sets - Dinner Sets - Fruit Baskets Miscellaneous
AHMEDABAD BANGALURU BELLARY BHUBANESWAR CHANDIGARH Tamil Nadu KOCHI Maharashtra DELHI GOA HYDERABAD JAIPUR MADHY PRADESH VIZAG KOLKATA UTTARAKHAND HARYANA UTTAR PRADESH PUNJAB
RESERVE BANK OF INDIA BALANCE SHEET AS AT 30th JUNE 2011 ISSUE DEPARTMENT (` Thousands) 2009-10 LIABILITIES 2010-11 2009-10 ASSETS 2010-11 Notes held in the Banking Departme nt Notes in Circulatio n 48577,21,5 2
Gold Coin and Bullion:
(a) Held in India (b) Held outside India Foreign Securiti es 57806,52,5 7 -
32,61,51 842008,36, 40
15,14,26 969261,23, 85
– 792300,92, 96 969276,38, 11 840878,14, 48 116,40,43 1046,43,00
910165,61, 91 967972,14, 48 257,80,63 1046,43,00
Total Notes Issued
Total Rupee Coin Government of India Rupee Securities Internal Bills of Exchange and other
842040,97, 91 2009-10 5,00,00 6500,00,00 19,00,00
Total Liabilities LIABILITIES Capital paid-up Reserve Fund National Industrial Credit (Long Term Operations) Fund National Housing Credit (Long Term Operations) Fund
– 969276,38, 842040,97, 11 91 BANKING DEPARTMENT 2010-11 2009-10 5,00,00 32,61,51 6500,00,00 6,34 20,00,00 3,08
Commercial Paper Total Assets ASSETS Notes Rupee Coin Small Coin
– 969276,38, 11 2010-11 15,14,26 5,34 2,25
– – – Deposits (a) Government 36457,41,0 8 41,33,15 (i) Central Government (ii) State Governments (b) Banks 100,51,30 42,44,43 310068,81, 35
Bills Purchased and Discounted : (a) Internal (b) External (c) Government Treasury Bills Balances Held Abroad
– – –
307759,41, 00 4065,43,76 4986,76,82 68,63,80
(i) Scheduled Commercial Banks (ii) Scheduled State Cooperative Banks (iii) Other Scheduled Co-operative Banks (iv) Non-Scheduled State Co-operative Banks (v) Other Banks (c) Others
381206,41, 38 3679,82,18 5755,36,42 67,31,80
9224,79,62 12807,72,5 3
10357,81,0 3 12430,75,9 1 – 73,38,00
Loans and Advances to : (i) Central Government (ii) State Governments Loans and Advances to: (i) Scheduled Commercial Banks (ii) Scheduled State Co-operative Banks (iii) Other Scheduled Co-operative Banks (iv) Non-Scheduled State Co-operative Banks (v) NABARD (vi) Others Loans, Advances and Investments from National Industrial Credit (Long Term Operations) Fund: (a) Loans and Advances to: (i) Industrial Development Bank of India (ii) Export Import Bank of India (iii) Industrial Investment Bank of India Ltd. (iv) Others (b) Investments in bonds/ debentures issued by: (i) Industrial Development Bank of India
– – 275,22,98 328809,35, 60 Other Liabilities 414197,15, 13
– – 795,28,48
(ii) Export Import Bank of India (iii) Industrial Investment Bank of India Ltd. (iv) Others Loans, Advances and Investments from National Housing Credit (Long Term Operations) Fund: (a) Loans and Advances to National Housing Bank (b) Investments in bonds/debentures issued by National Housing Bank
58676,68,4 9 711017,32, 98 Total Liabilities 835389,73, 94 711017,32, 98
69848,88,8 9 835389,73, 94
BIS Hallmarked Gold Coins Be it weddings, birthdays or festivals, our culture abounds with reasons to celebrate. And a true Indian’s celebration is incomplete without a touch of gold! That’s why CaratLane.com brings you BIS Hallmark Gold Coins of absolute purity, etched with symbols that usher in prosperity and festivity. Our Gold coin collection includes Lakshmi, Ganesha and more in 22K (916 fineness) and 24 K (995 fineness). Be it for investing, collecting or gifting, you can take home these mini-treasure troves, with the CaratLane.com guarantee of the lowest price in the market.
