A

GLOBAL / COUNTRY STUDY AND REPORT

SUBJECT CODE: 2830003

ON

“BELGIUM”

SUBMITTED TO:

GUJARAT TECHNOLOGICAL UNIVERSITY

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ASMINISTRATION

Batch: 2010-12

MBA SEMESTER IV

SWAMI VIVEKANAND MBA COLLEGE

MBA PROGRAM

AFFILIATED TO GUJARAT TECHNOLOGICAL

UNIVERSITY AHMEDABAD

MONTH 04, YEAR 2012

2

TABLE OF CONTENT

Chapter

No.

Sub Ch

No.

Topic Page No.

1 Introduction/Demographic Analysis About The

Country

8

1.1 Overview of Belgium 8

1.2 Demographic Profile 9

1.3 Geography of Belgium

11

2 Major Economic Sectors Analysis In Belgium 13

3 Introduction Of Gems And Jewellery Sector &

Diamond Market Of India And Its Role in

Belgium

17

3.1 Introduction Of Gems And Jewellery Sector in

India

17

3.2 Environment scanning and competitiveness of the

gems and jewellery sector of India

20

3.3 Introduction Of Gems And Jewellery Of Belgium 24

3.4 Role of India in Belgium in Gems and Jewellery

market

26

4 SWOT Analysis 28

4.1 SWOT Analysis of Belgium as a Country 28

4.2 SWOT Analysis of Diamond Industry in line with

Belgium (Co-related with India)*some points

29

5 PESTEL ANALYSIS 31

5.1 Political Factor 31

5.2 Economic Factor 33

5.3 Social Factor 35

5.4 Technological Factor 36

5.5 Ecological Factor 37

5.6 Legal Factor 38

6 Nation Advantage Of Competitive Advantage

(Porter Diamond Model)

40

3

Chapter

No.

Sub Ch

No.

Topic Page No.

7 Belgium Various Export and Import items

and its Partners

42

8 Belgium’s Trade At International Level And

With India And Gujarat

44

8.1 Belgium-International Trade 44

8.2 India-Belgium Relation 46

8.3 Bilateral Trade 46

8.4 Trade and Economic links between India and

Belgium

47

8.5 An Agreements Were Signed Between Belgian

and India

47

8.6 Cultural Cooperation 48

8.7 Indian community in Belgium 48

8.8 India‘s Exports and Imports to EU 49

9 Value Chain Of The Sector 56

9.1 Value Chain – Diamonds 56

9.2 Market structure of the Gems and Jewellery

sector

58

9.3 Major Export Markets 60

9.4 Competitive Markets Overview With India 60

9.5 India is a leading player in the global Gems and

Jewellery market

62

9.6 Competitive Advantage 66

10 Demand Drivers Of The Gems And Jewellery

Sector

68

10.1 Demand drivers of the Jewellery Segment 68

10.2 Demand drivers of Diamond Jewellery 69

10.3 Drivers of competitiveness of the Gems and

Jewellery Sector

70

4

Ch No Sub Ch

No.

Topic Page no.

11 Legal Procedure of Export-Import from

Belgium to India

76

11.1 Diamond Office 76

11.2 Custom duty-V.A.T Expence 78

11.3 Other Expense 79

11.4 Licence 79

11.5 Kimberley Certificate 80

11.6 Stock Declaration 81

11.7 Carnet A.T.A 81

11.8 Import and Export Procedure 82

11.9 Import Procedure 82

11.10 Export Procedure 85

12 Legal Procedure of Export-Import from

India and other Government Initiatives

88

12.1 Regulatory Bodies 88

12.2 Foreign Direct Investment Policy 90

12.3 Kimberley Certificate 90

12.4 Government Initiatives to Boost the Sector 91

12.5 Export Facilitation Measures by the Ministry of

Commerce and Industry

92

12.6 Foreign Trade policy 2009-2014 93

12.7 Special Economic Zones (SEZ) 93

12.8 Diamond, Gem & Jewellery Export Promotion

Schemes Policy

96

12.9 Import- Export Procedure from India to

Belgium

98

13 Opportunities in Belgium 101

13.1 Small in Size, Great in Opportunity 101

13.2 Feasible Opportunity In Belgium 107

5

Chapter

No.

Sub Ch

No.

Topic Page No.

14 Feasibiltiy Study 109

14.1 Marketing Analysis 109

14.2 Technological Analysis 110

14.3 Financial Analysis 111

14.4 Economic Analysis 115

14.5 Ecological Analysis 116

15 Barriers In Diamond Business 118

15.1 Culture & Communication 118

15.2 Risks 118

15.3 Hurdles to Expand Business 120

15.4 Economic, Social and Environmental Issues 121

15.5 The Diamond mining industry faces environmental

challenges

122

15.6 Social Problem and control 123

16 Recommendation 124

17 Conclusion 125

18 Bibliography 129

6

LIST OF TABLES

Sr. No Topic Page No.

2.1 Growth rates of major sectors of Belgium 13

2.2 Output of tertiary sector in 2011 15

3.1 Size of Retail Market India 21

3.2 Share of various segments of the gems and jewellery sector

(export)

21

3.3 Growth rates of various segment of Gems & Jewellery Sector in

India

22

3.4 Segment wise Belgium's exports of Gems and Jewellery during the

period 2006-07 and 2007-08 and 2008-2009

25

6.1 Porter Diamond Model Analysis 41

7.1 Imported Commodities and partners 42

7.2 Principal trading partners (in millions of US dollars) 43

8.1 Belgium Balance of Trade 45

8.2 India‘s Exports to EU 49

8.3 India‘s Imports from EU 50

8.4 Belgium-India total export and import in value for last 5 years: 51

8.5 India‘s Country wise Export 52

8.6 India‘s Country wise Import 53

9.1 India Gems & Jewellery Industry-Highlights 63

12.1 Operational Gem & Jewellery SEZs in India 95

12.2 SEZs Approved under the SEZ Act, 2005 95

12.3 List of Valid in principle Apporvals 95

13.1 Demography of Belgium 102

13.2 Households of Belgium 103

13.3 Life Expectancy in Belgium 103

13.4 Pattern of spending in Belgium 104

7

LIST OF FIGURES

Sr. No Topic Page No.

6.1 Porter Diamond Model 40

8.1 Trade Balance Fluctuations of Belgium since 1990-2011 54

8.2 Monthly Import-Export and Trade Balance 2007-2011 55

9.1 Value Chain of Diamonds and Gold 57

9.2 Gems & Jewellery Clusters in Gujarat 58

9.3 Destination wise exports of gems and jewellery 60

9.4 Share of India‘s Gem & Jewellery Sector 64

9.5 Comparative position of India in Global Gems & Jewellery Sector 65

10.1 Demand drivers for the gems and jewellery sector 68

10.2 Demand drivers for diamond jewellery 69

13.1 Patten of Spending in Belgium 105

13.2 Monthly import and export of textile, clothes and footwear 106

8

CHAPTER 1. INTRODUCTION/DEMOGRAPHIC ANALYSIS

ABOUT THE COUNTRY

1.1 Overview of Belgium

Belgium officially the Kingdom of Belgium, is a federal state in Western Europe. It is a

founding member of the European Union and hosts the EU's headquarters, and those of several

other major international organizations such as NATO. It has a population of about 11 million

people. Belgium is straddling the cultural boundary between Germanic and Latin Europe.

Belgium is home to two main linguistic groups, the Dutch-speakers, mostly Flemish (about

60%), and the French-speakers, mostly Walloons (about 40%), plus a small group of German-

speakers. Belgium's two largest regions are the Dutch-speaking region of Flanders in the north

and the French-speaking southern region of Wallonia. There are more Dutch speaking people in

Belgium than French speaking.

9

Flag of Belgium

The Brussels-Capital Region, officially bilingual, is a mostly French-speaking enclave within

the Flemish Region. A German-speaking Community exists in eastern Wallonia. Belgium‘s

linguistic diversity and related political conflicts are reflected in the political history and a

complex system of government. Belgium is having the Government Federal Parliamentary

Democracy and constitutional monarchy. The Prime minister of Belgium is Yves Leterme.

1.2 Demographic Profile

Total Population: 10,414,336 (July 2009 est.), ranked #78 behind the Portugal (10,707,924) and

Tunisia (10,486,339).

Total Land and Water Area:30,528 sq km, ranked #140 behind the Taiwan (35,980 sq km) and

Moldova (33,851 sq km) .

Age Profile Percentage of people

0-14 years 16.1%

15-64 years 66.3%

65 years and over 17.6%

Median age 41.7

Average life expectancy 79.22 years

Ranked (in Avg. life expectancy) 33rd

in world

10

Male 48%

Female 52%

Ethnic groups Fleming 58%,

Walloon 31%,

Mixed or other 11%

Religions Roman Catholic 75%,

Other(includes Protestant)25%

School life expectancy (primary to tertiary

education)

16 years

Per Capita Gross National Income (at

current prices in US Dollars)

$36,600, ranked #29 in world

Gross Domestic Product Contribution by

Economic Sector and Top Industries:

74.7% Services

24.5% Industry

0.8% Agriculture

Industries: engineering and metal products,

motor vehicle assembly, transportation

equipment, scientific instruments, processed

food and beverages, chemicals, basic metals,

textiles, glass, petroleum

(Source:http:// Belgium\Belgium/demographic - Wikipedia, the free encyclopedia.mht)

11

1.3 Geography of Belgium

Continent Europe

Region Western Europe

Coordinates 50°50′N 4°00′E50.833°N 4°E

Area Ranked139th

33,990 km2(13,120 sq mi)

89%land

11 % water

Borders Total and borders:

1,482 km(859 miles)

France 645 km, Germany 153 km, Luxembourg 150 km and Netherlands

460 km

Highest point Signal de Botrange

694 m (2,277 ft)

Lowest point De Moeren

12

Belgium is a federal state located in Western Europe, bordering the North Sea. Belgium shares

borders with France (620 km), Germany (167 km), Luxembourg (148 km) and the Netherlands

(450 km). Belgium comprises the regions of Flanders, Wallonia and Brussels.

Natural hazards: flooding is a threat in areas of reclaimed coastal land, protected from the sea

by concrete dikes.

Geography - note: crossroads of Western Europe; majority of West European capitals within

1,000 km of Brussels which is the seat of both the EU and NATO.

Longest Distances: 280 km SE-NW/ 222 km NE-SW

Natural resources

Natural resources in Belgium include construction materials, silica sand and carbonates. Belgium

used to have coal mines. As of 2007, the land use was as follows:

Arable land 27.42%

Permanent crops: 0.69%

Other: 71.89%

Environment

Because of its high population density and location in the centre of Western Europe, Belgium

faces serious environmental problems. A 2003 report suggested that the water in Belgium's rivers

was of the lowest quality in Europe, and bottom of the 122 countries studied.

Cities

The main cities in Belgium in terms of population are Brussels, Antwerp, Ghent, Charleroi and

Liège. Other notable cities include Bruges, Namur, Leuven, Mons and Mechelen.

(Source:http:// Belgium\Belgium/geography - Wikipedia, the free encyclopedia.mht)

13

CHAPTER 2 MAJOR ECONOMIC SECTORS ANALYSIS IN

BELGIUM

From Belgium‘s different economic sectors we have taken 7 different sectors according to their

emergence and growth at very fast pace:

1. Telecommunication Sector

2. Oil and Natural Gas Sector

3. Food Processing Sector

4. Chemical Sector

5. Personal care (cosmetic segment)

6. Health care segment

7. Gems & Jewellery Sector (Diamond segment)

Table: 2.1 Growth rates of major sectors of Belgium

No Economic sectors Growth rate in %

(Year 2010)

1 Telecommunication 2.2 %

2 Oil & natural gas 2.3 %

3 Food processing 4.6 %

4 Chemical sector 9.2 %

5 Cosmetic sector 8.0 %

6 Health sector 9.6 %

7 Diamond sector 11.6 %

Conclusion:-

From the above table we are conclude that in the year 2010 diamond industry are higher than

other economic sectors in Belgium, so that we can make investment in the diamond industry,

they are profitable for our business.

14

Service sector

The tertiary sector of the economy (also known as the service sector or the service industry)

is one of the three economic sectors, the others being the secondary sector (approximately the

same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as

mining).

The service sector consists of the "soft" parts of the economy, i.e. activities where people

offer their knowledge and time to improve productivity, performance, potential, and

sustainability. The basic characteristic of this sector is the production of services instead of

end products.

The tertiary sector of industry involves the provision of services to other businesses as well

as final consumers. Services may involve the transport, distribution and sale of goods from

producer to a consumer, as may happen in wholesaling and retailing, or may involve the

provision of a service, such as in pest control or entertainment. The goods may be

transformed in the process of providing the service, as happens in the restaurant industry.

However, the focus is on people interacting with people and serving the customer rather than

transforming physical goods.

A service is the non-material equivalent of a good. Service provision is defined as an

economic activity that does not result in ownership, and this is what differentiates it from

providing physical goods. It is claimed to be a process that creates benefits by facilitating a

change in customers, a change in their physical possessions, or a change in their intangible

assets. Service output is a component of the GDP of a nation. The service sector includes (but

is not limited to) farm and factory related activities.

Examples of service sector employment in Belgium includes:

Government

Healthcare/hospitals

Education

Banking/Insurance

Tourism

15

Retail sales

List of countries by service output

Table: 2.2 Output of tertiary sector in 2011

RANK COUNTRY OUTPUT IN

BILLIONS IN

US$

COMPOSITION

OF GDP (%)

% OF

GLOBAL

TERTIARY

SECTOR

- World 43967.335 62.8% 100%

- European

Union

13,128.911 73.1% 29.9%

1 United States 11,554.714 76.7% 26.3%

Remaining

Countries

5,627.819 12.8%

2 Japan 4,368.116 74.6% 9.9%

3 China 3,026.008 43.3% 6.9%

4 Germany 2,576.322 71.0% 5.9%

5 France 2,240.995 79.8% 5.1%

6 United

Kingdom

1,927.720 77.7% 4.4%

7 Brazil 1,694.565 67.3% 3.9%

8 Italy 1,637.120 72.9% 3.7%

9 Canada 1,248.663 71.0% 2.8%

10 Russia 1,110.208 58.9% 2.5%

11 Spain 1,089.364 70.9% 2.5%

12 Australia 1,061.211 70.4% 2.4%

13 India 1,024.920 55.6% 2.3%

14 Mexico 751.426 63.4% 1.7%

15 South Korea 670.376 57.6% 1.5%

16 Netherlands 626.546 73.0% 1.4%

17 Turkey 487.618 63.9% 1.1%

18 Switzerland 474.785 71.3% 1.1%

19 Belgium 411.069 77.7% 0.9%

20 Sweden 407.527 71.3% 0.9%

Thus we can conclude that the Growth rate of Service industry in Belgium was 77.4% of

G.D.P.in 2011 and from the above table we can conclude that in the year 2011 the European

union‘s G.D.P. composition of 73.1% and the global is 29.9%. The united kingdom‘s tertiary

sector‘s composition of G.D.P. is 77.7% and the global G.D.P. are 4.4%, The Belgium‘s

16

composition of service sector in G.D.P. is 77.3%, and global is 0.9%, As compared to United

Kingdom the Belgium tertiary sector growth rate are less. Because of weak export demand, labor

productivity growth decline, lower contributions for investments in Belgium

The diamond segment(Gems & Jewelry) growth is $23 billion and the diamond segment(Gems

& Jewelry) growth rate is 11.6% in the year 2011.Diamond segment(Gems & Jewelry) are higher

than other economic sectors in Belgium, so that we can make investment in the diamond segment

they are profitable for our business.

17

CHAPTER 3 INTRODUCTION OF GEMS AND

JEWELLERY SECTOR AND DIMOND MARKET OF

INDIA AND ITS ROLE IN BELGIUM

As part of our study of Global Country Report, we have taken Belgium to do trade in it, and here

we have analyzed the Gems and Jewellery and Diamond sector of India and Role of India in

Belgium.

