Gems And Jewellery
As India makes rapid progress in the retail arena, the jewellery market is undergoing a gradual metamorphosis from a 'storehouse of value' to a fashion accessory bazaar. Plain gold has now given way to diamonds, platinum and coloured gemstones.
The two major segments of the sector in India are gold jewellery and diamonds. Gold jewellery forms around 80% of the Indian jewellery market, with the balance comprising fabricated studded jewellery that includes diamond as well as gemstone studded jewellery. Gold jewellery and coloured gem segments account for about 15% and 5%, respectively of India's gems and jewellery export in value terms.
The largest cutting and polishing centre of diamonds in the world both in terms of quantity and value, the Indian gems and jewellery sector contributed to about 15% of India's total merchandise exports during 2005-06. And in 2006-07, it accounted for 13.7% of the country's total merchandise exports.
In terms of carat, India's share in this sector is about 80% of the world market. India produces 60% of the world's polished diamond market by value, 82% by carats and 95% by number of pieces.
According to the Gems and Jewellery Export Promotion Council (GJEPC), the total exports of the industry for the fiscal year 2006-07 were US$ 17,101.77 million as against US$16,646.04 million in 2005-06, showing a growth rate of 2.74% over the previous fiscal year. The current fiscal witnessed an impressive growth of 10.86% in April 2007 over the corresponding period in 2006. Exports in April 2007 amounted to US$ 1236.12 as against US$ 1115.07 in April 2006.
In this category, exports from domestic tariff area and SEZs together at US$ 9.77 billion during 2006-07 have shown a growth of 3.37%, while exports from bonded warehouses at US$ 1.12 billion have registered a decline of 52.42% compared to the corresponding period of the previous year.
Export of gold jewellery in 2006-07 has shown a growth of close to 35% at US$ 5.2 billion over US$ 3.87 billion in 2005-06. Export of coloured gemstones at US$ 246.48 million logged a growth of 6.08% during 2006-07 as compared to US$ 232.35 million in 2005-06.
The major destinations for exports have been the US, UAE, Hong Kong, Belgium and Israel. In fact, the US, UAE and Hong Kong together accounted for over 70% of the total exports in the previous fiscal year.
India's 300,000 traditional jewellers – commonly referred to as the unorganised sector – dominate the country's jewellery retail landscape with a 96% market-share, while large brands or organised retail form only 4% of the overall market.
But in recent times larger brands have been witnessing an upward swing mainly due to factors such as increasing consumer sophistication, diminishing investment-driven purchases, alternative retail channels and competition from other luxury products. Responding to the changing trends, India's small, independent jewellers are starting to organise themselves into groups of four to five players to share a common brand identity and marketing strategy.
Players in the market
Of late, some of the world's biggest names in the jewellery and luxury items such as watches and cuff-links are making inquiries to set up shop in India. Multi-national jewellery brands such as Tiffany, Cartier, Zales and Harry Winston are all said to be interested in coming here following the Government's decision to allow foreign direct investment of up to 51% in single brand retail stores. Most of these stores have been sourcing cut and polished diamond and gold items from Indian firms. Now they are making inquiries for possible tie-ups in India.
Other existing and new foreign players are drawing plans for expansion and launch of their operations in India:
De Beers has got permission to survey for diamonds in Jharkhand
Italian luxury silverware manufacturer, Greggio Argento, will set up two exclusive stores in Mumbai and Delhi within the next three months, through a marketing tie-up with Gitanjali Lifestyle – a subsidiary of Gitanjali Gems
Swarovski, the global crystal goods manufacturer and marketer, is on an expansion spree in India and hopes to achieve 5 to 10% of the global turnovers from the country in the next ten years. The company plans to set up 30 stores by 2009, from the current 13.
Damas India, part of one of the largest jewellery retail outlets in the world, is adding 16 new stores to its present dozen stores in India.
Simultaneously, domestic players are also drawing aggressive plans:
Shrenuj & Company Ltd has acquired 84.6% stake in the US-based jewellery distributor Simon Golub & Sons Inc for US$ 22.7 million.
Kerala-based jeweller Malabar Gold will spend US$ 48 million over the next year in order to expand its presence in southern India as well as abroad.
Gitanjali Gems Ltd, a Mumbai-based jeweller, has incorporated a wholly-owned subsidiary in Dubai, Gitanjali Ventures DMCC, whose main activity is trading in diamonds, precious stones, diamond jewellery and pearls.
Also, the Gitanjali Group has announced its foray into the luxury retail market through a new entity ‘Luxury Connexions'. The company will invest US$ 24.5 million over three years to set up luxury malls in eight leading cities across the country.
Two new special economic zones (SEZs) for gems and jewellery are to come up at Goregaon and Dhulia, both in Maharashtra. Also, the state-run Minerals and Metals Trading Corp. (MMTC), plans to establish a gems and jewellery special economic zone (SEZ) in partnership with a private company,
In the New Annual Supplement to Foreign Trade Policy (2004-2009) announced on April 19, 2007, the Government has extended the following facilities to this sector.
Service Tax on services (related to exports), which are rendered abroad have been exempted.
Re-import of Diamonds & Jewellery (either in complete or partial lot) exported on consignment basis have been allowed.
In the light of increase in global prices of precious metal, duty free entitlement for consumables for export of rhodium plated silver jewellery has been increased to 3%.
To reduce the transaction cost for the diamond sector, testing facility at International Diamond Laboratory (IDL), Dubai, has been incorporated in the list of laboratory/certifying agencies.
Duty free import entitlement of tools, machinery & equipment has been allowed. For metals other than gold, platinum, it will be 2% and for gold and platinum, it will be 1% of FOB value of exports during the previous financial year.
Categorisation of exporters as One to Five Star Export Houses has been changed to Export Houses and Trading Houses with rationalisation and change in export performance parameters.
In addition, the Government has decided to make gold hallmarking mandatory from January 1, 2008. It has also made the import of polished diamonds completely duty free. This will facilitate the sector towards evolving from being just a manufacturing centre to becoming a global trading hub for diamonds, gems and jewellery.
The committee appointed to study India's National Design Policy is likely to recommend the setting up of four additional National Institutes of Design (NIDs), along the lines of the existing Ahmedabad-based NID, whose curriculum includes, among other disciplines, jewellery design.