Gems and Jewellery sector forms an integral part of the Indian economy as it forms a major component of the export-led growth. The industry has been growing at a good pace over the last few years and contributed for 14 per cent of the revenues in India’s total merchandise exports in 2011-12.
Jewellery is a luxury component and the Indian luxury market is growing at a compounded annual growth rate (CAGR) of 25 to 30 per cent per annum. Jewellery, the largest segment of the luxury market, accounts for about 50 per cent of the total luxury products sold in the country. With India standing as a strategic market for gems and jewelleries, more and more multinational companies are foraying into the lucrative space and tuning their strategies to woo the country’s high net-worth individuals (HNIs).
India is considered to be the hub and one of the most competitive jewellery markets in the world owing to its lower costs of production and availability of highly skilled labour. A positive business environment coupled with various incentives offered by the Government has further strengthened the country's position as a major destination for gems and jewelleries.
The gems and jewellery industry majorly includes sourcing, processing, manufacturing and selling of precious metals and gemstones such as gold, platinum, silver, diamond, ruby, sapphire, among others. The highly fragmented sector comprises of more than 500,000 gems and jewellery players across the country, with the majority being small players. Though organised retail accounts for about 4-6 per cent of the entire market, Indian is increasingly getting acclaimed as an international sourcing destination for high-quality designer jewellery. Global companies such as Walmart and JC Penney source jewellery from India.
Some of the major brands in the Indian jewellery segment are Gili, Tanishq, Carbon, Oyzterbay and Trendsmith while companies like Reliance Retail, Damas Jewellery, Gitanjali Gems Ltd., Swarovski, Diamond Trading Company, Vardhaman Developers, Dubai-based Joy Alukkas, Viswa and Devji Diamonds and Gold Souk India are major players in the Indian gems and jewellery retail sector.
Gold and diamond are two major components of the gems and jewellery sector. India is the largest consumer of gold, accounting for over 20 per cent of the total world gold consumption. Gold jewellery forms around 80 per cent of the Indian jewellery market, with the remaining comprising of fabricated studded jewellery (including diamond and gemstone studded jewellery). A substantial portion of the gold jewellery produced in India is consumed in the domestic market only.
Currently, the Reserve Bank of India (RBI) prohibits any liaison office from entering into any commercial activity in the country and it could only promote the existence of parent entity and not any individual products of any Indian entity.
India is the world’s largest hub for cutting and polishing of diamonds wherein the cutting and polishing industry is well supported by Government policies and the banking sector with around 50 banks facilitating nearly US$ 3 billion of credit to the Indian diamond industry.
The country is looked upon as the world capital for diamond polishing and processing as its artisans are skilled in working upon small-sized diamonds. At present, India exports 95 per cent of the world’s diamonds, according to data released by the Gems and Jewellery Export promotion Council (GJEPC). A predominant portion of the rough, un-cut diamonds processed in India is exported, either in the form of polished diamonds or finished diamond jewellery.
Leading jeweller Tiffany & Co is planning to invest Rs 100 crore (US$ 15.78 million) in order to set up a diamond processing unit in Maharashtra. The facility, to be located inside the Special Economic Zone (SEZ) at the Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN), would be the first major investment in the country.
The Maharashtra Airport Development Company (MADC), a special purpose company of the Maharashtra Government, is the project developer.
Exports of gold jewellery from India stood at US$ 441.4 million while the total gems and jewellery exports amounted to US$ 2.49 billion in July 2013, the GJEPC reported. Silver jewellery exports increased by 184 per cent to US$ 109.69 million.
Gems and Jewellery accounted for 17 per cent of the total exports from India in 2012-13.
The Government of India (GoI) plans to promote the gems and jewellery sector in a big way through its New Foreign Trade Policy (2009-2014). Some of the important components of the policy are discussed below:
Exports from the gems and jewellery industry are poised to reach US$ 58 billion by 2015, according to report prepared by Technopak with an industry body. It also projects that the domestic market for gems and jewellery will be around US$ 35-40 billion by that time.
Moreover, India’s increasing orientation towards branded jewellery and organised format is helping consumers accept modern retail formats apart from conventional family jewellers. The report states that this change would act as a catalyst for further growth.
Exchange Rate Used: INR 1= US$ 0.01578 as on August 24, 2013
References: Media Reports, Press Releases