'Gems and Jewellery' sector includes following:

Diamonds

Precious / Semiprecious stones or colored gemstones

Gold jewellery Pearls

Non-gold jewellery

Synthetic stones Costume / fashion jewellery.

3.1 INTRODUCTION OF GEMS AND JEWELLERY SECTOR IN INDIA

Indian gems and jewellery products are acknowledged the world over for their exquisite

craftsmanship. Modern state-of the-art machinery and computerized operations have lent a

cutting edge to both the diamond processing and jewellery manufacture. Over one million people

are directly or indirectly employed in this industry.

18

The industry is highly export-import oriented, labour intensive and employment oriented.

Realizing enormous potential of the sector, the Ministry of Commerce, Government of India

declared gem and jewellery as a thrust sector for export promotion.

India is the world's largest manufacturing centre for gems and jewellery and the Industry

contributes over 12% to the total export earnings of the country and employs highly skilled

1.5 million workers. This industry was hit hard by the full demand due to global economic

slowdown in FY 09.

The gems and jewellery industry is a major exchange exchequer as major portion (around 80%)

of its turnover was contributed by exports.

This classified into five main segments:

Cut and polished diamonds, gemstones, gold and jewellery, pearl and synthetic stones, and

others, including precious metal jewellery (other than gold), synthetic stones and costume

fashion jewellery.

i) Gold

India has been the largest consumer of gold jewellery in recent times. The main reason for

demand for gold has been the traditions and cultures in India.

India exported gold mainly in the form of jewellery, valued US $ 4.32 billion (majority of them

are studded with diamonds), which witnessed an increase of 2.2% over the previous year. This

signifies the importance of domestic demand for jewellery and the reliance of imported gold for

jewellery manufacturing.(which indirectly affect the diamond market of India with Belgium)

19

ii) Diamond

India has always excelled in the field of diamond cutting, gem cutting, polishing and processing.

India‘s diamond tradition goes back thousands of years and is one of the oldest in the world.

India imports rough diamonds and process them for value addition and exports.

iii) Precious Stones

India was more an exporter of precious stones than an importer of the same, and the difference

between these two being minimal. During 2007-08, the exports of precious stones were US $

280.8 million, an increase of 6.5% over the previous year, and in the year 2008- 09, exports of

precious stones witnessed a marginal decline of (-)0.1%, over the previous year. Import of

precious stones has grown marginally; during the year 2008-09, imports grew by 4.6% over the

previous year.

iv) Platinum

Platinum is a naturally occurring rare metal which is scantier than gold. UAE was the major

export destination for India‘s export of raw platinum, constituting 49.1% of total exports.

Thailand and Belgium with 69% and 13% share.

v) Silver

During 2007-08, exports of silver (unwrought and semi-manufactured form) witnessed a

negative growth of 35.5%, and silver jewellery witnessed a growth of 19.5%.

According to Gems and Jewellery Export Promotion council (GJEPC) export of cut and

polished diamonds have declined by 8% in value terms to $13024.53 million in FY 09 as against

$14194.13 million in the corresponding previous year. In the volume terms, the Quantity of cut

and polished diamonds have fell by 7% to 402.05 lakh carats in fiscal ended March 09.

20

3.2 ENVIRONMENT SCANNING AND COMPETITIVENESS OF THE

GEMS AND JEWELLERY SECTOR OF INDIA

India in the Global Context

The size of the global Gems and Jewellery industry was estimated at US $ 146 billion at retail

prices in 2005, and is estimated to have recorded US $ 170 billion in sales in 2008. The industry

has grown at an average Compounded Annual Growth Rate (CAGR) of 5.2% since 2000.

India is one of the eight key world markets, the others being the USA, UK, Middle

East, Turkey, Japan, Italy and China. India is the also the largest consumer of gold in the world,

and is estimated to hold nearly 16,000 tons of gold, accounting for nearly 12-15% of the world's

cumulative 'above ground' gold stocks. India is also the largest diamond cutting and polishing

centre in the world.

While a predominant portion of gold jewellery manufactured in India is for domestic

consumption, a significant portion of rough, uncut diamonds processed in the form of

either polished diamonds or finished diamond jewellery is exported.

The manufacturing and processing of Gems and Jewellery is distributed across several countries

in the world (i.e., the African continent dominates the mining space of diamonds whereas

India is the dominant player in diamond processing). Apart from being a major market, India

primarily forms a part of the polishing and jewellery manufacturing part of the industry's

value chain in addition to increasing traction in the organized retail of jewellery.

Industry size and Growth of the Gems and Jewellery Sector

The domestic demand for gold jewellery was estimated at Rs. 550 billion in 2007, accounting for

an estimated 80% of the Indian jewellery market of Rs. 690 billion; the balance comprised of

diamond jewellery (Rs. 115 billion), and other fabricated jewellery (Rs. 25 billion), as seen

below:

21

Table: 3.1 Size of Retail Market India

Table 3.2 share of various segments of the gems and jewellery sector (export)

22

Also, the growth rates of the segments are as below:

Table: 3.3 Growth rates of various segment of Gems & Jewellery Sector in India

OUTLOOK:

The gems and jewellery Industry has been one of the fastest growing industries in India

in the past few years. This industry has been vital for the economy, as it has contributed,

on an average, to about 15.27% of the country‘s total exports in past one decade.

India is one of the largest diamond processors in the world. This industry is engaged in

sourcing, manufacturing and processing which involves cutting, polishing and selling of

precious gemstones as well as diamond and precious metals like gold, silver and

platinum.

The price of one of the main inputs in jewellery — gold — has been consistently

touching all-time highs. The yellow metal‘s spot price in the domestic market hit all time

high of `28,540 per 10 gram on August 22, 2011. In the international market, prices

breached $1,900 (per ounce) level. Investment demand for gold remains strong in the

current environment of market uncertainty, triggered by worries of a double dip recession

in the US and worries of sovereign debt contagion in Europe. Gold has slowly turned into

23

a sophisticated invest-ment instrument, an improvement over its traditional use for

jewellery making in India.

Hence, the retailers have been trying to woo customers through cheaper alternatives,

mainly silver jewellery. Because of this, Indian non-gold jewellery, a chunk of which is

made in silver, is finding its way to export markets. This trend might strengthen in near

future.

The industry is highly fragmented and mostly unorganised. However, due to the ongoing

retail revolution in the country, this industry is undergoing a transformation and gradually

moving towards being organised. As part of this phenomenon, a number of nation-wide

jew-ellery chains are increasingly making their presence felt.

In recent times, the Government has taken various initiatives to support this sector. For

instance, up to 100% FDI is allowed in the indus-try through automatic route. Also,

special economic zones (SEZs) and jewellery parks have been set up to promote

investments.

After witnessing a significant downturn during 2008-09, this industry is back on the a

recovery path. However, due to export-import de-pendence, it remains susceptible to

external developments, such as fluctuation in international prices, exchange rate volatility

and de-mand scenario in key markets. It can be mentioned here that India has been one of

the largest importers of gemstones, rough diamonds and precious metals over the years

and most of it is used for exports after value addition.

24

3.3 INTRODUCTION OF GEMS AND JEWELLERY OF BELGIUM

Global Exports in Gem and Jewellery Sector:

Global exports of gem and jewellery related products in 2004 registered a steep growth of 28.49

per cent over the previous year when the same touched a figure of US$78,022 million as against

US$60,721 million. India as may be seen turned out to be third largest exporting country after

Belgium and Israel. Belgium continues to be the largest exporting country.

The country during the period registered a growth of 21.55 per cent. The other countries

registering a robust growth during the period include Switzerland (60.97%), China (37.31%),

Canada (34.15%), USA (33.81%), India 25.21%), Hong Kong (21.78%), Israel (21.42%), and

Congo (21.15%).

Belgium has evinced interest in further boosting economic ties with India in sectors like IT,

gems and jewellery, non-conventional energy sources and education.

Belgian Ambassador Jean M. Deboutte in a press meet Friday said that they can strengthen

their economic ties with India by increasing their cooperation in the IT, non-conventional

energy sources and education along with gems and jewellery. Gems and Jewellery Export

Promotion Council (GJEPC) has strongly urged the Union government to introduce

presumptive tax system on the lines of Belgium and Israel, which will make India the world's

leading gems and jewellery hub and to protect its vanguard position as the low-cost labour

intensive global centre for diamond cutting and polishing activities.

In its pre-budget recommendations, GJEPC has stated that India's traditional pre-eminent

position is under threat with the shifting of industries and capital from India to other countries

such as China and Thailand having the ability to offer plentiful and cost effective labour.

25

Table: 3.4 Segment wise Belgium's exports of Gems and Jewellery during the

period 2006-07 and 2007-08 and 2008-2009

(Rs.in crores)

Segment 2006-2007 2007-2008 2008-2009 %Growth

on 08-09

over 07-

08

Cut and

polished

diamond

39554 50074 67543 34.89

Gold

Jewellery

12255 17113 21346 24.74

Rough

diamond

2451 1599 3224 101.63

Coloured

Gems

Stone

818 864 1288 49.07

Non-Gold

Jewellery

457 580 819 41.21

Pearls 19 12 13 8.33

Synthetic

Stones

5 4 4 -

Total 55684 70245 94237 34.15

26

3.4 Role of India in Belgium in Gems and Jewellery market

Forty percent of gems and jewellery in Belgium are imported from India and almost seventy to

eighty percent Indians staying in Belgium are associated with the gems and jewellery trade.

There exists growing trade and investment between the two countries in the face of the global

financial slowdown," an official release quoting Sharma said .Indo-Belgium trade in 2010-11

was USD 14.90 billion. The balance of trade continues to be in favour of Belgium

At present, the trade is dominated by the gems and jewellery sector which accounts for about 61

per cent of the total bilateral commerce. The top sectors of imports from Belgium are pearls,

precious and semi-precious stone, machinery, iron and steel. Diamonds accounts for a large part

of this trade, much of it happens with the city of Antwerp.

India is the 5th largest exporter to Belgium (after USA, China, Japan and Russia) and 2nd

largest

importer of Belgian products in 2010 (after USA).

The growth in exports of gems and jewellery sector has been primarily driven by the Cut &

Polished Diamonds (CPD) segment over the years. CPD exports grew from US$ 7.11 bn in

FY03 to US$ 13.02 bn in FY09. Over the years, the major export markets for the Indian gems

and jewellery sector has been USA, UAE, Hong Kong, Belgium, Israel, Japan Thailand, with US

being the biggest export destination for Indian gems and jewellery. On the import front, Europe

has been the largest importing destination for india followed by Middle East, Oceania and Asia.

The major items of Indian exports to Belgium are - Precious stones; Textiles and garments; Iron

and steel; Chemical products; Mineral products; Organic chemicals; Machinery and Electrical

Equipments etc.

27

The major items of Indian imports from Belgium are- Precious stones; Iron and steel; Machinery

and mechanical appliances; Chemical products; boilers, machinery and mechanical appliances &

parts thereof: Organic chemicals; Plastic and rubber; Plastics and articles thereof; Pharmaceutical

products etc.

Around 2,500 Indian NRIs/PIOs, based in Antwerp mainly from Gujarat are involved in

diamond trade.

28

CHAPTER 4. SWOT ANALYSIS

4.1 SWOT Analysis of Belgium as a Country

Weaknesses

1. Structural Weakness

2. Tax system

3. Budget deficit

4. Low availability of

Natural Resources

5. Dominant power of

Service sector

6. Environmental Issues

Strengths

1. Integrated Economy:-

2. Favorability of

Government:-

3. Developed Infrastructure:-

4. Business Freedom:-

5. Trade Freedom:-

6. Investment Freedom:-

7. Financial Freedom:-

8. Property Rights:-

9. Freedom from corruption

10. Labour Freedom

11. Rank in Health and Primary

Education

12. Better Economy:-

Threats

1. Unstable economy

2. Fiscal threat

3. Anti social activity and

threat from terrorism

4. High tariffs

5. New competitive pressure

6. Claims made by

stakeholders are illegitimate

OPPORTUNITIES

1. Trade from UK

2. Scope in domestic market

3. Job opportunities

4. Scope to develop as being

a member of EU

5. Climate of open trade

29

4.2 Swot Analysis of Diamond Industry in line with Belgium

(Co-related with India)*some points

Weaknesses

1. Licenses:-

2. Lack of Raw Material

Availability:-

Strengths

1. Tradition with having scope to

Develop:-

2. High Innovation in Diamond

Processing in Gujarat with Brand

Advantage:-

3. Historical significance and Home

of the Diamond Industry:-

4. Strong connection between Indian

diamond polishing industry &

Belgium Diamond industry

structure:-

5. Developed Diamond Processing

Industry in Gujarat, getting

trading advantage in Belgium:-

6. Largest Processing capacity

advantageous over higher trading

network:-

7. Developed connecting Network

getting benefit to develop in EU

Countries:-

8. Advantage of largest

manufacturing sector with trading

Advantage:-

9. Getting Advantage of Great

entrepreneurial spirit of Indian

with Great Specialized person in

Belgium:-

10. Lower costs with Competitive

Advantage:-

30

Threats

1.Global competitive threats:-

2. Conflict diamonds:-

3.Effect of global recessionary

trend:-

4. Global economic downturn:-

5. Protected cartel

6. Over dependence on single-

channel supply chain:-

Opportunities

1. Colored diamonds:-

2. Developing Market of India with

having chance to make Growth:-

3. Growth in international market:-

4. Growing Center having

opportunity to get advantage of

leading exporter:-

5. New markets in Europe & Latin

America through establishing

Network in Belgium:-

6. Growing demand in south Asian &

far east countries:-

7. Fancy cut diamonds using

specialized skill of labour:-

8. Roll-over skills and Government

support to develop it:-

9. Network to grow in International

Market:-

10. Employment opportunities with

Government support:-

31

CHAPTER 5 PESTEL ANALYSIS

Belgium is a federal state, consisting of its three language communities that are responsible for

the control of culture and education, and its three regions that are responsible for controlling the

economic development, infrastructure, and environment. In Flanders, the institutions of the

Dutch-speaking community and the Flemish region have merged, leaving the country with six

governments and six parliaments. This complex structure has resulted from the increasing

federalization of the country, which in turn has resulted from the demands.

From the creation of the Belgian state in 1830 and throughout most of the 19th century, two

political parties dominated Belgian politics: the Catholic Party and the Liberal Party. In the late

19th century the Socialist Party arose, representing the emerging industrial working class. These

three groups still dominate Belgian governments, but they have evolved substantially in

character and face new electoral challengers.

5.1 Political parties

The Christian Democratic Parties

After World War II, the Catholic (subsequently Christian Democratic) Party severed its formal

ties with the Church. It became a mass party of the center (more like a political party in the

United States). In 1968, the Christian Democratic Party responded to linguistic tensions in the

country by dividing into two independent parties, now known as the Democratic and Humanist

Center (CDH) in Francophone Wallonia and the Flemish Christian Democrats (CD&V) in

Flanders. The two parties share similar policies, but not on institutional issues. The CD&V is the

country's largest party, while the CDH is among the smaller parties.

32

The Socialist Parties.

The modern Belgian Socialist parties are labor- and city-based parties. Despite the post-World

War II dominance of the Christian Democrats, the Socialists headed several postwar

governments. The Socialists also split along linguistic lines in 1978. The francophone Socialists

dominate the cities and towns of Wallonia's industrial basin. The Flemish Socialists' support is

less concentrated.

The Liberal Parties.

In modern times, the Liberal Parties in Belgium have chiefly appealed to business people,

property owners, shopkeepers, and the self-employed. In American terms, the Liberals' positions

could be considered to reflect a more conservative free market oriented economic ideology. This

non-interventionist ideology is reflected also in the parties' strong support for gay marriage,

homosexual adoption, and euthanasia. The two current Liberal parties were formed in 1971, after

the original all-Belgium Liberal Party split along linguistic lines. They are the Flemish Liberals

and Democrats (Open VLD) in Flanders and the Reform Movement (MR) in Wallonia.