Bank of India
Today's Selling Price ( Date : 15/03/2012) (exclusive of Sales Tax/VAT) Weight of Coin 4 gms. 5 gms. 8 gms. 10 gms. 20 gms. 50 gms. Price in Rs. 11725 14624 23188 29029 57510 141646
Bank of India presents Gold Coins worth its purity and weight. Gold Coins are a 24 Carat, 999.9 pure gold that you can purchase for investment or gifting. Gold continues to be one asset that appreciates steadily. Bank of India now offers Pure Gold Coins imported from Switzerland with an Assay certification, signifying the highest level of purity as per international standards. Pure and reliable Gold Coins are great value for money. These 24 K Gold Coins are made in Switzerland and come with an Assay certification, signifying the highest level of purity as per international standards. Convenience Currently Pure Gold Coins will be available in 4 g, 5 g, 8 g, 10 g, 20 g and 50 g weight. Price Gold Coins are competitively priced based on the daily prices in the international bullion market. The price is inclusive of customs duty and other charges involved in the retailing of gold coins but excluding Vat/ST Availability of gold coins Gold Coins are available at over 3000 branches across the country
Gold Coin- Bank of Baroda Bank of Baroda offers sale of goldcoins in the denomination of 2, 4, 5 & 8 grams in round shape and 10, 20 & 50 grams bar. These coins areavailable for sale at select POS Branches. Features:
24 carat, 999.99 pure gold Imported from Valcambi Refinery, Switzerland, one of the most reputed gold refinery world wide. Coins/bars are packed in a tamperproof see-through packet. Accompanied with an International Quality Certification (Assay Certificate)
Today's Selling Price (15/03/2012) (All rates in Rupees; exclusive of Sales Tax/VAT) Denominatio n Today's Rate (Exclusiv e of VAT) 5991/11761/14652/23313/29094/57925/143939/Price after 1% Discount Exclusive of VAT (Customers/Bul k Purchasers) 5931/11644/14505/23079/28803/57345/142500/
2 gram 4 gram 5 gram 8 gram 10 gram (Bar) 20 gram (Bar) 50 gram (Bar)
Urban consumers in India have become more exposed to western lifestyles, primarily through overseas travel. This has led to increased preference for products and designs that are popular abroad. For example, there is a shift towards preference for machine made jewellery over the traditional handcrafted jewellery. Demand for branded jewellery has also been increasing, as the quality, reliability and wearability of the jewellery is becoming important. With these emerging trends, the demand for branded jewellery is further expected to increase. There is also an increasing demand for diamonds, coloured gems, synthetic stones and other gems.
Tradition / Practice
Jewellery considered an investment partcularly “Whearable” Jewelry as a source of fashion gold jewellery. accessory and gifting. Marriage and festival seasons are peak seasons Wearability and gifting dimensions are distributing demand throughout the year. Dependence on the family Jeweler in the Growing interest in brands which personnify locality quality and trust. Traditional, ethnic and chunky designs Demand for fashionable, lightweight and innovative desings Growing interest in white gold and Predominantly gold based jewellery newer precious metals such as platinum. Dimond studded jewelry is also generating significant interest Jewellery largely sold on prevailing gold price Jewellery is being sold on a fixed price basis by per gram plus margin. branded jewelers.
With the growing awareness and influence of the west, the Indian consumers are becoming highly demanding and sophisticated, requiring better quality of products and services. This puts pressure on the players to consistently improve their product and service quality levels, thereby improving the overall competitiveness of the industry.
The factors which decide the price of gold in the market
There are basically five major gold markets around the world. These are New York, London, Zürich, Hong Kong and Sydney. London Bullion Market is sometimes confused with the London Metal Exchange which is quite different. Only gold is traded at the London Bullion Market while other metals, other than gold, are traded at the London Metal Exchange. So gold is considered as a metal by itself in these terms.
