India's gems and jewellery industry had a market size of Rs 251,000 crore (US$ 40.58 billion) in 2013, and is expected to reach Rs 500,000-530,000 crore (US$ 81.61-86.51 billion) by 2018, according to the FICCI-AT Kearney study 'All that glitters is Gold: India Jewellery Review 2013'.
The study also projected that the country's gems and jewellery market could double in the next five years. The growth will be driven by a healthy business environment and the government's investor friendly policies. India is deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour.
India's gems and jewellery sector has been contributing in a big way to the country's foreign exchange earnings (FEEs). The Government of India has viewed the sector as a thrust area for export promotion. In FY14, India's gems and jewellery sector contributed US$ 34,746.90 million to the country's FEEs.
The cumulative foreign direct investment (FDI) inflows in diamond and gold ornaments in the period April 2000-September 2014 were US$ 453.41 million, according to Department of Industrial Policy and Promotion (DIPP).
FY14 saw an increase of 12.65 per cent in export of cut and polished diamonds with the segment reaching US$ 19,635 million. The industry also witnessed a rise of 11.98 per cent in imports of rough diamonds with figures of US$ 16,716 million.
India imported 163.11 million carats of rough diamonds worth US$ 16.34 billion and exported 36.46 million carats of polished diamonds valued at US$ 20.23 billion in 2013. The country exported gems and jewellery worth US$ 36.04 billion in 2013.
Platinum jewellery could breach the Rs 2,500 crore (US$ 404.26 million) mark in FY15, according to research by IKON Marketing Consultants.
Gold jewellery chain major Kalyan Jewellers will invest Rs 1,500 crore (US$ 242.56 million) in 2014 to increase its network of showrooms across the country and the Middle East, as well as convert its centres to mini diamond outlets so as to make gold available at affordable rates to customers.
Titan Company has informed the Bombay Stock Exchange (BSE) that its board of directors has approved the acceptance of deposits from customers for jewellery purchase under the Companies (Acceptance and Deposits) Rules, 2014. Monthly instalment schemes are popular with buyers as these do not involve large sums of payment upfront.
Tata Son's Chairman Emeritus Ratan Tata has invested in jewellery e-tailer Bluestone.com. The Bengaluru-based startup has more than 2,000 designs of gold and diamond jewellery and has raised US$15 million from Accel partners, Kalaari Capital and Saama Capital in several rounds, since it began in 2011.
The festival season this year may lead to online shopping breaching the Rs 10,000 crore (US$ 1.61 billion) mark, as per a survey conducted by an industry body. Internet shopping is anticipated to rise up to 350 per cent before Diwali on October 23, as against the 200 per cent in the August-September period. The present 12,000-crore market could cross the Rs 100,000 crore (US$ 16.17 billion)-a-year mark in India over the next three to four years, as per the survey.
Surat plans to house a world-class diamond bourse that will provide a trading facility and also bring all those interested in the business under one platform. This development could be big as Mumbai's Bharat Diamond Bourse (BDB), encompassing 1.8 million sq ft to BDB's two million sq ft.
To bring down the risk in extending loans to diamond and jewellery companies after a series of loan defaults in lately, leading banks in India want the Gems and Jewellery Export Promotion Council (GJEPC) to mediate in recommending the financial standings of diamond companies that seek business loans and credit limit enhancement.
The Indian government is planning to establish a special zone with tax benefits for diamond import and trading in Mumbai, in an effort to develop the city as a rival to Antwerp and Dubai, which are currently the top trading hubs for diamond.
The Reserve Bank of India (RBI) has liberalised gold import norms. Now, star and premier export houses can import the commodity, while banks and nominated agencies can offer gold for domestic use as loans to bullion traders and jewellers, as per a notification issued by the RBI.
To further liberalise norms for rough diamond imports, the RBI has lifted restrictions on some mines abroad. Advance remittances can now be given to these mines for such import of roughs.
India and Russia have signed a Memorandum of Understanding (MoU) to source data on diamond trade between the two countries. India is the top global processor of diamonds, while Russia is the largest rough diamond producer.
Exports from the gems and jewellery industry could reach US$ 58 billion by 2015, according to a joint report by Technopak and an industry body. The report further anticipates that the value of the domestic market for gems and jewellery will be around US$ 35-40 billion by 2015. Indian consumers, however, are not wholly dependent on diamonds and gold for jewellery. For instance, the costume jewellery industry in India grew at 20-30 per cent in the first half of FY14, with women showing a gradual preference for costume jewellery over gold. This market is expected to touch Rs 15,000 crore (US$ 2.42 billion) by December 2015 - a marked increase from the Rs 8,000 crore (US$ 1.29 billion) in December 2012 - as per an industry study.
India is also considered one of the top exporters in the sector. Key exporting destinations in FY14 were UAE at 35 per cent of exports valued at US$ 12,195.34 million; Hong Kong at 28 per cent of exports valued at US$ 9,790.45 million; and the US at 14 per cent of exports valued at US$ 4,948.92 million.
Rate Used: INR 1= US$ 0.016 as on November 27, 2014
References:Media Reports, Press Releases, GJEPC Report