Greens.

The Flemish (Groen!) and Francophone (ECOLO) ecologist parties made their parliamentary

breakthrough in 1981. Following significant gains in the 1999 general elections, the two Green

parties joined a federal coalition cabinet for the first time in their history in Prime Minister

Verhofstadt's first six-party coalition government. The parties experienced significant losses in

the May 2003 election, however, with ECOLO winning only four seats in the Chamber and

AGALEV failing to win any seats. They were thus excluded from the new coalition formed by

returning Liberal Prime Minister Verhofstadt in 2003. Following the election, AGALEV

changed its name to "Groen!." The two parties made a slight recovery in the 2007 general

elections and even better in the 2010 general elections.

33

The Linguistic Parties.

A postwar phenomenon in Belgium was the emergence of linguistic-based parties, which were

formed to defend the cultural, political, and economic interests of one of the linguistic groups or

regions of belgion society.

The far-right Vlaams Belang (Flemish Interest) is the most militant Flemish regional party, with

a separatist, anti-immigration, law and order platform. The Vlaams Belang was formerly called

the Vlaams Blok, until a 2004 high court ruling confirmed a lower court verdict that the Blok

was a "racist" party. Faced with further legal problems, the Blok disbanded and resurrected itself

as the Vlaams Belang, with the same party leaders and basically the same radical party policy.

The Vlaams Belang was the second most popular party in the 2007 general elections, with 19%

of the Flemish vote. The party‘s support fell to 7.76% in 2010, as voters in Flanders turned to the

more moderate and pragmatic new Flemish allince.

In Brussels and Wallonia, the small far-right Front National (FN) managed to hold on to its only

House seat in the 2007 general elections but lost it in the 2010 general elections.

5.2 Economical factors

Central bank:- National Bank of Belgium . Belgium is part of the Euro system and the

European Central Bank

International Reserves:- US$ 27.225 billion (Source: IMF; Data updated: November 2010)

GDP : US$ 499.397 billion (2010 estimate).

GDP (Purchasing Power Parity):- 405.47 billion of International dollars (2010 estimate)

34

Real GDP growth: GDP (PPP) - share of world total

2005 2% 1980 0.85%

2006 2.7% 1990 0.76%

2007 2.8% 2000 0.66%

2008 0.8% 2010 0.53%

2009 -2.7% 2015** 0.47%

2010 2%

2011* 1.7%

GDP per capita - current price:- US$ 45,367 (2009 estimate)

GDP per capita PPP:- $36,834 International Dollars (2009 estimate)

GDP - composition by sector:- Agriculture: 0.6%

Industry: 22%

Services: 77.4% (2009 estimate)

Gross domestic expenditure on R&D (% of GDP):- 1.92% (2008)

Inflation rate:- Unemployment rate:-

2008 4.5% 2008 7%

2009 0% 2009 8%

2010 2.3% 2010 8.4%

2011* 2.9% 2011* 8.4%

35

5.3 Socio-Cultural Factors

Geographically and culturally, Belgium is at a crossroads of Europe, and during the past 2,000

years has witnessed a constant ebb and flow of different races and cultures. Consequently,

Belgium is one of Europe's true melting pots with Celtic, Roman, Germanic, French, Dutch,

Spanish, and Austrian cultures having made an imprint.

Belgium is divided ethnically into the Dutch-speaking Flemings and French-speaking Walloons,

the 75,000 residents of the eastern German cantons, and the bilingual capital of Brussels. The

population density is the second highest in Europe, after the Netherlands.

The majority of business people speak English and are highly-educated, desiring to be both

straightforward and well-informed. However, efforts to speak a native language (Dutch or

French) are always welcomed.

Belgian culture is more formal than Canadian culture, with Belgians being formal and courteous

in their business transactions. Titles are often used, while addressing business contacts by first

name is not very common unless they are well-known.

Similarly, business attire is formal and handshakes are a common way of greeting. However,

establishing a personal relationship is not a necessary prerequisite for starting business

dealings/relationships. Punctuality and deadlines are expected to be respected.

Evolving consumer demands combined with increasingly powerful retailers are resulting in more

interest in developing long-term partnerships. Due to a competitive marketplace and

sophisticated consumer market, importers are interested in value-added products that have

unique, innovative and healthy attributes.

36

5.4 Technological factors

Product category

Product

Manufacturing: Octopus: pre polishing and polishing equipment

Pendragon : polishing mill

Balancer: to become a perfect equilibrated scaife

EOS: new type of girdling machine

Solid: three dimensional laser

Examination: D-Scope: diamond microscope

G-Scope: gemmological microscope

D-Screen: compact screening device

Merlin: rough scanner and marker

Avalon: smoothness tester

Avalight: smoothness tester on the D-Scope

Source:

http://www.comdiam.com/frame.htm

37

5.5 Ecological factors

Today most modern diamond mines are managed to the ISO 14001 standards of environmental

management, and the major companies have a policy of regularly publishing reports on their

environmental performance. Many of the major diamond mining companies go beyond the ISO

14001 standard and use Environmental Impact Assessments and Social Impact Assessments to

identify the environmental and social impacts of mines as well as to identify gaps at their

operations.

The environmental impact of the land exploration involved in diamond mining is minimized in

several ways:

Vehicle tracks are reused

Minimal amounts of soil are cleared during drilling and sampling

Topsoil from exploration sites is refilled and replace

Energy efficiency and renewable energy programmes are widely used across the diamond mining

industry. Emission levels are monitored through energy and carbon emission assessments.

Mines have reduced their energy use by introducing a range of schemes: installing timers on

boilers, shutting off pressurised fans over weekends, running mud pumps in off-peak periods and

introducing battery-powered vehicles that do not emit harmful gases.

Furthermore, solar panels and energy-saving schemes have reduced the amount of electricity

used at mines.

38

5.6 Legal and government factors

National Government

Belgium is a hereditary constitutional monarchy. The current monarch is King Albert II, who

took the oath of office on August 9, 1993.

As titular head of state, the King plays a largely ceremonial and symbolic role in the nation. His

primary political function is to designate a political leader to attempt to form a new cabinet

following either an election, the resignation of a government, or a parliamentary vote of no

confidence. The King is seen as playing a symbolic unifying role, representing a common

national Belgian identity.

The Belgian Parliament consists of a Senate and a House of Representatives. The House of

Representatives has 150 directly elected members. The Senate has 71 members. The executive

branch of the government consists of ministers and secretaries of state (junior ministers) drawn

from the political parties that form the government coalition. The number of ministers is limited

to 15, and they have no seat in Parliament. The Council of Ministers is chaired by the Prime

Minister and consists of the ministerial heads of the executive departments.

The allocation of powers between the Parliament and the Council of Ministers is somewhat

similar to the United States--the Parliament enacts legislation and appropriates funds--but the

Belgian Parliament does not have the same degree of independent power that the U.S. Congress

has. Members of political parties represented in the government are expected to support all bills

presented by the Cabinet. The House of Representatives is the "political" body that votes on

motions of confidence and budgets. The Senate deals with long-term issues and votes on an

equal footing with the Chamber on a limited range of matters, including constitutional reform

bills and international treaties.

39

5.7 Government

Type: Parliamentary democracy under a constitutional monarch.

Independence: 1830.

Constitution: 1994 (revised).

Branches: Executive--King (head of state), Prime Minister (head of government),

Council of Ministers (cabinet).

Legislative--bicameral parliament (Senate and House of Representatives).

Major political parties: Christian Democratic, Liberal, Socialist, Green, Flemish

Nationalists, Vlaams Belang (Flemish extreme right).

Political subdivisions: Ten provinces, three regions, three communities, 589

municipalities.

40

CHAPTER 6 NATION ADVANTAGE OF COMPETITIVE

ADVANTAGE (PORTER DIAMOND MODEL)

Figure: 6.1 Porter Diamond Model

41

Table: 6.1 Porter Diamond Model Analysis

Sr.

No

Component Favorable/

Unfavorable

Description

1 Factor Conditions Favorable Labors, Resource and Material

availability

2 Demand Conditions Favorable Rising demand for polished, rough

diamonds from developed as well

as developing countries.

3 Related and Supporting

Industries

Favorable Gem quality diamonds are usually

distributed to one of the main

diamond cutting and trading

centers in Antwerp, Mumbai, Tel

Aviv, New York, China, Thailand

or Johannesburg.

4 Firm Strategy, Structure, and

Rivalry

Favorable Associations are formed of

diamond traders

5 Government's Role Favorable Government‘s main focus is on

diamond segment as Antwerp is the

only trading hub for diamonds.

6 Chances

Unfavorable Less chances has happened in past

regarding any natural calamities.

Only Diamond conflict has arise

the certain issues for diamond

traders.

42

CHAPTER 7 Belgium Various Export and Import items and its

Partners

Table 7.1 Imported Commodities and partners

Main Exports:

Machinery and equipment, chemicals, finished diamonds, metals and metal products,

Foodstuffs

Main Imports:

Raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals,

Foodstuffs, transportation equipment, oil products.

The various imported

commodities are:

The various Belgium

import partners are:

Raw materials Netherlands

Machinery

& equipment

Germany

Chemicals France

Raw diamonds UK

Pharmaceuticals US

Foodstuffs China

Transportation

equipment

Oil product

43

Table: 7.2 Principal trading partners (in millions of US dollars) were as follows:

Source: - Foreign trade - Belgium - export

As raw materials and natural resources are not sufficient, the balance of trade is usually towards

imports and thus there is always some trade deficit in Belgium.

According to the 2009 estimates, Belgium had an export volume of $296.1 billion and ranked

13th

in the world. This, however, showed a tremendous drop from the 2008 figures, which shone

bright at $371.5 billion.

COUNTRY EXPORTS IMPORTS BALANCE

France 32,487 21,659 10,828

Germany 30,964 28,136 2,828

Netherlands 23,146 29,893 -6,747

United Kingdom 18,400 14,563 3,837

United States 10,953 12,893 -1,940

Italy 10,184 6,746 3,438

Spain 6,683 3,109 3,529

Luxembourg 3,720 977 2,743

India 3,193 1,593 1,600

Israel 3,497 1,487 2,010

44

CHAPTER 8 BELGIUM’S TRADE AT INTERNATIONAL

LEVEL AND WITH INDIA AND GUJARAT

8.1 Belgium - International trade

Belgium's economy is dependent on international trade. From year-to-year, foreign trade

accounts for approximately 70 percent of the nation's economy. This makes Belgium particularly

sensitive to disruptions in global trade. Recessions or other economic problems around the world

often cause reciprocal problems in Belgium's economy. Fortunately, the kingdom has a variety of

trade partners so that problems in one export market are mitigated by export diversity. For

instance, since companies were able to shift exports to other markets, Asia's economic problems

in the late 1990s had little significant impact on Belgium.

The nation's main trade partners are in the EU. In fact, in 1998 some 76 percent of Belgium's

exports went to nations in the EU. In that year, the main export market for Belgian goods was

Germany (19 percent), followed closely by France (18 percent), the Netherlands (12 percent),

and the United Kingdom (10 percent). Most of Belgium's imports also came from the EU that

provided (71 percent) of the kingdom's imported products. Germany was the main exporter to

Belgium and provided (18 percent) of goods, while the Netherlands provided (17 percent),

France (14 percent), and the United Kingdom (9 percent). Total foreign investment in Belgium is

$68.1 billion. The Netherlands is the principal source of foreign investment (21.9 percent),

followed by Germany (17.1 percent), France (16 percent), and the United States (11 percent).

The United States is a major trading partner of Belgium. The kingdom is the ninth largest trading

partner of the United States. In 1999, the United States exported $11.3 billion to Belgium. About

half of Belgium's imports from the United States are processed and re-exported to other markets.

The kingdom is home to 1,300 U.S. companies. American investment in Belgium totals $18.9

billion. The majority of this investment is concentrated manufacturing ($8.969 billion), services

($5.262 billion), and wholesaling ($2.716 billion). Belgium also has significant investments in

45

the United States that total $6.7 billion. The majority of these investments are in manufacturing

($2.6 billion), petroleum ($1.265 billion), and retail ($882 million).

Goods and products from EU nations enter Belgium without any tariffs or duties. However,

goods from nations outside of the EU face import duties and a value-added tax (VAT).

Depending on the product, these taxes amount to an average of 5-6 percent of the total value of

the product. Consequently, many goods from outside of the EU face a price disadvantage.

Table 8.1 Belgium‘s Balance of Trade:

Source: www.tradingeconomics.com

46

Belgium reported a trade surplus equivalent to 1101 Million EUR in September of 2011. Foreign

trade accounts for approximately 70 percent of the Belgium's economy. About 80% of Belgium's

trade is with fellow EU member states. The major export commodity in Belgium is the

automobile, medicament mixtures put in dosage, not mounted or set diamonds. Belgium imports

mainly machinery and equipment, chemicals, diamonds, pharmaceuticals, foodstuffs,

transportation equipment and oil products. This page includes: Belgium Balance of Trade chart,

historical data and news.

8.2 India-Belgium Relations

Diplomatic relations between India and Belgium were established in 1948 and our bilateral

relations are cordial and friendly. In recent times, Belgium has acknowledged the growing

importance of Asia and has emphasized the value of strengthening economic relations with India.

8.3 Bilateral Trade

Belgium is the third largest trading partner of India in the European Union with annual bilateral

trade turnover amounting Euro 7.1 billion in 2009. India is the13th largest exporter to Belgium

and 9th largest importer of Belgian products. The major items of Indian exports to Belgium are-

Natural/cultured pearls, Precious stones and metals; Textiles and articles; Base metals; Iron and

steel; Chemical products; Articles of apparel and clothing accessories; Articles of apparel and

clothing accessories; Mineral products; Organic chemicals; Machinery and Electrical

Equipments etc. The major items of Indian imports from Belgium are- Natural/cultured pearls;

Precious stones and metals; Base metals; Iron and steel; Machinery and mechanical appliances;

Chemical products; boilers, machinery and mechanical appliances & parts thereof: Organic

chemicals; Plastic and rubber; Plastics and articles thereof; Pharmaceutical products etc.

The bilateral trade between India and Belgium between 2004 and 2009 has increased by 11%

growing from 6.4 billion euro in 2004 to 7.1 billion euro in 2009. Indian exports to Belgium

increased by 18%, from 2.2 billion Euro in 2004 to 2.6 billion Euro in 2009. Indian imports from

47

Belgium on the other hand increased by 7% during the same period, growing from 4.2 billion

Euro in 2004 to 4.5 billion Euro in 2009.

8.4 Trade and Economic links between India and Belgium

Belgium is currently India‘s third most important trading partner within the European Union

(EU), preceded only by Germany and the United Kingdom (UK). Total bilateral import and

export exceeded Euro 8.7 billion in 2008. There are close to 150 Belgian enterprises formally

established in India and several of the most distinguished, international Indian companies are

active in Belgium. These include Tata Consultancy Services (TCS), HCL, NIIT, Jet Airways,

Jubilant Organosys, Crompton Greaves and Raymond, among others.

Bilateral economic relations are framed by several agreements between India and Belgium.

These include a double taxation treaty, a bilateral investment treaty, a cooperation agreement in

the area of science and technology and various transport agreements. A bilateral social security

agreement between Belgium and India entered into force on September 1, 2009. Belgium is the

first nation to have entered into such an agreement with India.

8.5 An Agreements Were Signed Between Belgian and India

―The Indo-Belgian signing ceremonies hold special significance in light of the rapid economic

development in India. It clearly indicates the interest and commitment of Belgian companies to

work in partnership with their Indian counterparts across diverse sectors to further collaboration,

learning and growth‖, said Deputy Prime Minister, Minister of Foreign Affairs and Foreign

Trade of Belgium, Steven Vanackere.

