INDIAN GEMS AND JEWELLERY INDUSTRY

GEMS AND JEWELS SCENARIO

 In ancient times people made jewelry out of natural materials like

seeds, feathers, leaves, berries, fruits, flowers, animal bones, claws
and teeth.

 The early people made jewelry not only for humans but also for the
gods and decorating animals like elephants and horses, on special
occasions.

 It is interesting to note that both men and women of ancient times

wore jewelry made of gold, silver, copper, ivory and precious and
semi-precious stones.

 We find the description of jewelry in the great epics, the Ramayana

and the Mahabharata and also in the code of Manu that defines
various duties of the goldsmith.

 As a result of this old tradition India has been a leading exporter of

gemstones and manufactured jewelry.

INDIAN SCENARIO

 Till 1725, India was the only producer of diamonds in the world.

 India has a long history of diamond mining and several diamonds,

including the Kohinoor.

 The Golconda mines were world-famous and even today, a Golconda

diamond fetches a very high price in the international market.
  Today diamonds are mined only at Panna in the Indian state of
Madhya Pradesh and in Andhra Pradesh by the National Mining
Development Corporation.

 India does not contribute much to the world market in terms of rough
diamonds.

 India is already the largest diamond cutting and polishing centre in the
world.
 The Indian diamond cutting and polishing industry enjoys 60 per cent
value share, 82 per cent carat share and 95 per cent share of the world
market in terms of number of pieces.
 Nearly 9 out of 10 diamonds sold worldwide are cut and polished in
India.
 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.

PRODUCTION CENTRES

RAJASTHAN – JAIPUR, POLISHING PRECIOUS AND SEMI

PRECIOUS STONES

GUJARAT –SURAT, DIAMOND PROCESSING CENTRE

MAHARASHTRA-MUMBAI, MACHINE MADE JEWELLERY

TAMIL NADU – TRICHUR, GOLD JEWELLERY AND DIAMOND

CUTTING

DELHI- SILVER JEWELLERY AND ARTICLES

WEST BENGAL-KOLKATA,LIGHTWEIGHT PLAIN GOLD
JEWELLERY

ANDHRA PRADESH-HYDERABAD,PRECIOUS AND SEMI

PRECIOUS STUDDED JEWELLERY
ANDHRA PRADESH-NELLORE,CAPTIVE SOURCEFOR HAND
MADE JEWELLERY.

DOMESTIC INDUSTRY (GOLD)

• From historic times, gold has played a pivotal role in the Indian social
fabric.

• Gold jewellery is very popular among farmers, with an upsurge in

gold sales after a good agricultural season.

• Buying of gold is an important part of every stage of an Indian

citizen's life-at birth, marriage, construction of home, festivals,
religious ceremonies, setting up of new business, and death.

• India is the largest consumer of gold in the world.

• India is also estimated to hold nearly 14,000 tones of gold, accounting

for 9% of the world's cumulative mine production of around 153,000
tones.

DOMESTIC INDUSTRY (DIAMOND)

• The Indian domestic diamond jewellery market is estimated at around

Rs. 80 billion per annum in retail value.

• Because of increased disposable income and aggressive promotion

strategies by the diamond industry, Indian diamond jewellery demand
has increased significantly.

• Nearly 9 out of 10 diamonds sold worldwide are cut and polished in

India.
Destination-wise Exports of Cut and Polished Diamonds

HONG KONG is the largest importer of Indian Cut and Polished Diamond
worth USD 5,484.68 MILLION in 2009-10.

UAE is the second largest importer with USD 5,340.13 MILLION in 2009-
10.

US is the third largest importer with USD 3,183.07 MILLION in 2009-10.

It is followed by Belgium, Israel, Singapore, Japan, Thailand and

Switzerland with USD 1561,739,339,217,265 and 65 millions respectively
in the year 2009-10.

Source-wise Imports of Cut and Polished Diamonds

India imports most of the cut and polished diamond from Belgium. In 2009-
10, the worth was USD 4,556 million.

It is followed by UAE with USD 5,504 million in 2009-10.

Hong kong comes third with USD 2,930 million in 2009-10.

