Gems and Jewellery symbolise Indian tradition in a lot many ways. A legacy that passes from one generation to another, the components of jewellery include not only conventional gold but also diamond, platinum accompanied by a variety of precious and semi-precious stones.
The Indian gems and jewellery sector is expected to grow at a compound annual growth rate (CAGR) of around 13 per cent during 2011 – 2013, on the back of increasing government efforts and incentives coupled with private sector initiatives, according to a report 'Indian Gems and Jewellery Market Forecast to 2013', by RNCOS.
The diamond industry in India is predicted to remain stable during 2010-11 due to improved prices and steady demand, as per the credit rating agency Crisil.
On the back of healthy demand from Western markets like the US and Europe, India's gems and jewellery exports rose by about 22 per cent year-on-year (y-o-y) to US$ 2.86 billion in January 2011.
Rajiv Jain, Chairman, Gems and Jewellery Export Promotion Council (GJEPC), said that they are expecting the jewellery exports to surpass the target of US$ 30 billion in 2010-11.
At the BaselWorld 2011 show in Switzerland held recently, Mr Jain said that India’s gems and jewellery exports are estimated to rise by an impressive 35 per cent in 2011.
Although the market is highly dominated by unorganised players, with increase in consumer income and economic prosperity, the future of organised branded jewellery in India is very bright.
In its bid to enhance the market strategy, a gems and jewellery special economic zone (SEZ) sprawling over 40 acres with an investment of US$ 441.1 million is being planned to be set up by Gold Souk, the jewellery mall developer. The company plans to have residential apartments named Gold Souk City, apart from having gems and jewellery manufacturers from Thailand and Dubai who will open their units in India.
The US and European markets constitute about 60 per cent of India’s gems and jewellery exports. Indian exporters are also exploring other new markets including South America and East Asia in order to reduce their dependency on the West.
India is one of the largest bullion markets in the world. It has been until now, the undisputed single-largest Gold bullion consumer.
As per the study ‘Heart of gold' by the World Gold Council (WGC), the industry association for the gold industry, India owns over 18,000 tonnes of above-ground gold stocks (all physical and gold holdings, including private, Reserve Bank of India and institutional) worth around US$ 800 billion.
WGC maintains a highly positive outlook on gold demand for future considering a 30 per cent jump in the imports during December 2010. For the quarter ended December 31 2010, India's gold jewellery demand rose 47 per cent to 210.5 tonne from a year ago, the WGC data showed.
India's share of global demand, which stood at 16 per cent in 2009, rose to 25 per cent in 2010. The country is also the biggest buyer of gold jewellery with a 20 per cent share of the market.
Gold import is likely to rise by 15 per cent in 2011 to around 805 tonnes, as compared to 2010 due to growing demand for gems and jewellery, according to Vinod Hayagriv, Chairman, All India Gems and Jewellery Trade Federation.
In terms of the percentage share held in gold of total foreign reserves, as calculated by the World Gold Council, India stood at 11th position with 557.7 tonnes of gold and 8.5 per cent of gold reserves.
India is the largest diamond cutting and polishing centre in the world, accounting for about 95 percent share of the global market by number of pieces. The country is also the third largest consumer of polished diamonds.
Surat is India's diamond processing hub, contributing over 80 per cent of the country's diamond processing industry with annual revenue of around US$ 13.03 billion.
The diamond jewellery industry grew 30 per cent in calendar year 2010, as consumers are attracted towards using items as both luxury fashion and investment. The industry is set to continue its growth momentum this year. During calendar year 2011, it is poised for 20 per cent growth.