The agreements signed as on (22th Nov, 2011) includes:

Tractebel Engineering with GAIL India

Eurostation and Immo Star Ltd with RITES

Dredging International (International Seaports Dredging Ltd) with Kakinada Seaports Ltd

Sarens with Larsen and Toubro Ltd.

48

Soudal with McCoy Silicones

ZingaMetall and John Galt with Vestas Hose Division Pvt. Ltd.

Belgium Luxembourg Business Association (BLBA), established in New Delhi with

Belgo-Indian Chamber of Commerce industry (BCCI) with its base in Brussels

AWEX will sign a letter of Intent with New Ventures India and one with the Foundation

of Innovation and Technology Transfer of the Indian Institute of Technology (IIT)

Port of Antwerp and Port of Mumbai.

8.6 Cultural Cooperation

India has a Cultural Agreement with Belgium. Cultural exchange and cooperation takes place on

a regular basis between the two countries. Belgium has not forgotten the sacrifices made by

thousands of Indian soldiers in Flanders during World War I. To commemorate their memory,

an Indian Memorial Pillar has been installed along side the Menin Gate in Ieper, where

ceremonies are organized along side the main Armistice Day celebrations on November 10/11

every year.

The Indian Council for Cultural Relations (ICCR) in association with the Centre for Fine Arts

(BOZAR) organized an India Festival from October 2006- January 2007. The festival included,

inter alia, art, theatre, musical and dance performances, fashion shows and a food festival.

8.7 Indian community in Belgium

According to the information received from the local Government the total number of Indians

upto 2006 were around 16,132 out of which 10,000 Indian nationals have obtained Belgian

citizenship and remaining 6000 are involved in various economic activities. Around 2,500

Indian NRIs/PIOs, based in Antwerp mainly from Gujarat are involved in diamond trade. Their

contribution to the trade and commerce of Belgium is widely acknowledged by the Belgian

leadership. The proposal for dual nationality for Belgian PIOs/NRIs has been agreed to by

49

GOI. There are around 500-1000 Indian students pursuing studies in educational institutions of

Belgium.

8.8 India’s Exports and Imports to EU

TABLE 8.2 India‘s Exports to EU

Source: Computed from the data from ‘ India’s Exports by countries –Commodities; DGFT, Government of India, Ministry of Commerce, Various Issues from 2001 to 2005

50

Table 8.3 India‘s Imports from EU

Source: Computed from the data from ‘ India’s import by countries –Commodities ;DGFT, Government of India, Ministry of

Commerce, Various Issues from 2001 to 2005

51

Table: 8.4 Belgium-India total export and import in value for last 5 years:

S.No. \Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

1. EXPORT 3,478.18 4,207.08 4,480.32 3,759.26 6,296.21

2. %Growth 20.96 6.49 -16.09 67.49

3. India's Total Export 126,414.05 163,132.18 185,295.36 178,751.43 251,135.89

4. %Growth 29.05 13.59 -3.53 40.49

5. %Share 2.75 2.58 2.42 2.10 2.51

6. IMPORT 4,146.19 4,349.93 5,776.77 6,019.20 8,609.82

7. %Growth 4.91 32.80 4.20 43.04

8. India's Total Import 185,735.24 251,654.01 303,696.31 288,372.88 369,769.13

9. %Growth 35.49 20.68 -5.05 28.23

10. %Share 2.23 1.73 1.90 2.09 2.33

11. TOTAL TRADE 7,624.36 8,557.01 10,257.09 9,778.46 14,906.02

12. %Growth 12.23 19.87 -4.67 52.44

13. India's Total Trade 312,149.29 414,786.19 488,991.67 467,124.31 620,905.02

14. %Growth 32.88 17.89 -4.47 32.92

15. %Share 2.44 2.06 2.10 2.09 2.40

16. TRADE

BALANCE

17. India's Trade

Balance

-59,321.19 -88,521.83 -118,400.95 -109,621.45 -118,633.24

52

TABLE 8.5: India‘s Country wise Export

53

TABLE 8.6 India‘s Country wise Import

54

Figure: 8.1 Trade Balance Fluctuations of Belgium since 1990-2011

Source: TULLI customs

Interpretation:

Both Exports and imports have fluctuating trend over 20 years. At initial years exports

and imports having balance,then Exports was higher than imports at 1992 to 2010 then

Exports of the Europen union has been declined so trade balance shows negative 4 billion

dollar.

55

Figure: 8.2 Monthly Import-Export and Trade Balance 2007-2011

Interpretation:

As compare to 2007, in 2011 export has been declined, approximately 10% has

been declined so trade balance in also declining and show negative trade balance.

Duration of 2008-2010 both Imports and Exports declining so trade balance have not

much impact.

56

CHAPTER 9 VALUE CHAIN OF THE SECTOR

9.1 Value Chain - Diamonds

Diamonds pass through a series of processes before they are finally sold in the retail market. The

value chain of diamonds begins with exploration of diamonds from mines and is followed by

processing, manufacturing, whole selling and retailing.

Mining

There are very few commercially-viable diamond mines operating in the world currently.

Diamonds are sourced through three ways, open pit mining, underground mining and extraction

from alluvial deposits. The rough diamonds that are sought from mining are then sorted in

different categories according to the quality, shape, colour, and size. The diamonds that are not

good in quality are used for industrial purposes and the good quality diamonds are sent for

further processing.

Processing

Processing is the next and the most important step as the greatest value addition takes place at

this stage. Diamonds are sorted, graded, and valued at this step and then sent for further

processing. Not all countries that produce diamonds also process it. The sorted and graded

diamonds are sent to the cutting and polishing centres such as Antwerp (particularly high-value

diamonds), Tel Aviv, Israel (for medium-value diamonds), India (for low value diamonds),

China, Johannesburg, New York and Thailand. These processed diamonds are then exported or

sold in domestic markets as finished diamonds or as diamond-studded jewellery.

Manufacturing and Retailing

Once the diamonds are processed, they are then sold to manufacturers directly or through

registered diamond exchanges. Much of the value addition is done at this stage, as the diamonds

are converted into jewellery. Jewellery making has high margins and therefore, many cutting and

polishing centres across the globe are aiming to move up the value chain to gain maximum

57

revenue. The jewellery that is manufactured from the diamonds is sold either through a

wholesaler or directly in the retail market, domestically or internationally.

India is not a major miner of precious metals and stones such as diamonds but it is the largest

processor of diamonds in the world owing to its skilled labour and low cost of processing.

Figure: 9.1 Value Chain of Diamonds and Gold

Value Chain – Gold

South Africa is the largest producer of gold in the world. Gold mining, the process of mining

gold out of the earth, is done through the following methods: hard rock mining, gold ore

processing, placer mining and by-product gold mining. The gold that is extracted from mines is

in impure form, and it is obtained in its purest form through a series of chemical processes called

refining. The gold that is refined is converted into cast bars/gold bars through fabrication. The

58

fabricated gold is then used for either making jewellery or for making coins, industrial products

and dental products — jewellery fabrication garners the highest share among the value chain

activities. The gold jewellery is then sold in the retail outlets in domestic as well as international

markets.

9.2 MARKET STRUCTURE OF THE GEMS AND JEWELLERY SECTOR

Major Production Clusters

The centre of the trade in India's Gems and Jewellery 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. The Gems and Jewellery clusters in Gujarat are as

shown in the following figure.

Figure 9.2 Gems & Jewellery Clusters in Gujarat

Gujarat alone accounts for an estimated 80% of the diamonds processed in India. Of this, 90%

are processed by diamond units located in and around Surat alone. The rest of the

59

diamond units are located in Ahmedabad, Palanpur, Khambhat, Rajkot, Bhavnagar, Valsad and

Navsari.

The diamond processing industry has spread from Gujarat to other states. Many diamond

processing units have been set up in Mumbai in Maharashtra. There are also jewellery units in

Trishur in Kerala, Coimbatore in Tamil Nadu, Jaipur in Rajasthan, and Goa. Mumbai

continues to be the main diamond trading centre of India accounting for the dispatch of 93%

of diamond exports.

Major Players

A brief profile of major players in the Indian Gems and Jewellery Industry is as below:

• Rajesh Exports Limited

• Gitanjali Group

• Su-Raj Diamonds & Jewellery Ltd.

• Suashish Diamonds Ltd.

• Shrenuj & Co. Ltd.

• Tanishq

• Hindustan Diamond Co. Pvt. Ltd.

• Vaibhav Gems Ltd

60

9.3 Major Export Markets

Figure 9.3 Destination wise exports of gems and jewellery

The destination-wise share of exports of gold jewellery from India is as below. The total

value of exports of gold jewellery was $28.25 billion in the year 2011. Exports to USA

and UAE alone account for about 58% of the exports of gold jewellery from India.

9.4 COMPETITIVE MARKETS OVERVIEW WITH INDIA

The gems and jewellery sector can be categorised into the following sub-sectors based

on characteristics, processing techniques, preciousness in terms of price range and

marketability.

• Gemstones -Diamonds and colored stones (precious, semi-precious and synthetic)

• Jewellery- Plain Gold, Studded, Silver, Costume

• Pearls - The global market for gems and jewellery today is pegged at US$ 85 billion

with key markets having registered an average compounded annual growth rate (CAGR)

of 5-10 per cent in the last decade.

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The global market for Gold is estimated at 3300 tones. South Africa is the world's largest

producer of gold, followed by U.S.A and Australia. Together, these countries account for

45 per cent of the world's total gold production. India is the largest consumer of gold,

followed by the U.S.A.

In the production of Silver, the Americas have near monopoly - Mexico, Peru and the

United States are the top three silver producing countries. Platinum is an extremely rare

precious metal. More than 90 per cent of all platinum supplies come from South Africa

and Russia. With increased economic development, the demand for the metal has grown

at a faster pace than it is being mined. The United States is the world's leading

consumer of platinum overall, while China has emerged as the leading consumer of

platinum jewellery.

Jewellery manufacturing is traditionally dominated by players from 3-4 countries.

1. United States

• While a growing number of American manufacturers export their goods around the

world, the sheer size of the domestic market keeps a large portion of the goods at home.

2. Italy

• World‘s largest producer of fine jewellery, with about 8,200 factories annually

Producing an estimated US$ 6.4 billion worth.

• Italy‘s strength lies in plain gold jewellery.

3. Thailand

• Major global supplier of quality jewellery over the last two decades.

4. Hong Kong/China

• Produces a substantial portion of the world jewellery market·

• Thailand‘s strength is in gemstone jewellery

• China and Hong Kong are strong in both gold and studded jewellery

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Over the years, global markets have been impacted by several developments like falling

trade barriers, increasing competition, changing customer preferences and developments in

technology in several areas. The global jewellery industry is being transformed by a few

key trends such as:

• Increasing competition among top producing countries.

• Emergence of different materials - different alloys within gold, as well as

Non-gold jewellery.

• Emergence of new manufacturing techniques.

• Requirement of stricter quality norms and hallmarking.

In this context, India is fast emerging as a leading destination for jewellery

manufacturing in the world. The following sections discuss India's gems and jewellery

sector in detail with a specific focus on the following areas:

• Significance of India within the global gems and jewellery sector

• The structure and current scenario of the sector in India

• India's competitive advantages in the sector

• Future outlook

9.5 India is a leading player in the global gems and jewellery market

The gems and jewellery industry occupies an important position in the Indian economy.

It is a leading foreign exchange earner and also one of the fastest growing industries in

the country.

The two major segments of the sector in India are gold jewellery and diamonds. Gold

jewellery forms around 80 per cent of the Indian jewellery market, with the balance

comprising fabricated studded jewellery that includes diamond studded as well as

gemstone studded jewellery. A predominant portion of gold jewellery manufactured in

India is consumed in the domestic market. In diamonds, however, a major portion of

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rough, uncut diamonds processed in India is exported, either in the form of polished

diamonds or finished diamond jewellery.

Besides being the largest consumer of gold, India is also the leading diamond- cutting

nation in the world.

Table 9.1 India Gems & Jewellery Industry-Highlights

India Gems & Jewellery Industry - Highlights

Jewellery market size - US$ 13 billion

Diamond jewellery

- US$ 1.2 billion

Gold jewellery market growth year on year 15%

Diamond jewellery market growth

27%

The Indian gems and jewellery industry is competitive in the world market due to its

low cost of production and availability of skilled labour. In addition, the industry has a

worldwide distribution network, which has been established over a period of time. India

has set up more than 3,000 offices worldwide for promotion and marketing of Indian

diamonds.

The Indian diamond industry has acquired leadership position in cutting and polishing of

rough diamonds. India has the world's largest cutting and polishing industry, employing

around 800,000 people (constituting 94 per cent of global workers) with more than 500

hi-tech laser machines. The industry is well supported by government policies and the

banking sector - around 50 banks provide nearly US$ 3 billion credit to Indian diamond

industry. India is expected to have its diamond bourse functioning at Mumbai in 2006.

India is therefore a significant player in the world gems and jewellery market both as a

source of processed diamonds as well as a large consuming market.

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The sector is largely unorganised at present with a small but growing organised sector:

The Indian gems and jewellery sector is largely unorganized at present. There are over

15000 players across the country in the gold processing industry, of which only about

80 players have a turnover of over US$ 4.15 million (Rs 200 million). There are about

450,000 goldsmiths spread throughout the country. India was one of the first countries to

start making fine jewellery from minerals and metals and even today, most of the

jewellery made in India is handmade.

Figure 9.4 Share of India‘s Gem & Jewellery Sector

The industry is dominated by family jewelers, who constitute nearly 96 per cent of the

market. Organized players such as Tata with its Tanishq brand, have, however, been

growing steadily carving a 4 per cent market share. As India's jewellery market matures,

it is expected to get more organized and the share of family jewelers is expected to

decline.

There are more than 6000 players in domestic diamond processing industry. The average

gestation period for setting up a diamond cutting and polishing unit is 15 months. The

low gestation period, coupled with low capital cost allows easy entry into the sector.

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This has led to the industry being largely characterized by a large number of small scale

players. However, just as in the case of jewellery, the share of the organized sector has

increased significantly in recent years due to an increase in demand for better and finer

quality finished goods.

Figure 9.5 Comparative position of India in Global Gems & Jewellery Sector

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

jewellery market, at 27 per cent per annum.

The emergence of branded jewellery is a new trend that is shaping the Indian jewellery

market Branded jewellery is a relatively new concept in the sector, and has positioned

itself on the quality, reliability and wear ability factors. The branded jewellery market in

India is estimated at US$ 111.6 million per annum. Trends also show that traditional

handcrafted jewellery is slowly giving way to machine-made jewellery.

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9.6 Competitive Advantage

India

India boasts of around 450,000 goldsmiths, 100,000 gold jewelers, 6,000 diamond

processing players and 8,000 diamond jewelers

Low-cost destination

Largest consumer of gold in the world – around 20 percent of the global consumption

Largest diamond cutting and polishing centre in the world - nearly 9 out of 10 diamonds

sold worldwide are cut and polished in India Dedicated SEZ‘s for Gems and Jewellery

sector.

Government Incentives

Rough colored precious gems stones are exempt from customs duty

Duty-free import of consumables for metals other than gold and platinum, up to 2 percent

of freight on board value of exports

Import of gold of 18 carat and above under the replenishment scheme

No import duty on polished diamonds

Export of colored gemstones on a consignment basis has been allowed

Interest subvention of 2 percent on pre-shipment credit extended to March 2010

Excise duty on branded jewellery to be reduced from 2 percent to Nil Customs duty on

unworked Corals to be reduced from 5 percent to Nil

EU

Proximity to Western Markets

Design and technological expertise, for instance, Italy is known for its strength in design

and use of advanced equipments and machineries

Antwerp in Belgium is known as the trading hub for diamonds.