Then comes UK with USD 792 million in 2009-10.

Israel is next with USD 667 million in 2009-10.

 Platinum Jewellery

• India's share in the global platinum Jewellery market is growing by 19

per cent annually, it continues to be less than one per cent in the
global platinum Jewellery market.

• As per the Platinum Guild International (India), the number of outlets

selling platinum Jewellery increased from 12 in 2000-01 to over 300
currently. It is predicted that the number of outlets selling platinum
Jewellery would increase to around 1,000 outlets in the next 2-3 years.

Jewellery

• The Indian jewellery market is one of the largest in the world, with a
market size of $13 billion. It is second only to the US market of $ 40
billion and is followed by China at $11 billion.

• The gold jewellery market is growing at 15 per cent per annum and
the diamond jewellery market at 27 per cent per annum.

• The current global costume Jewellery and accessories market is

estimated at US$ 16.3 billion, of which India only exports around
US$ 53 million, thereby, providing a huge opportunity area for the
Indian costume manufacturers.

• The branded jewellery market in India is estimated at $111.6 million

per annum
 TOP 10 EXPORT DESTINATIONS OF INDIAN
GEMS & JEWELLERY

The largest exporter of Indian Gems and Jewellery is UAE with export
worth USD 12,524 million in 2009.

Hong kong follow UAE with export worth USD 6,253 million in 2009.

USA is the third largest exporter with USD 4,740 million in 2009.

Belgium follows USA with USD 1,645 million in 2009.

It is followed by countries like Israel, Thailand, China, UK and Japan with

worth USD 753,597,434,349 and 255 million in 2009.

The 10 major players in Indian Gems and Jewellery

Segment

1)FLAWLESS DIAMOND (INDIA) LIMITED

2)GITANJALI GEMS LIMITED
3)GOLKUNDA DIAMOND AND JEWELLERY LIMITED
4) RAJESH EXPORT LIMITED
5)SHENTIVIJAY JEWELS LIMITED
6)SHRENUJ & COMPANY LIMITED
7)SHYAM STARGEMS LIMITED
8)SU-RAJ DIAMONDSAND JEWELLERY LIMITED
9)VAIBHAV GEMS LIMITED
10)WHITE DIAMOND INDUSTRIES LIMITED
 Highlights of New Foreign Trade Policy for the year
2009-2014 with respect to Gems & Jewellery Sector

 Import of gold of 8 kg and above is allowed under replenishment scheme

subject to import being accompanied by an Assay Certificate specifying
Purity, weight and alloy content.
 Duty Free Import Entitlement (based on FOB value of exports during
previous financial year) of Consumables and Tools, for:
Jewellery made out of:
Precious metals (other than Gold & Platinum)– 2%
Gold and Platinum – 1%
Rhodium finished Silver – 3%
Cut and Polished Diamonds – 1%

• Duty free import entitlement of commercial samples shall be Rs.

300,000.
• Duty free re-import entitlement for rejected jewellery shall be 2% of
FOB value of exports.
• Import of Diamonds on consignment basis for Certification/ Grading
& re-export by the authorized offices/agencies of Gemmological
Institute of America (GIA) in India or other approved agencies will be
permitted.
• Personal carriage of Gems & Jewellery products in case of
holding/participating in overseas exhibitions increased to US$ 5
million and to US$ 1 million in case of export promotion tours.
• Extension in number of days for re-import of unsold items in case of
participation in an exhibition in USA increased to 90 days.
• In an endeavour to make India a diamond international trading hub, it
is planned to establish “Diamond Bourse (s)”.
• With an objective to meet the Dollar Credit needs of exporters, a
Committee has been constituted with Finance Secretary, Commerce
Advance Authorizations necessitate exports with a
• minimum value addition of
• Item of Export Minimum Value
Addition
• Plain gold / platinum / silver jewellery and 3%
• Articles and ornaments like Mangalsutra
• containing gold and black beads / imitation
• stones, except in studded form of jewellery.
 • All types of Studded gold / platinum / silver 5%
• Jewellery and articles thereof.
• Any jewellery / articles manufactured by fully 1.5%
• mechanised process
• Gold / silver / platinum medallions & coins 1.5%
• (excluding coins of nature of legal tender)
• Gold / silver / platinum findings / mountings 2.25%
• manufactured by mechanised process

SEZs in Gems and JewellerySector

• Santacruz Electronics Export Processing Zone (SEEPZ)

• Manikanchan SEZ, W. Bengal
• Jaipur SEZ
• Surat Special Economic Zone

• Surat in Gujarat, which is home to thousands of diamond units with

lakhs of diamond workers, has been recognized as “Town of Export
Excellence”.