The price of gold is actually determined twice a day in London. Here a group of bankers get together and 'fix' the price of gold or in other words, decide what the price of gold is going to be at those particular moments when they decide the price. Of course the price then changes by the hour and moves up and down depending on various influences and perceptions of the value of gold. The reason for the fix is more to add stability and as a stable price twice a day for the banks to work on. A sort of guidepost for the day you might say. The price fix is actually determined in Pounds Stirling and is then converted, by various markets, into the currency of their country. Commonly, around the world, the price of gold is perceived in US dollars and Euros. Each market have their own operating times depending on the time zones and this means that gold can be traded more or less around the clock. There is much trading between the markets as a result. The value and price of gold varies depending on various factors. Some of these factors are, The value of various currencies, particularly the US dollar. The price of other commodities, The oil price, the economic situations and changes in those situations around the world. World events, such as wars and even dramatic weather influences, such as earthquakes, tidal waves etc. The biggest influence of course is the perception of the value of gold as against their currency. There are hundreds of analysis on a daily basis busy writing on what they think the gold price is going to do, go up or down or remain steady. In the final analysis no one can predict with 100 percent certainty if the value of gold will go up or down. In the long term, one can see historically that gold has always gone up. Provided there is inflation, currency manipulation, economic upturns and downturns it would be safe to say that, in the long term, gold will continue the trend it has had over the past 100 years. Hong Kong is the center of gold trading for the Far East and the Southeastern Asia region. The Hong Kong Dollar is used here. It can be confusing to decide what to do, either buy gold or sell gold or just keep what one has.
How Current Gold and Silver Prices Are Determined
The markets for precious metals are among the most active in the world. In fact, there is an old saying that the precious metals markets never sleep. Gold and silver trade internationally on bourses and electronic exchanges in financial centers such as Chicago, New York, London, Paris, Zurich, Istanbul, Dubai, Mumbai, Hong Kong, Shanghai, and Sydney. This means that gold and silver are being actively traded 24 hours per day, because, somewhere in the world the market is open at all times. The prices of gold and silver fluctuate constantly based upon activity in the marketplace. The fundamental supply and demand factors feed into the process. As stakeholders in the market buy and sell gold and silver, the price goes up and down. Various sources of supply and demand combine to drive the price of precious metals. On the demand side, demand for gold and silver comes from three primary sources:
Investment demand: individual, institutional and official (government) demand for the precious metals play a major role in the overall demand picture. This demand can take the form of everything from small bullion coins and bars to large positions in Exchange Traded Funds (ETFs) which take large positions in precious metals. Industrial demand: gold and silver have a large variety of industrial uses due to their unique properties, such as electrical conductivity, malleability, durability and resistance to corrosion. This makes them useful for many applications in the high tech world of electronics and modern industrial fabrication. Jewelry demand: gold and silver have been treasured for centuries for their beauty and luster and this has most often been expressed in the form of jewelry crafted by artisans through the years right up to today. Not only does jewelry demand play a major role in the market for precious metals, but it is important to understand that in many Oriental cultures, jewelry is used as a storehouse of value to keep and pass family wealth down for generations. In these cultures, jewelry demand is closely related to investment demand and is a key ingredient in determining the price in the marketplace. The supply of precious metals is much less dynamic than the demand side. The supply of metals comes from new mine supply and recycled scrap metal and above ground stocks. It is important to note that it is said that all of the gold ever mined would be able to fit into a cube less than 20 yards on each side. The fact that gold and silver are difficult to obtain—they must be mined in often remote places in the world using expensive methods—is one reason why they remain relatively scarce and thus valuable. This value tends to motivate holders of gold and silver to keep them for the long-term, thus adding to their scarcity in the marketplace. The supply and demand of gold and silver are often manifested in the futures markets, where buyers and sellers are able to trade a variety of commodities and financial derivatives. In the case of gold and silver, futures prices actually help to determine the commonly-watched “spot price” which is merely the price of a commodity available for immediate delivery (as opposed to a futures price which could conceivably reflect the price of that same commodity available for delivery months and months into the future). The spot price is most commonly expressed in US dollars, but is also increasingly expressed in a variety of foreign currencies such as European euros, Japanese yen, Chinese yuan, and even Canadian, Australian and Hong Kong dollars.
CONCLUSION: Jewelry has become a vital element in everyone’s life. Men, women and even kids love to wear jewelry articles all the time. Wearing jewelry is the demand of modern fashion. A few years back jewelry was used only on special occasions like weddings, engagements and other formal parties and it was associated with the brides and married girls only. But nowadays it is worn casually as well as formally and everyone likes to wear beautiful and elegant jewelry items. Trendy and stylish jewelry is in fashion these days. The gems and jewelry industry has been growing rapidly and has become one of the most profitable industries of the world.
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