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Government Incentives

The European Union has reduced tariffs on gems and jewellery originating from India

under its Generalised System of Preferences (GSP), which has been extended for the

period from January 5 1, 2009 until the end of 2011

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CHAPTER 10 DEMAND DRIVERS OF THE GEMS AND

JEWELLERY SECTOR

10.1 Demand drivers of the Jewellery Segment

The demand drivers for the jewellery fabrication segment are as below:

Figure 10.1: Demand drivers for the gems and jewellery sector

Continuous traditional demand: Jewellery is an important constituent of the Indian culture.

Traditionally in India, the demand for gold and diamond jewellery is driven by festivals and

weddings and there is remarkable historical and religious significance too. India is also the

largest consumer of gold in the world. In marriages, gold jewellery is the gift preferred by the

near relatives of the bride and the groom. 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. Given the Indian culture, this stream of demand is thus

continuous and is only expected to rise going ahead.

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Important savings and investment vehicle: Apart from its religious and social significance,

gold is valued as an important savings and investment vehicle in India, and is the

second preferred investment behind bank deposits. This can also be attributed to the fact that

gold is highly portable, holds its value well in times of uncertainty and can be easily converted to

cash either through sale or for guarantying loans. Further, the emergence of use of jewellery as a

fashion statement as well as for daily use and gifting has fuelled demand growth in the Gems and

Jewellery sector. Apart from this, the increasing share of diamond jewellery is explained below.

10.2. Demand drivers of Diamond Jewellery

The demand drivers for the diamond processing and jewellery sector are as below:

Figure 10.2 Demand drivers for diamond jewellery

Increasing acceptability of diamond jewellery in the domestic market:

Traditionally, jewellery in India has mainly been gold jewellery. Diamond jewellery is lesser

accepted in India due to factors such as myths associated with diamonds being unlucky in

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certain instances and the higher cost of diamonds. This is now changing with an increased

acceptance of diamond jewellery in the domestic market.

Diamond as a fashion statement for the affluent: Diamond jewellery is increasingly serving as

a fashion statement for the affluent to differentiate themselves from others wearing

traditional jewellery/gold jewellery.

Increasing affordability: Employment of women in the workforce has been increasing due to

the changing mindsets and increasing education levels among women. This has resulted in

women having more impact on the purchase decisions; and women having also started

purchasing jewellery for themselves as against earlier trends of jewellery purchase being

primarily a family decision. Increased disposable income for working couples and lifestyle

changes have aided this.

Exports as a driver: As seen earlier, exports have been growing year-on-year and the 5 year

CAGR (2002-03 to 2007-08) is about 13%. India currently produces around 95% of the world's

cut and polished diamond pieces. By carat weight, India is estimated to process 80% of world

rough production by volume and 58% by value. India is also now increasing its presence in the

larger diamonds space. Value addition from processing to jewellery: Though India

processes a large number of diamonds, most of them are re-exported after polishing. There

exists scope to increase value addition through setting into jewellery (jewellery fabrication).

10.3 Drivers of competitiveness of the Gems and Jewellery Sector

Industry standards, certification, and hallmarking: By and large, the Gems and Jewellery

industry in India has been indifferent to the adoption and establishment of formal or informal

industry standards. However, as the industry has grown and more and more businesses have

started transacting on a global basis, a need has arisen for establishing standards. However, in

India, one of the largest markets for precious jewellery, quality standards are conspicuous by

their absence. Hallmarking is restricted to a minor portion of sales, with the bulk of the

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consumers unaware of the exact cartage of the jewellery they buy. It is expected that the

industry will see an increasing level of adoption of hallmarking in gold and certification in

gemstones and this is critical to its competitiveness.

Processing of larger size diamonds: The Indian Gems and Jeweler industry has been built on

polishing lower size and quality stones. Looking forward, since India already enjoys

domination in the world CPD market in general, and for smaller-sized diamonds in particular, the

scope for significant increase in market share and growth in the traditional small-size

diamond exports is limited. Industry leaders are now seeking further growth through

processing of larger size stones, and manufacture of diamond jewellery. Indian industry can now

increasingly process the full range of sizes and qualities of stones utilizing not only a cheap

and abundant workforce, but also advanced technologies. Future growth is likely to be largely

driven by the cutting and polishing of medium and large stones (currently dominated by

Belgium and Israel), with consequently higher unit realizations. The Indian Gems and

Jewellery GJ industry is already reporting increased growth in the larger-size segment. Export

data from the GJEPC also reports a gradual shift in Indian exports to higher value segments,

reflected in higher per carat realizations. Larger-sizes command higher per carat realizations and

profits.

Availability of labour at competitive wages: Labour is a critical component in the value chain

of the Gems and Jewellery sector. Labour in India, as compared to other countries, is cheap, and

India thus stands at an advantage over its global competitors in this industry. Availability of

skilled manpower is a key strength that has enabled growth in India's Gems and Jewellery sector.

India has a large pool of skilled artisans with vast traditional knowledge and expertise in

jewellery making. It also has the largest resource pool in diamond cutting and processing. India

also has a good blend of technically trained designers who are well-versed in latest 2D and 3D

design software. India also has one of the lowest costs in diamond cutting.

Government Support: The Indian Government has supported the Indian Gems and Jewellery

sector with policies such as waiver of customs duties on the import of rough diamonds,

permission for personal carriage of jewellery through Hyderabad and Jaipur Airport as well, in

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addition to Delhi, Mumbai, Kolkatta, Chenai and Bangalore, establishment of Gems and

Jewellery SEZs, etc. This continued support is critical to the competitiveness of this industry.

10.4 Key Success Factors and Risk Factors of the Gems and Jewellery sector

Key Success Factors

Movement from unbranded to branded jewellery and increase in fashion dictated buying:

Over 90% of the jewellery sold in India, is mainly sold by traditional '"family jewellers'" and the

unorganized sector contributes to about 96% of the total jewellery sales in the country. Thus,

currently the Indian market remains highly fragmented. This scenario is seen to be

changing, though slowly, with the entry of players such as Tanishq and Gitanjali, and

the trend of supermarkets like Lifestyle and Shoppers Stop having jewellery outlets.

Hallmarking and Certification: Increasing consumer awareness and need for certification by

BIS and hallmarking have served as a means for firms to differentiate themselves in the

market.

Increased use of technology: The Gems and Jewellery business had traditionally involved a

large content of manual labour. Though this still remains the case, a greater use of technology is

seen in this industry. For example, factories have started using more machine-made

designs, laser soldering is replacing manual soldering, investments in modern manufacturing and

quality systems is increasing, etc.

Transformation from family owned businesses to professionally managed businesses:

Traditionally in India, the majority of India's diamond workforce is employed by small units that

process diamonds on a job-lot basis. At the low-end, family units processes diamonds make

jewellery. Even at the retail end of the value chain, people in India generally buy

jewellery from their 'family jewellers'. This structure makes it less possible to bring in

professionalism into the industry, which will be key going ahead given the threats from other

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diamond processing/jewellery making nations. Thus for firms in the Indian Gems and

Jewellery sector to prosper, a transformation from family owned businesses to professionally

managed businesses is critical.

Key Risk Factors

Limited Standardization: In India, jewellery consumption is primarily of gold. The bulk of the

Indian jewellery buying is still rooted in tradition, and jewellery is sold in traditional

designs. Gold jewellery is also bought as an investment. In the present system of selling gold

jewelerry in India, the purity may or may not be standard and the buyer can lose - cheating on

caratage (and purity) is widespread.

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 reasons like

the cheap and disciplined labor force, significant increase in potential consumers in the

high- income segment within the country and the steadily improving quality of

Chinese workmanship. Technology is another area where the Indian industry faces a long-term

threat from China.

Threat from Polishing in Producing Nations: The preference for polishing diamonds in the

producing countries has been seen to be growing. There has been increased political pressure by

major diamond producing countries in Africa to gain further economic benefits from

diamond production through jobs creation in a domestic cutting and polishing industry.

Polished trading through the manufacturing and trading centers made considerable gains from

2009 as sellers capitalized on growth in consumer markets. Trade in India exceeded even 2008

levels, while the strong increase in imports to Belgium and Israel indicate that growth in those

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centers may have been stimulated by strong inter-dealer trading, or that dealers in those mar- kets

were hoarding stock to sell at a later date in anticipation of higher prices (Figure 4).

Polished trading was largely influenced by tough price points throughout the year. Manufacture-

in margins were persistently tight due to high rough prices, while polished buyers

resisted higher seller asking prices.

Figure 10.3 Polished Diamond Trade at the Manufacturing centers

3. Rough Market

a. Demand Factors

Demand for rough by far outpaced growth seen in the rest of the diamond pipeline, as did the

recovery in rough prices.

The rebound was influenced by a number of factors, including: Strong growth of consumer

markets in China and India and signs of recovery in the U.S. The cautious production ramp-up

by De Beers which kept supply levels below demand and resulted in shortages in the rough

and polished markets by year-end.

Strong demand in India as Surat-based manufacturer's ability to buy rough was helped by the

easier credit terms allowed by the Indian banks compared with their Belgian and Israeli

counterparts.

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Indian manufacturers were intent to keep their factories running at full capacity, even if short-

term demand had not filtered through at the same level along the pipeline. Price speculation as

traders expected both rough and polished prices to rise further.

These trends resulted in high increases in rough trading as India, the largest and most influential

manufacturing center, grew its imports to exceed 2008 levels. Belgium's rough exports were

larger than its imports indicating Antwerp's growing strength as a trading, rather than

manufacturing, center. Similarly Israel's rough exports grew at a higher pace than its imports.

Figure 10.4 Rough Diamond Trade at the Manufacturing Center

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CHAPTER 11 LEGAL PROCEDURE OF EXPORT-IMPORT

FROM BELGIUM TO INDIA

11.1 Diamond Office

Diamond Office was established with a view to fulfilling all the necessary formalities on behalf

of the Belgian diamond dealers to import and/or export diamonds in Belgium. At first, this

organisation worked independently, later it became a department of the HRD, the Diamond High

Council.

Diamond Office, situated in the heart of the Antwerp diamond centre, consists of three depart-

ments:

- Import department: here, all formalities for the import of diamonds in Belgium are fulfilled in

co-operation with the Belgian customs authorities.

- Export department: here, all formalities for the export of diamonds in Belgium are fulfilled in

co-operation with the Belgian customs authorities.

- Expertise department: here, all parcels of diamonds (import and export) are checked by sworn

experts under supervision of an officer of the Federal Public Service Economy,

Economic Potential, Licensing Service (FPS Economy).

Who can import and/or export diamonds in Belgium?

Only registered diamond traders can import or export diamonds in Belgium. The

registration must be effected at the FPS Economy.

Diamond dealers residing on Belgian territory have to submit the following documents to

register:

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1 Upon registration as a self-employed person:

a) A copy of the identity card;

b) Proof of the company registration number issued by the Crossroads Bank for Companies;

c) The profession card, issued by the FPS Economy, if the self-employed person is a foreign

national.

2 Upon the registration of a company:

a) A copy of the identity card of all business managers;

b) Proof of the company registration number issued by the Crossroads Bank for Companies;

registration will not be allowed if the company has not been registered with the Crossroads Bank

beforehand;

c) A copy of the notarial instrument of establishment and/or extract from the Belgian Official

Gazette;

d) The profession card, issued by the FPS Economy, if the business manager is a foreign

national;

e) If the company exercises the mandate of director, business manager or member of the

management committee at another company, the permanent representative must present a copy

of his identity card and appointment;

f) If none of the business managers of the Belgian company is in possession of a permanent place

of residence in Belgium, they grants powers to an authorized person residing in Belgium and

representing the business manager(s). The latter must present a copy of his identity card and

appointment, signed by both parties.

Each diamond dealer residing in the territory of the European Union and who wants to export or

import diamonds through Belgium from or to the European Union, also has the obligation to

register at the FPS Economy, for which he has to submit evidence that he has fulfilled all

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formalities, established by the European member state in which he is residing, to exercise the

profession of diamond dealer.

A foreigner or a foreign company residing outside the EU, cannot import or export diamonds in

Belgium in his own name: the foreigner or foreign company has to contact a Belgian company,

registered with FPS Economy, which will execute all formalities for the import and/or export of

the diamonds.

11.2 Customs Duties - V.A.T. - Expenses

Customs Duties and VAT

Export: In Belgium the export of diamonds is exempt from taxes: no duties or VAT have to be

paid.

The importer must pay 21% V.A.T., calculated on the ―customs value‖, i.e. the amount

mentioned on the invoice (freight and insurance included) converted into EURO‘s (at the rate

imposed by the Ministry of Finance).

However, Belgium has a unique system of V.A.T.-exemption when importing diamonds. A

diamond dealer can benefit of VAT-exemption, both for imports and for transactions on the local

market, on condition that he/she fully complies with all stipulations of Article 42 & 4 of the

VAT-Legislation. For practical purposes, he/she has to sign a declaration to the HRD – Diamond

Office declaring whether or not he/she wishes to work under the VAT-exemption.

The diamond importer does not have to pay the amount of the V.A.T. in cash at the precise

moment of import. In case of goods coming from outside the E.U., Diamond Office will advance

this amount to the Customs and will send an invoice to the diamond dealer at the end of the

month.

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Concerning the imports of E.U.-goods, Diamond Office does not intervene: the importer himself

will inform the V.A.T.-administration by means of his bookkeeping. From January 1st 1993, the

V.A.T.-administrations inside the European Union execute a double check on the movement of

goods: therefore it is obligatory to mention the V.A.T.-number of both the importer and the

exporter on the commercial invoice.

11.3 Other expenses

1. The diamond dealer will also be charged with the expenses for the administration and the

expertise of his goods at Diamond Office: 0.035 % of the value of the goods and only half for

return shipments. There is a discount of 10 % on shipments presented before 10 a.m.

2. On the import of rough diamonds (valued at more than 7,44 EURO/ct, return shipments

excluded) coming from outside the E.U., from countries listed based on international treaties, the

importer also has to pay "Social Fund", i.e. 1/3 % of the value of the goods. This contribution is

collected by the Internal Compensation Fund.

Non-Belgian diamond traders have to pay locally all the expenses in cash.

11.4 Licenses

For the import of diamonds coming from non-E.U. countries, a license is required. In most cases,

Diamond Office disposes of "general" import licenses, i.e. overall licenses that can be used by all

registered Belgian diamond dealers.

It can however occur that the Belgian company itself will have to apply for a personal import

license, available from the FPS Economy.

For the export of diamonds to non-E.U. countries a license is equally necessary. Diamond Office

also holds "general" licenses covering most exports.

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No license is required if the diamond trader voluntarily declares his intra-community trade. In

this case a Statistical Declaration needs to be fulfilled

11.5 Kimberley Certificate

Rough diamonds can be imported and exported only when accompanied by a Kimberley Process

(KP) Certificate and traded between KP participants. In the EU 3 authorities (based in Antwerp,

London and Idar-Oberstein) are entitled to verify the trade in rough diamonds imported or

exported in the EU.

In Belgium the FPS Economy verifies the import and issues the KP Certificates for export at

Diamond Office.

Diamond traders based in a member state were there is no authority, have to submit their rough

shipments to an authority in another member state where the verification shall be completed. If

the diamond trader chooses Belgium for the verification, he needs to be registered at the FPS

Economy and have the rough diamond shipment submitted to Diamond Office, just like a

Belgian diamond trader.

For export of rough diamonds the diamond trader has to provide ―conclusive evidence‖ to prove

that the rough diamonds he possesses were lawfully obtained (by purchase invoice, KP

certificate).

If a diamond trader is a member of a diamond organisation recognized by the EC, he only has to

submit the conclusive evidence when requested.

The diamond trader will always receive an authenticated forgery-resistant copy of the KP

Certificate, that has to be kept together with a copy of the invoice. He also has to keep a register

of all diamonds coming in or going out.

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11.6 Stock declaration

All diamond dealers and manufacturers have the obligation to fill in an annual stock declaration,

that has to be sent to the FPS Economy, Italiëlei 124 pb 71 - 2000 Antwerp.

