Role in Indian Economy

The Gems and Jewellery (G&J) market is composed of sourcing, processing, manufacturing and selling of precious metals and gemstones – Gold, Platinum, Silver, Diamond, Ruby, and Sapphire etc. The G&J market is a significant contributor to the Indian economy, based on the size of the domestic market and through its contribution to the country’s exports. The consumption of gold in India stands at 1000 tonnes per year (around 20 percent of global consumption) – largest consumer; it is also the processes 90% of the diamonds by pieces (55 percent by value of the global market) – largest consumer. The Gems and Jewellery Export Promotion Council (GJEPC) is responsible for sustaining the new initiatives in the sector(Public enterprise).

The industry holds prominent significance as it is a net exporter and provides employment to 1.3 million people directly and indirectly. India is also emerging as the world’s largest trading centre for gold targeting US$ 16 billion by 2010. GJ market contributes 16 per cent of total exports, making it a significant foreign exchange earner for the country.

Growth Potential

Jewellery Retail

Sourcing & Mining of Metals

The Industry’s value chain is indicated by the diagram above. India is not a major miner of precious metals and stones. The country’s inexpensive and skilled workforce are one of the best in the world for processing of diamonds though. The most interesting development in India’s diamond industry in the last five years has been the industry’s steady progress up the value chain; from the skill to the ability to innovate and develop.

Home

Currently, India’s G&J industry is highly unorganized and fragmented with 96 percent of the total players being family owned businesses. The gold processing industry has around 15,000 players, with only 80 having revenues over USD 5 million. India is also home to around 450,000 goldsmiths, 100,000 gold jewelers along with 6,000 diamond processing players and 8,000 diamond jewelers.

Consumers have started shifting towards branded jewelery, which offers higher quality and saves the consumers from unfair trade practices in the industry. The emergence of jewelry retail chains provide customers with convenience and assurance of quality. The organized gems and jewellery sector is expected to progress with a good pace in near future, and should hopefully account for nearly 8% of the total gems and jewellery market by 2009-10. The Branded jewellery segment is also expected to have a high growth rate.

The key drivers for the industry growth are raising disposable income, conscious marketing efforts, rising young population with urge to spend and jewellery being increasingly regarded as fashion accessory.

The entry of foreign players is also likely to increase competition and provide consumers with greater choice. As Indian gem and jewelry exports have grown to $17 billion, the industry has witnessed an annual average growth rate of about 15-20 percent.

EXPORTS

The gems and jewellery industry provides a shining example of achieving international competitiveness. The bulk of the Indian GJ exports comprises import of rough diamonds, their cutting and polishing in India, and re-export. CPDs(Cut-Polished-Diamonds) accounted for 71.1% of India’s GJ exports during FY2006, followed by gold jewellery (23.2%), rough diamonds (3.4%), coloured gemstones (1.4%), and non-gold jewellery (0.9%). Thus, these two items-CPDs and gold jewellery- accountrd for around 96% of India’s GJ exports.

Gems and jewellery exports from India have risen from Rs 2 crore in 1960-61 to Rs 22 crore in 1966-67, the year in which the industry’s export promotion body, The Gem & Jewellery Export Promotion Council (GJEPC), was set up to Rs. 45 crore in 1970-71.

India’s gem and jewellery exports displayed a growth of 1.45 per cent during 2008-09 at $21.1 billion, primarily driven by gold jewellery exports, including medallions and ornament, over the exports of $20.8 billion of gem and jewellery in 2007-08. The overall export for 2008-09 was $21.9 billion on the heels of a substantial demand in the first half of the last fiscal and augmented gold jewellery exports to the United Arab Emirates (UAE) which has become the largest exporting destination accounting for 31 per cent of India’s exports. This was followed by Hong Kong with 25 per cent and the US with 20 per cent.