QUALITY STANDARDS

The Bureau of Indian Standards has launched its hallmarking scheme.

Hallmarking is the benchmark regarding the purity of input used in the

product.

The various other institute facilitating GEMS AND JEWELLERY are:

• G.I.A. - Gemological Institute Of America

• A.G.S. - American Gem Society
• E.G.L. - European Gemological Laboratory
• I.G.I. - International Gemological Institute
Quick Gold Hallmark Guide

.999 = 24 carat = 99.9%

.916 = 22 carat = 91.6%
.750 = 18 carat = 75%
.585 = 14 carat = 58.5%
.375 = 9 carat = 37.5%

The hallmark is only applied after the item has been assayed to determine
that its purity conforms not only to the standards set down by the law but
also and with the maker’s claims as to metallurgical content.

KEY ISSUES FOR THE SECTOR

 Large Presence of Unorganized Sector

 The bulk of the GJ industry in India is concentrated in the

unorganized sector and employs around 2 million workers serving
over 0.1 million gold jewellers and over 8,000 diamond jewellers.

 The centre of India's GJ industry is Mumbai. Most imports of

gold and rough diamond arrives in Mumbai. However, most of
the processing of diamonds takes place in the neighboring state
of Gujarat, mostly in Surat, Bhavnagar, Ahmedabad, Bhuj, and
Navasari.

 Laser technology was introduced in the early-1990s for

operations like cleaving and sawing. More than 500 such
machines are estimated to be in operation in India, thereby
enhancing production efficiency and quality.

 Indian companies are now venturing into processing of larger

and expensive stones. While incredibly precise, computerized
machinery is now used in some parts of the cutting process for
 some diamonds, most of the work is still performed by hand
using exacting and meticulous techniques.
 Limited Potential for Greater Value Addition in Gold
Jewellery

 In India, jewellery consumption is primarily of gold.

 Gold jewellery is fabricated mainly in 22-carat gold and, lower

carat age is not favored as the Indian mindset does not accept
low purity gold jewellery.

 The bargaining power of the buyer is typically limited to the

fabrication charges.

 A jeweler or goldsmith of reasonable standing in a local area

has a fixed and loyal clientele.

 The system of hallmarking is expected to increase the buyer's

confidence in the jewellery's purity.

 Hallmarking of gold is mandatory from January 1, 2008.

 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 a
variety of reasons:
 The labor force, like in India, is cheap and disciplined;

 High economic growth over the past decade has resulted

in a significant increase in potential consumers in the
 high-income segment within the country; by comparison,
India has to rely almost solely on exports;

 Quality of Chinese workmanship is steadily improving.

 China has rapidly become the world's second largest diamond

manufacturing centre, when measured in manpower terms.

 Technology is another area where the Indian industry faces a

long-term threat from China.

 China with its modern and automatic factories is today in a

similar position to manufacture jewellery at competitive prices.

 Threat from Polishing in Producing Nations

 There has been increased political pressure by major diamond

producing countries in Africa-Botswana, Angola, Namibia and
South Africa-to gain further economic benefits from diamond
production through jobs creation in a domestic cutting and
polishing industry.

 Most of these countries have no history of diamond polishing

but the skills can be taught as has been seen by the recent rapid
growth of jobs in other non-traditional centers such as the Far
East and Armenia.

 The pressure towards polishing in the producing countries is

growing and increasingly it is a part of the overall agreement
permitting mining, or of not imposing high taxes.

 The Indian diamond industry has thrived because for economic

reasons, most smaller stones cannot be profitably cut in higher
cost locations.