Starting from the declaration of 2004 a new form has to be used. This form exists in an

electronic version (may be requested by e-mail: diamond@mineco.fgov.be)

11.7 Carnet A.T.A.

The Carnet A.T.A. (Admission Temporaire - Temporary Admission) is a customs document

issued by the Chamber of Commerce that attests that goods will only be exported temporary

(samples, for exhibitions and fairs, ...). Goods imported or exported in countries where the

Carnet is acknowledged by the authorities are exempt from all taxes. In Belgium the Carnet

A.T.A. is officially acknowledged: it permits the Belgian diamond dealers to travel around in

countries outside the European Union with their goods without paying taxes. Goods covered by

the Carnet A.T.A. are not considered as merchandise. For this reason, all goods having been

exported have to be re-imported. Only in exceptional cases, part of the diamonds can be sold

abroad.

Foreign diamond dealers can also temporary import diamonds into Belgium on a Carnet A.T.A.

without paying any taxes. But again the foreign diamond dealer has to present the goods at

Diamond Office where the import will be registered on the name of a Belgian dealer. In case the

foreign dealer wants to sell some of his goods, he has to declare the sold goods as a definitive

import at Diamond Office on the name of the Belgian buyer.

Note: From January 1st 1993, the Carnet A.T.A. is no longer used for temporary export and/or

import between E.U.-countries as from that date on the borders between these countries were

opened, resulting in free trade within the E.U..

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11.8 Import and Export Procedures

Extra-community shipments: COMPULSORY check by the FPS Economy at Diamond Office

For every extra-community import or export of diamonds a declaration regarding the value, the

weight, the characteristics and the documented source of origin of the diamonds to be imported

or exported has to be made to the FPS Economy at Diamond Office. Here also a physical check

takes place by sworn experts under supervision of the FPS Economy.

Intra-community shipments: VOLUNTARY subjection to check by the FPS Economy at

Diamond office possible. The declaration of intra-community shipments to the FPS Economy at

Diamond Office is no longer compulsory according to the Royal Decree of 30 April 2004.

However, the new legal regulation foresees the possibility of a voluntary declaration to the FPS

Economy at Diamond Office if the diamond dealer requests it. The diamond dealer is free to

choose whether he wants to have the intra-community shipments declared and physically

checked or not.

11.9 Import Procedure

In general Import Procedure

Each parcel of diamonds sent to Belgium has to be addressed as follows:

Name of the registered Belgian diamond company

C/O Diamond Office

Hoveniersstraat 22

2018 Antwerpen 1

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As soon as the parcel arrives at Diamond Office, the diamond dealer will be notified. The

dealer comes to Diamond Office where he submits a correct invoice to the import department,

stating: the name and complete address of the seller and the buyer, a complete detailed description

of the goods (quantity, unit price, total amount, possible other expenses). If necessary, he has to

present his personal license. In case of a return shipment, he also has to present his export

document.

When the documents are ready, the diamond dealer has to go to the expertise room. There the

sealed parcel will be opened to check whether the contents are conforming to the invoice. The

goods will be verified by one of the sworn in experts under supervision of the FPS Economy.

If the contents of the parcel correspond with the goods on the invoice, the dealer can leave

taking his goods with him after he has signed a receipt.

There are three possible ways for parcels of diamonds to enter Belgium: via a transport

contractor/courier service, by means of personal transport or by post.

Transport contract

Diamonds sent from abroad via the services of a transport contractor usually arrive at the

national airport in Zaventem, or possibly at the Antwerp airport (Deurne). At the request of the

diamond dealer to whom they are addressed, one of the several Belgian transport firms who

specialize in the declaration and transport of diamonds, will declare the goods at the customs

department in the airport, after which the sealed parcels of diamonds are brought to Diamond

Office. These transports occur at least once daily.

At the customs department in Diamond Office, the sealed parcels are locked away in a safe -

under supervision of the customs officers - until the Belgian dealer comes to Diamond Office

with his invoice to collect his goods.

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E.U.-parcels do not have to be declared at the customs but are also brought to Diamond Office

where they are stored in another safe until the diamond dealer comes to pick up his goods.

As soon as a parcel has arrived at Diamond Office, Diamond Office or the transport firm will

notify the diamond dealer. All he has to do is to present himself with the required invoice at

Diamond Office, where the staff of Diamond Office will complete all the necessary documents

to declare the goods in his name. For E.U.-goods the staff of Diamond office will complete other

documents (for statistical reasons and for the V.A.T.-administration)

Personal carriage

A diamond dealer who personally brings his goods to Belgium from abroad, has to declare his

goods to the Customs as soon as he enters the territory of the European Union: in the airport -

when he arrives by plane - or at the border - if he enters the country by car or by train.

In case of airfreight, the diamond dealer has to leave his goods in the hands of the Customs at

the airport (for which he will receive a receipt).

He has two possibilities to get his goods transported to Diamond Office. The first procedure is

that he personally picks up his parcel as soon as he has made an electronic declaration in

N.C.T.S. and is in the possession of a bank guarantee (i.e. a guarantee covering the V.A.T. that

has to be paid eventually at Diamond Office) and a written permission of Diamond Office. The

second possibility is that the dealer gives his receipt and an invoice to one of the specialized

transport companies who will then do all the necessary to bring the goods to Diamond Office:

making the electronic declaration and guaranteeing the V.A.T.

A dealer arriving by car at the border of the E.U. also needs to make an electronic declaration

in N.C.T.S. and a bank guarantee to bring his goods to Diamond Office. He can - if he wishes -

85

call on a forwarding agent at the border who will stand surety in case he does not have a bank

guarantee.

Once the parcel arrives at Diamond Office, the same procedure takes place as described

above: on the basis of the invoice the necessary documents are prepared and the diamond dealer

passes the expertise.

Note: There are no customs formalities to be fulfilled at the border for trade between two

countries of the European Union. If the diamond dealer has chosen for the voluntary declaration

of intra-community shipments, then he still has to come to the Diamond Office for registration of

his goods.

Post Parcels

Parcels of diamonds sent from abroad by post should be addressed as mentioned above (1.1).

The parcels will then arrive at a special post office situated inside the building of Diamond

Office. The staff of Diamond Office or the post will advise the dealer of the arrival of his goods.

As soon as the dealer comes to Diamond Office with his invoice, all the necessary formalities

will be fulfilled to declare or to register his merchandise.

11.10 Export Procedure

A diamond dealer, who wants to export his goods, has to come to Diamond office. Besides his

merchandise he should also be in the possession of following documents: a few copies of his

commercial invoice, a Statistical Return (if the diamonds are sent to another E.U.-country) or an

application form to make use of the "general" licenses (in case the diamonds are sent to a country

outside the E.U.) and additional shipping documents if the goods are sent through the post or a

transport company.

86

A diamond dealer, who does not have the above-mentioned documents, can always appeal to a

special service inside Diamond Office where these documents can be prepared for him.

With his documents and his merchandise, the diamond dealer first goes to the expertise room

where - under supervision of the FPS Economy - one of the sworn in experts checks the contents

of the parcel. After the experts have approved the documents and the parcel is sealed, the

diamond dealer has to go to the export department.

At the export department, the customs declaration is made up, as well as a Kimberley Certificate

(in case of rough diamonds) validated by the FPS Economy. In special cases (when there is no

"general" license) the diamond dealer will have to present an export license on his own name.

Goods leaving for another E.U.-country are registered here for statistical reasons only. How the

procedure continues depends on the way the diamond dealer is going to send his merchandise

abroad: as personal carriage, by post or by a transport company.

Personal Transport

When leaving the export department for a country outside the E.U., the diamond dealer receives

a copy of the customs document. The dealer has to show this document and the sealed parcel to

the Customs at the border or in the airport when leaving the E.U.

When leaving the European Union by car or by train, the diamond dealer also needs a bank

guarantee (as guarantee for the V.A.T. in the countries he passes), which he has to show the

Customs at Diamond Office first.

Post Parcels

A diamond dealer, who wants to send his parcel abroad by post, leaves it at the export

department where it will be stored in a special safe.

87

Several times a day, the staff of Diamond Office brings these parcels to the post office in the

same building from where they will be sent to the consignee.

Shipping companies

When the export customs document is validated, the dealer receives a copy of the document. He

leaves the parcel, accompanied by copy of the customs document and the shipping documents at

Diamond Office where it will be stored in a special safe.

At least once a day several specialized shipping companies come to Diamond Office to pick up

the goods, which are destined for them.

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CHAPTER 12 LEGAL PROCEDURE OF EXPORT-IMPORT

FROM INDIA AND OTHER GOVERNMENT INITIATIVES

Introduction

The gems and jewellery sector is a major foreign exchange earner. Due to its importance in

India‘s foreign trade, the government has taken many initiatives to boost the sector. The

government, for instance, has declared this sector as a thrust area for exports. During the global

economic meltdown especially the government has dealt out many initiatives for the badly-

affected sector. This chapter focuses on the various policies and measures that were taken by the

government for the gems and jewellery sector.

12.1 Regulating Bodies

Gems & Jewellery Export Promotion Council (GJEPC):

Established in 1966, the GJEPC is the apex body of the Indian gems and jewellery industry, and

has around 6,500 members across India. The primary goal of the Council is to introduce the

Indian gems and jewellery to the international market and to promote their exports. The Council

provides market information to its members regarding foreign trade inquiries, trade and tariff

regulations, rates of import duties, and information about jewellery fairs and exhibitions. The

roles played by the GJPEC are broadly highlighted below:

Trade Facilitator

The Council promotes the Indian gems and jewellery industry in the international market. It

organises international jewellery shows, hosts trade delegations, and undertakes image-building

exercises through advertisements, publications and audio-visual means.

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Advisory Role

The Council also aids better interaction and understanding between traders and government. The

Council takes up relevant issues with the government and agencies connected with exports. It

also submits documents for consideration and inclusion in the Exim Policy

Nodal Agency for Kimberley Process Certification Scheme

GJEPC works closely with the Indian government and the traders to implement and oversee the

Kimberley Process Certification Scheme; in fact, the Council has been appointed as the nodal

agency in India under the Kimberley Process Certification Scheme.

Training and Research

The GJEPC runs many institutes that provide training in all aspects of manufacturing and design

in Mumbai, Delhi, Surat and Jaipur.

Varied Interests

The Council publishes many brochures, statistical booklets, trade directories and a bi-monthly

magazine - Solitaire International, which is distributed internationally as well as to its members.

Gem & Jewellery Trade Council of India (GJTCI):

The GJTCI was founded in 2000, and is tasked with resolving any issue arising from trade in

gems and jewellery. It plays an important role in showcasing the Indian gems and jewellery to

the international as well as the domestic market. Like the GJEPC, GJTCI also provides

information to its members through a monthly newsletter, various educative and trade-

motivational events such as seminars, workshops, exhibitions, festivals etc.

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The Bureau of Indian Standards:

The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body

set up under the Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold

jewellery in India.

12.2 Foreign Direct Investment Policy

At present, the Indian government allows 100% foreign direct investment (FDI) in gems

and jewellery through the automatic route.

For exploration and mining of diamonds and precious stones FDI is allowed up to 74%

under the automatic route.

For exploration and mining of gold and silver and minerals other than diamonds and

precious stones, metallurgy and processing, FDI is allowed up to 100% under the

automatic route.

12.3 Kimberley Process (KP)

The Kimberley Process came into force when the South African diamond producing nations met

at Kimberley in South Africa in May 2000. The Kimberly Process was set up to discuss ways to

stop the trade in ‗conflict diamonds‘ and to ensure that diamond purchases did not fund

violence. As of November 2008, the KP had 49 members, representing 75 countries. The

Kimberley Process Certification Scheme (KPCS) was implemented in India on January 1, 2003

to verify the legitimacy of the import / export of rough diamonds as per the UN resolution and

to curb the entry of conflict diamonds into the global trade flow. The system of verification and

issuance of KPC is administered from the Mumbai and Surat offices of GJEPC. In India‘s

Foreign Trade Policy 2009-14, the following measures related to the Kimberley Process

Certification Scheme (KPCS) have been adopted:

No import or export of rough diamonds shall be permitted unless accompanied by the KP

certificate as specified by the GJEPC.

The export and import of rough diamonds to and from Venezuela has been prohibited by

the Indian government owing to the voluntary separation of Venezuela from the KPCS.

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12.4 Government Initiatives to Boost the Sector

Measures taken by the government in the Union Budget 2009-10:

Customs Duty on Gold and Silver

Customs duty on serially numbered gold bars (other than tola bars) and gold coins to be

increased from Rs 100 per 10 gram to Rs 200 per 10 gram. Customs duty on other forms

of gold to be increased from Rs 250 per 10 gram to Rs 500 per 10 gram.

Customs duty on silver to be increased from Rs 500 per kg to Rs 1,000 per kg. These

increases will also be applicable when gold and silver (including ornaments) are imported

as personal baggage

Central Excise Duty

Excise duty on branded articles of jewellery to be reduced from 2% to nil.

All categories within HS code 71 except the ‗diamonds whether or not worked but not

mounted or set‘ (HS code 7102) and certain sub-categories within HS code 7104 and

7106 currently have an excise duty rate of 16%.

The category ‗diamonds whether or not worked but not mounted or set‘ (HS code 7102)

currently does not attract any excise duty.

Sub-category ‗Piezo-electric quartz‘ (HS code 71041000), silver (including silver plated

with gold or platinum) in powdered form (HS code 71061000), unwrought (HS code

71069100) and other (HS code 71069290) do not attract any excise duty.

Fiscal Stimulus Measures (December 2008)

The Reserve Bank of India announced certain fiscal stimulus measures in December

2008 to revive the Indian economy during the onset of the global financial crisis. The

following measures were announced for the Indian gems and jewellery sector:

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Increasing the post-shipment Rupee export credit period from 90 days to 180 days from

November 28, 2008.

Increasing the pre-shipment rupee export credit period from 180 days to 270 days from

November 15, 2008.

Providing an interest subvention of 2% up to March 31, 2009, subject to minimum rate of

interest of 7% per annum, to make pre and post-shipment export credit for gems and

jewellery more attractive.

Allowing exporters to avail refund of service tax on foreign agent commissions of up to

10% of FOB value of exports. They will also be allowed refund of service tax on output

services while availing of benefits under Duty Drawback Scheme

Banks will charge interest rate not exceeding Benchmark Prime Lending Rate (BPLR)

minus 4.5% on pre-shipment credit up to 270 days and post-shipment credit up to 180

days on the outstanding amount for the period December 1, 2008 to September 30, 2009.

12.5 Export Facilitation Measures by the Ministry of Commerce and

Industry

Further, in February 2009, the gems and jewellery sector got a special boost from the Ministry

of Commerce with the following announcements: Gems and jewellery, diamonds and precious

metals were given a special boost by the Ministry of Commerce and Industry, the Export

Promotion Council for Gems and Jewellery and Star Trading Houses (in the gems and jewellery

sector). Besides, the Diamond India Ltd, MSTC Ltd and STCL Ltd were added under the list of

nominated agencies of foreign trade policy for the import of precious metals.

Surat, Gujarat has been given the recognition of a town of export excellence, because it is

home to thousands of diamond units that employ many diamond workers.

The authorised persons of gems and jewellery units in export-oriented units will be

allowed to carry personal carriage of gold in primary form up to 10 kg in a financial year

subject to the RBI and customs guidelines.

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Import restrictions on worked corals have been removed to address the grievance of gem

and jewellery exporter

12.6 Foreign Trade Policy 2009-2014

Foreign Trade Policy has identified the gems and jewellery sector as a thrust area with prospects

for export expansion and employment generation. The highlights of the policy are:

a. Import of gold of 8 carat and above allowed under replenishment scheme subject to

import being accompanied by an Assay Certificate specifying purity, weight and alloy

content.

b. Duty Free Import Entitlement (based on FOB value of exports during the previous

financial year) of consumables and tools, for:

1. Jewellery made out of:

i. Precious metals (other than gold and platinum) – 2%

ii. Gold and platinum – 1%

iii. Rhodium finished silver – 3%

2. Cut and polished diamonds – 1%

3. Duty free import entitlement of consumables for metals other than gold, platinum

will be 2% of FOB value of exports during the previous financial year.

c. Duty-free import entitlement of commercial samples shall be Rs 300,000.

d. Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of

exports.

12.7 Special Economic Zones (SEZ)

In order to boost foreign trade and investment, the Indian government introduced the SEZ policy

in April 2000 under the Export-Import (EXIM) policy. Under the policy, the government

allowed companies to set up units in SEZ to manufacture goods or provide services that

facilitated a hassle-free environment for exports. However, it was the SEZ Act 2005 – passed in

February 2006 – that laid down regulatory frameworks and rules for setting up and for the

operation of SEZs. With extended tax holidays up to 15 years – from previous tax holiday of 10

94

years, the SEZ Act managed to generate considerable level of interest; as a result, the number of

SEZs witnessed a sharp rise in a matter of few years. The Act envisages promoting exports of

goods and services, promoting FDI, creating employment, generating economic activity and

most importantly, developing infrastructure.

To promote the exports of gems and jewellery, the government has set up various SEZs with

specific incentives. Some important government policies relating to SEZs in the gems and

jewellery sector are highlighted below:

No import or export of rough diamonds will be permitted unless the shipment parcel is

accompanied by the Kimberley Process Certificate issued by the Development

Commissioner.

Cut and polished diamonds and precious and semi-precious stones (except rough

diamonds, precious or semiprecious stones having zero duty) shall not be allowed to be

taken outside the SEZ for sub-contracting.

A gem and jewellery unit may receive plain gold or silver or platinum jewellery from the

Domestic Tariff Area or from an EOU or from a unit in the same or another SEZ in

exchange of equivalent content of gold or silver or platinum contained in the said

jewellery after adjusting permissible wastage or manufacturing loss allowed under the

provisions of the Foreign Trade Policy read with the handbook of procedures.

Table 12.1 Operational Gem & Jewellery SEZs in India

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Table 12.2 SEZs Approved under the SEZ Act, 2005

Table 12.3 List of Valid in Principle Approvals

T

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Table 12.4 Formal Approvals granted in the Board of Approvals

12.8 Diamond, Gem & Jewellery Export Promotion Schemes Policy

The Policy relating to Replenishment (REP) Licence, Diamond Imprest Licence, Bulk Licence

and Schemes for gold/ silver/platinum jewellery is given.

Replenishment Licence

An application for REP Licence may be made to the licensing authority concerned along with the

documents prescribed therein.

The application shall be filed within six months following the month/quarter during which the

97

export proceeds are realised. For export proceeds realised during the month/quarter, consolidated

application for entire month/quarter shall be filed. However, if any supplementary application is

to be filed, it may be accepted with a cut of 10% on entitlement. In case of third party exports,

Replenishment benefit shall be admissible provided the EP copy of the Shipping Bill shows the

names of both the manufacturer and the third party and REP licence against such exports is

claimed by either of the parties after furnishing a disclaimer from the other party. REP licences

will be transferable.

In case where part payment has been realised against an invoice, the application for REP licence

may be made within six months following the month during which part payment was realised,

provided;

(a) Not more than two such applications may be made for each such invoice; and

(b) The first such application shall be made only after 50% of the proceeds of the invoice is

realised.

In case where payment is received in advance and exports take place subsequently, the

application for REP licence shall be filed within six months following the month during which

the exports are made.

The rate of entitlement will be with reference to the date of export.

REP Licence Against Rough Diamonds

Export of rough diamonds is permissible of the imports made against relevant Bill of Entry for

the purpose of replenishment benefit. This will be applicable for exports effected on or after 13th

April,1998. For the purpose of claiming REP licence against such export of rough diamonds, the

exporter shall furnish Bill of Entry in his own name for imports of rough diamonds . The

licensing authority while issuing the REP licences, shall make suitable endorsement on the

original Bill of Entry to avoid further use of the same Bill of Entry for claiming additional REP

Licences.

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Imprest Licence

An application for Diamond Imprest licence may be made to the licensing authority concerned

along with the documents prescribed therein. In addition, the exporter shall give:

(i) Declaration giving the name and address of his bankers;

(ii) Certificate from his bankers to the effect that realisation of export proceeds against exports

made by the exporter are not outstanding for a period of more than six months.

Gem Replenishment Licences

The Gem REP Licences shall be valid for import of rough diamonds, precious stones, semi-

precious and synthetic stones and pearls. In addition, the licence shall also be valid for import of

empty jewellery boxes upto 5% of the value of the licence within its overall cif value. The Gem

REP licences issued against export of studded gold/silver/platinum jewellery articles, shall also

be valid for import of cut and polished precious/semi-precious stones other than emerald upto

10% of the cif value of the licence within its overall cif value.

12.9 IMPORT- EXPORT PROCEDURE

Conditions of Exports

The exports shall be allowed by the customs authorities provided the endorsement made on the

shipping bill and the invoice are correct and the value addition achieved is not below the

minimum prescribed in the Policy.

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Proof of Exports

The exporter has to furnish the proof of exports, wherever required for export of

gold/silver/platinum jewellery and articles thereof, by furnishing the following documents:

(a) Copy of the shipping bill;

(b) Customs attested invoice;

(c) Bank certificate of export documents has been sent for negotiations/collections; and

(d)A declaration on the following lines: "I/We declare that outstanding realisation of export

proceeds beyond 180 days does not exceed 10% of average exports of preceding three licensing

years. I/We further declare that no export proceeds are outstanding beyond one year or such

extended period for which RBI permission has been obtained."

Personal carriage

In case of Personal carriage by foreign buyer, the following documents should be submitted by

the exporter/seller as proof of exports for claiming export entitlements:

(a) Copy of the shipping bill filed by the Indian Seller;

(b) A copy of the Currency Declaration Form filed by the Foreign Buyer with the Customs at the

time of his arrival; and

(c) Foreign Exchange Encashment Certificate from the Bank. In addition to this, Personal

Carriage on Documents Against Acceptance (DA)/ Cash On Delivery (COD) basis is also

allowed. The exporter will have to furnish the following documents as proof of exports for

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claiming export entitlements: (i) Copy of Shipping Bill filed by the Indian Seller; and (ii) Bank

Certificate of Export and Realisation Instructions issued by the Customs Department in this

regard should be followed mutatis mutandis.

Terms of payment

Export of gold/silver/platinum jewellery and articles thereof shall be against irrevocable letter of

credit, payment of cash on delivery basis, Documents Against Acceptance (DA) basis or advance

payment in foreign exchange.

Port of Export

Exports under the schemes of gold/silver/platinum jewellery and articles thereof shall be allowed

by airfreight and Foreign Post Office through the Customs House at Mumbai, Calcutta, Chennai,

Delhi, Jaipur, Bangalore, Kochi, Coimbatore, Ahmedabad, Dabolin Airport, Goa and Hyderabad.

Export by courier shall also be allowed through Custom Houses at Mumbai, Calcutta, Chennai,

Delhi, Jaipur, Bangalore, Ahmedabad and Hyderabad upto FOB value of Rs.20 lakhs per

consignment.

Export by Post

In case of exports through Foreign Post Office which may include export via Speed Post through

Foreign Post Office, the value of the jewellery parcels shall not exceed US$50000 and 20 kg. by

weight. At the time of exports, the exporter shall submit the following documents:

(i) Shipping bills or invoice presented at the foreign Post Office ;

(ii) Certificate from nominated agencies indicating the price at which gold/ silver/platinum was

booked or given on outright sale basis or loan basis.

(iii) Three copies of invoice

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CHAPTER 13 OPPORTUNITIES IN BELGIUM

13.1 Small in size, great in opportunities

Belgium is a small but densely populated country with a stable, market-driven economy, situated

in one of the most economically active regions in the world

The country has always been a crossroads of European trade and culture. As a result, foreign

businesses can benefit from the flexibility, language skills and business know-how built up over

centuries.

Located at the center of the European Union, Belgium provides an excellent transport and

communications infrastructure. A solid platform for businesses looking to develop activities in

the wider European market.

Being one of the largest importers of foreign goods and services in the OECD, Belgium offers

you a very interesting target market: concentrated, diverse, cosmopolitan. Belgian consumers are

relatively wealthy, well-traveled and responsive to new products and ideas: home improvement,

transportation, electronics, household appliances, communication, lifestyle & leisure, healthcare,

travel.

UK Trade & Investment (UKTI) staff in British embassies around the world are always looking

to provide an international network of opportunities for UK companies.

Around 400 business opportunities are published across all sectors and in over 100 markets each

month on the UKTI website. As a UK business, when you register with our website we can put

you in contact with the companies who have posted these opportunities.

102

UK Trade & Investment Belgium is dedicated to helping British businesses make the most of the

fantastic opportunities in Belgium.

Many British companies have been particularly successful in Belgium in areas like consumer

goods, biotechnology, ICT, security and business services, but opportunities abound in other

areas too. UK Trade & Investment Belgium assigns a Trade Adviser to every industry area who

specializes in hunting down the best opportunities in each industry.

Table 13.1 Demography of Belgium

Age Person

0-18 2.214.156

18-64 6.765.590

65above 1.860.159

0

2,000,000

4,000,000

6,000,000

8,000,000

person

0-18 18-64 65above

age group

Demography

Person

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Table 13.2 Households of Belgium

singles living alone 1,534,317

Households without kids 983,136

Households with kids: 1,817,847

Table 13.3 Life expectancy in Belgium

Gender Years

Males 77.15

Females 82.43

Households

singles living alone Households without kids Households with kids:

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Table 13.4 Pattern of spending in Belgium

Pattern of spending: In %

Food / drink / tobacco 15.6

Clothing / footwear 4.3

Gross rent 18.7

Heating / lighting / water 5.7

Furniture / household appliances 6.2

Health 4.7

Transport 13.7

Communication 2.7

Culture / leisure activities 8.1

Bars / restaurants / hotels 5.1

Tourist travel 4.6

Financial services / insurance 5.1

Other 5.5

Life expectancy

Gender Males Females

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Figure 13.1 Patten of Spending in Belgium

The above graph shows that pattern of spending at Belgium. People spends high percentage of

money in Gross rent & then after Food / drink / tobacco & Transport respectively. Small % of

money spends in other like Culture / leisure activities, Furniture / household appliances, Heating

/ lighting / water, etc.

Pattern of spending:

Food / drink / tobacco

Clothing / footwear

Gross rent

Heating / lighting / water

Furniture / household

appliances

Health

Transport

Communication

Culture / leisure activities

Bars / restaurants / hotels

Tourist travel

Financial services /

insurance

Other

106

Figure 13.2 Monthly import and export of textile, clothes and footwear

The above graph shows that monthly import & export of Clothes & Footwear between 2007 –

2011 in EUR million. The exports are lesser than imports & between 40 to 90 EUR million in

five years. While imports are more fluctuate in five years & between 110 to 290 EUR million

Implication of Graphs as Opportunities

Belgium have demography between 18-64 age so younger & sufficient employment

available. It also helps for diamond, gems & jewellery as a customer.

People of Belgium are mostly having household with kids which indicates loyal &

consistent employee available. And also high single living which helps to not require

more non monetary employee welfare.

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Females are main customer for diamond business and they are having life around 83

years at Belgium so long time & more no. of customer available.

Health expenses are less that it indicates people are having very well health so absent

ratios may be less from employee.

People spends more in food, drink, leisure & luxuries items so they are rich and easily

can buy diamond as luxuries symbol.

13.2 Feasible Opportunity In Belgium

The Jewelry and Investment segments together represent 83 percent of the value of rough

diamonds produced. The industry is controlled as a monopoly by the De Beers diamond

company which operates from South Africa and London. The wholesale trade and cutting of

diamonds is limited to only a few places in the world namely New York, Surat, Tel Aviv,

London, and Amsterdam and the most important being Antwerp.

The diamond industry currently produces US$13 billion worth of rough diamonds each year,

leading to the employment of 10 million people globally from mining to retailing. 70% of rough

diamonds are sold for industrial purposes with the remaining 30% ―gem quality‖ being

distributed to experts for cutting, polishing and jewellery manufacturing. The global jewellery

market has increased three-fold in the last 25 years and is currently worth US$72 each year.

In 2000, the De Beers model changed,[19] due to factors such as the decision by producers in

Russia, Canada and Australia, to distribute diamonds outside of the De Beers channel, thus

effectively ending the monopoly.[6][18] Current major players in the diamond industry are the

African producers Debswana and Namdeb, De Beers, Rio Tinto, BHP Billiton, Lev Leviev,

Harry Winston, and Alrosa.

108

Belgium belongs to the Organization for Economic Co-operation and Development (OECD) and

is one of the founding members of the European Community (EC). It became a first-tier member

of the Economic and Monetary Union of the European Union in January 1999. In 2006, the per

capita income was $31,800. Despite the heavy industrial component, services account for 72.5%

of GDP. Agriculture accounts for only 1.4% of the GDP.

109

CHAPTER 14 FEASIBILTIY STUDY

14.1 MARKETING ANALYSIS

Managing Supply and Demand

De Beers dominates the diamond industry unequivocally. De Beers produces 50 per cent of the

World‘s gem diamonds (by value), from its own mines in South Africa and in partnership with

the Governments of Botswana, Namibia and Tanzania. In addition, it purchases diamonds from

'outside Markets' and in turn markets them through its CSO. The total of De Beers own mining

output plus Diamonds purchased from the 'outside market' results in De Beers selling each year,

on average, 70 To 80 per cent of the world's diamond output.

No strong marketing tactics or strategy needed for any company because of

- Major export and import activities

- Brand (Famous Diamond)

2. How Prices are maintained

Next to the United States, the Asia-Pacific region is the largest retail market for

cut and polished diamonds and Diamond jewelry. However, with the disintegration of Asian

economies in 1997, retail diamond sales fell by 18per cent in a single year. De Beers responded

by significantly reducing diamond sales through its CSO inthe latter part of 1997 and throughout

1998, stockpiling diamonds in order to maintain the price levels of previous years. As a result,

sales by the CSO during 1998 were US$3,345 million — a drop of 28 per cent on the previous

year. De Beers then convinced other 'core sellers' which were contracted to the CSO to share the

burden by agreeing to stockpile 26 per cent of their production, despite the short-term effect on

revenue. Overall, De Beers was successful in reducing stocks of rough and polished diamonds by

a value of US $1 billion and, in Dc Beer‘s terms, 'leaving the stock-to-sales ratios in the cutting

110

centre‘s at much healthier levels'. What this means for the consumer is artificially determined

higher retail prices.

14.2 TECHNOLOGICAL ANALYSIS

Product category Product

Manufacturing: Octopus Pre polishing and polishing equipment

Pen

dragon

Polishing mill

Balancer To become a perfect equilibrated

scaife

EOS New type of girdling machine

Solid Three dimensional laser

Examination: D-Scope Diamond microscope

G-Scope Gemological microscope

D-Screen Compact screening device

Merlin Rough scanner and marker

Avalon Smoothness tester

Avalight Smoothness tester on the D-Scope

Machineries help to diamond cut, Polish. So it is easy to work .it is easily available or

import from outside so it is favor to start a diamond business and achieve a growth in

short time duration.

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14.3 FINANCIAL ANALYSIS

FOR TRADING DIAMOND IN BELGIUM

Foreign Investment and Foreign companies:

A Foreign company can also establish a presence in Belgium by setting up a branch

office. A branch office has no separate legal personality and is an extension of the foreign

company but implies the involvement of a management function or at least a representative with

the ability to deal directly with third parties from a Belgian location.

The foundation of a branch office is more complicated than the incorporation of a

Belgian company, since a number of documents of the foreign company must be translated,

legalized or even authenticated.

Foreign companies are subject to the requirement as Belgian companies. Moreover, the

annual accounts of the parent company are to be published, in their relevant format in Belgium.

The legal representatives of a Belgian branch of a foreign company are liable in the

same way as directors of Belgian companies. The foreign company is liable for all undertakings

of the branch office in Belgium.

The Belgian bankruptcy legislation is applicable to branches of foreign companies, but

its scope is limited to the assets in Belgium. Even without establishment in Belgium, the foreign

company may in certain cases be required to register for Belgian VAT purpose.

Raising adequate external finance is not always easy, especially for smaller businesses.

However, with professional guidance, the problem of obtaining adequate funding for an initial

investment, as well as for future growth and expansion, should not prove difficult.

DOING BUSINESS IN BELGIUM

112

Equity Finance

Private Finance

For certain levels of investment, venture capitalists provide a common source of equity

funding. The amounts of money potential available via this source can be significant but success

in securing such funding may not be so easy. Venture capitalist demands a rapid (and relatively

high) return on their investments and requires evidence of a sound management track record and

a clear exit plan.

In return, they may provide not only financial support but also valuable relevant

experience. Often, they are also part of the Board of Directors.

Listing

Obtaining a listing on one of the open markets may provide the solution to business

seeking to expand further. A listing will not only provide access to capital and growth and a

market for trading in shares, but will also increase public profile and credibility.

Nasdaq Europe provides an alternative to a listing on Euro next Brussels. This is more

attractive for smaller growth-oriented businesses with a smaller market capitalization.

Established financial control producers and a solid administrative organization are

essential for a listing to be accepted. A listing on Euro next Brussels normally implies a certain

track record of trading. Normally, a merchant bank of stockbroker will guide the company and

will ensure compliance with the legal regulations.

Overdraft

Borrowing from a bank by way of overdraft remains the simplest form of external

funding. However, as an overdraft can be called in at short notice since the interest rates will be

higher, its use should generally be restricted to short-term cash flow funding, with longer- term

needs met by more secure loans.

Term loans

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Fixed-term loans may provide a better solution to fund start-up costs, since repayment

schedules and interest rates can be agreed and budgeted for from the outset. Such loans are

usually secured by a pledge on assets, such as property, debtors or plant and machinery. For

smaller companies, the lender may also require personal guarantees from the directors or

controlling shareholding. Fixed or variable interest rates may be available, with more complex

arrangement available for larger loans, including ―caps‖, ―collars‖ and ―floors‖. These restrict

the interest chargeable.

Other loans

Loans to assist in the purchase of specific may come in different forms, varying from

straight-forward hire purchase of items through finance or operating leases. As each method will

have differing cost and taxation implications, advice should be sought on the most appropriate

method for each situation.

Factoring and discounting

With factoring, the factor pays the company a proportion of the relevant invoiced

amount and is then free to collect the debt itself. Once collected, the balance of the invoice, less

interest and administration charges, is paid over to the business. The business will usually remain

liable to pay the factor for any bad debts.

With invoice discounting, the business itself retains control of the debt collection. All

the factor does is to provide a proportion of the invoice face value until such a time as the debt is

collected.

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Incentives and grants

Companies thinking of setting up factories, offices or distribution units in Belgium

should be aware that, through the Belgian Federal Government, the different Regions and the

European Union, there are many grant schemes and incentives that can help reduce the cost of a

specific investment.

It cannot possibly describe all incentives in detail, but we will summaries the most

important ones:

R & D grants: available in Belgium for the development of innovative products;

Investment incentive: for small, medium- sized and big companies ;(they refer to the

expansion of the company in Belgium);

Employment grants: for companies employing young employees (receiving an

unemployment allowance) or employees with a low grade of education, or reorganizing

the workload (part time labor, reduction of working hours,). There are also tax reductions

for having employees with a very low salary;

Grants in connection with environmental protection;

Grants in connection with venture capital, stock options

Central Excise Duty

Excise duty on branded articles of jewellery to be reduced from 2% to nil.

All categories within HS code 71 except the ‗diamonds whether or not worked but not

mounted or set‘ (HS code 7102) and certain sub-categories within HS code 7104 and

7106 currently have an excise duty rate of 16%.

The category ‗diamonds whether or not worked but not mounted or set‘ (HS code 7102)

currently does not attract any excise duty.

Sub-category ‗Piezo-electric quartz‘ (HS code 71041000), silver (including silver plated

with gold or platinum) in powdered form (HS code 71061000), unwrought (HS code

71069100) and other (HS code 71069290) do not attract any excise duty.

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14.4 ECONOMICAL ANALYSIS

GDP per capita - current price: - US$ 45,367 (2009 estimate)

GDP per capita PPP: - $36,834 International Dollars (2009 estimate)

GDP - composition by sector:- Agriculture: 0.6%

Industry: 22%

Services: 77.4% (2009 estimate)

Gross domestic expenditure on R&D (% of GDP):- 1.92% (2008)

Inflation rate: - Unemployment rate:-

2008 4.5% 2008 7%

2009 0% 2009 8%

2010 2.3% 2010 8.4%

2011* 2.9% 2011* 8.4%

Belgium have very stable GDP growth except 2 year and good per capita .industrial

sector helps to earn GDP around quarter (1/4) percentage and having acceptable

inflation as well as unemployment rate so it is also favorable for diamond industries.

Source:

http://www.gfmag.com/gdp-data-country-reports/318-belgium-gdp-country-

report.html#ixzz1ecl73XOW

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Today most modern diamond mines are managed to the ISO 14001 standards of environmental

management, and the major companies have a policy of regularly publishing reports on their

environmental performance. Many of the major diamond mining companies go beyond the ISO

14001 standard and use Environmental Impact Assessments and Social Impact Assessments to

identify the environmental and social impacts of mines as well as to identify gaps at their

operations.

The environmental impact of the land exploration involved in diamond mining is

minimized in several ways:

a) Vehicle tracks are reused

b) Minimal amounts of soil are cleared during drilling and sampling

c) Topsoil from exploration sites is refilled and replace

Energy efficiency and renewable energy programmers are widely used across the

diamond mining industry. Emission levels are monitored through energy and carbon emission

assessments. Mines have reduced their energy use by introducing a range of schemes: installing

timers on boilers, shutting off pressurized fans over weekends, running mud pumps in off-peak

periods and introducing battery-powered vehicles that do not emit harmful gases. Furthermore,

solar panels and energy-saving schemes have reduced the amount of electricity used at mines.

14.5 ECOLOGICAL ANALYSIS

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CHAPTER 15 BARRIERS IN DIAMOND BUSINESS

15.1 Culture & Communication

It difficult to accept or even to understand those views held by other cultures. The difficulties of

communicating at a global level have become increasingly widespread. Lack of understanding

deriving from ethnocentrism or ignorance of culturally based assumptions erroneously believed

to be universal can readily escalate to unproductive conflict among people of differing cultural

orientation.

Problems in business communication conducted across cultures often arise when participants

from one culture are unable to understand culturally determined differences in communication

practices, traditions, and thought processing. At the most fundamental level, problems may occur

when one or more of the people involved clings to an ethnocentric view of how to conduct

business. Ethnocentrism is the belief that one's own cultural group is somehow innately superior

to others

15.2 Risks

Limited Standardization

Jewellery consumption is primarily of gold. The bulk of the jewellery buying is still rooted in

tradition, and jewellery is sold in traditional designs. Gold jewellery is also bought as an

investment. In the present system of selling gold jewelerry in India, the purity may or may not be

standard and the buyer can lose - cheating on caratage (and purity) is widespread.

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Possible Long-Term Threat from China

Although 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 reasons like the cheap and disciplined labor force, significant

increase in potential consumers in the high- income segment within the country and

the steadily improving quality of Chinese workmanship. Technology is another area.

Threat from Polishing in Producing Nations

The preference for polishing diamonds in the producing countries has been seen to be growing.

There has been increased political pressure by major diamond producing countries in Africa

to gain further economic benefits from diamond production through jobs creation in a

domestic cutting and polishing industry.

Monopoly of DeBeers

The DeBeers cartel is singularly responsible for the price being so high as a result of restricting

supply and aiming to increase demand. This paper will begin by describing the evolution of the

DeBeers involvement in the evolution of the diamond industry.

Historically diamonds were extremely scarce, found only in the river beds of India and the

jungles of Brazil , and as such were highly prized by nobility around the world. In 1870, large

reserves were found in South Africa, and with that the idea of them becoming more widely

available was borne. Production levels of individual miners were restricted by their lack of

equipment so local business men aided them by renting them costly mining equipment. One such

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businessman, Cecil Rhodes, began purchasing claims to the production of the diamond mines.

By 1887 the company he set up, DeBeers, owned the rights to all the mines in South Africa;

―DeBeers were initially able to develop their complete control in South Africa

De Beers is well known for its monopolistic practices throughout the 20th century, whereby it

used its dominant position to manipulate the international diamond market.The company used

several methods to exercise this control over the market: Firstly, it convinced independent

producers to join its single channel monopoly, it flooded the market with diamonds similar to

those of producers who refused to join the cartel, and lastly, it purchased and stockpiled

diamonds produced by other manufacturers in order to control prices through supply.

15.3 Hurdles to Expand Business

Vertical Integration

Vertical Integration is when an organization expands production along the vertical supply chain.

The scale and scope of vertical integration in the diamond industry is fuzzy as the lines are hard

to distinguish.

Nature of Competition

One of the first things that should be done to examine competition is to identify substitute

products. Diamonds as a form of jewelry competes with other precious stones like emeralds,

rubies etc and with non precious and manufactured stones like cubic zirconia‘s, diamonds etc.

Implications of Globalization

Globalization, also known as internationalized capitalism, is a major concern in all countries. A

diamond from start to finish travels through many different countries each of which have

120

different economic and social concerns. The controversies which may be caused by diamonds in

places like Angola, Sierra Leone, and the Congo are far away from the ultimate diamond buyers

in the international markets such as United States and Europe. Even so, these ultimate buyers are

starting to realize that there purchasing decisions in the domestic realm can have substantial

effects abroad

15.4 Economic, Social and Environmental Issues

The surrounding controversy of blood diamonds shows the economic, social land environmental

impacts that the diamond industry partakes in. Proceeds of diamond sales have been shown to

fund warlord activities in African countries such as Liberia and Angola, Democratic Republic of

the Congo and Sierra Leone .

Workers, in mines, in cutting and polishing shops, and at various other steps along the product

chain, are shown to be treated in burdensome conditions ,low compensation, and with inhumane

conduct. For example, Diamond polishers are exposed to cobalt which has been shown in studies

to cause Interstitial pulmonary fibrosis which is an inflammatory lung disease.

Additionally, the process used to extract and manufacture diamonds show how the industry is

putting economic concerns before environmental strain. There are other methods that may be

more expensive but are better for the environment.

There are many economic, social and environmental concerns that are prevalental each step

along the diamond process. Managers in the diamond industry can learn from their stakeholder

about economic, social and environmental issues that arise

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15.5 The Diamond mining industry faces environmental challenges

It must be recognized that mineral extraction by its very nature of mining does have the potential

to impact the environment unless carefully managed. The key challenge is Land Disturbance;

Diamond mining uses a variety of methods, some of which involve the removal of large

quantities of soil from the earth. However it must be remembered that it is economically

beneficial to recover the greatest amount of diamonds while moving the least amount of other

material. Therefore diamond mines seek to have the minimum sized footprint, and move only

that necessary material (known as waste) efficiently. Modern day best practice calls for a full

review of the plans for removal, storage and return of this topsoil/waste and the environmental

impact it will have to allow the area to return to its previous state.

In addition to land disturbances there are a number of other associated challenges:

Energy use and emission

Waste and recycling

Use of water

Impact on Biodiversity

However, importantly, diamond mining unlike other industrial processes and types of mining

does not use hazardous material.

Environmental standards

Today most modern diamond mines are managed to the ISO 14001 standards of environmental

management, and the major companies have a policy of regularly publishing reports on their

environmental performance. Many of the major diamond mining companies go beyond the ISO

14001 standard and use Environmental Impact Assessments and Social Impact Assessments to

identify the environmental and social impacts of mines as well as to identify gaps at their

122

operations. Generally, conducting these assessments is a legal requirement used by local

authorities before permission to mine is granted. Predicting environmental and social impacts

from the outset enables planners ways to identify reduce potentially negative impacts on the

environment and then to shape the negative impact on the local environment and harness the

positive impacts.

15.6 Social Problems and Control

Policing and the judiciary are organized at the national level. After a major police reform in

1999, there will be one police force with authority to operate in the entire nation. Delays in

handling cases in Brussels are often related to a lack of bilingual magistrates. In recent years,

civilian patrols without legal powers of intervention have come into existence, but their function

is mainly to deter robbers.

Informal social control is much stronger in small villages and towns than it is in large cities.

Organized crime is rare except in drug trafficking, prostitution, and illegal immigration.

Organized crime is mostly controlled by foreign criminals such as the Russian mafia. There are

relatively few murders and armed robberies. The most common crime is property theft.

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CHAPTER 16 RECOMMENDATIONS

Belgian government & industry should provide benefits to outside EU countries like tax,

more % of import – export of diamond, etc so other country also attract to do business

with Belgium.

Diamond industry should marketing well so it will get Belgium people demand & spend

more money in gem & jewellery. Because they spend more in luxuries activities.

World diamond industry & countries government have to take some actions for misusing

diamond as a finance for purchase military arms which affects diamond business.

Belgium should no levy import duty or reduces it for importers of their country which

create more globalize business.

Diamond industry should keep fund from profit or business to improve environmental

impact arises.

Equitable fair wage should provide to both men & women which reduce gender gap &

also increase industrial labor.

Diamond business can provide house & transport facilities to Belgian people which helps

to reduce tax and also employee welfare activity.

Women are main to provide new ideas & things for gems & jewellery business so appoint

more as employee.

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CHAPTER 17 CONCLUSION

India is one of the largest manufacture of cutting and polish center of diamond in the world. The

gems and jewellery industry is a major exchange exchequer as major portion (around 80%) of its

turnover was contributed by exports This classified into five main segments cut and polished

diamonds, gemstones, gold and jewellery, pearl and synthetic stones, and others, including

precious metal jewellery (other than gold), synthetic stones and costume fashion jewellery. India

contributes over 12% to the total export earnings of the country and employs highly skilled 1.5

million workers.

The Indian jewellery sector is largely unorganized at present. There are over 15000 players

across the country in the gold processing industry, of which only about 80 players have a

turnover of over US$ 4.15 million (Rs. 200 million). There are about 450,000 goldsmiths spread

throughout the country.

There are many regulating body exist in the India…..,like

Established in 1966 has around 6,500 members across India. GJEPC works closely with the

Indian government and the traders to implement and oversee the Kimberley Process Certification

Scheme; in fact, the Council has been appointed as the nodal agency in India under the

Kimberley Process Certification Scheme.

The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body

set up under the Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold

jewellery in India.

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The GJTCI was founded in 2000, and is tasked with resolving any issue arising from trade in

gems and jewellery. It plays an important role in showcasing the Indian gems and jewellery to

the international as well as the domestic market.

This policy affects the investment of the foreign investor in the diamond & gems and jewellery

sector .At present, the Indian government allows 100% foreign direct investment (FDI) in gems

and jewellery through the automatic route. So we can say that Indian government is are ready to

give permission to FDI to enter into jems and jewellery sector .which is help to increase and

develop the Indian jems and jewellery sector.

Customs duty on serially numbered gold bars (other than tola bars) and gold coins to be

increased from Rs 100 per 10 gram to Rs 200 per 10 gram. Customs duty on other forms of gold

to be increased from Rs 250 per 10 gram to Rs 500 per 10 gram.

Customs duty on silver to be increased from Rs 500 per kg to Rs 1,000 per kg. These increases

will also be applicable when gold and silver (including ornaments) are imported as personal

baggage.

Excise duty on branded articles of jewellery to be reduced from 2% to nil It is due to increase in

the demand of gold and silver in the Indian market.

Gujarat accounts for almost 80 % of the diamonds processed in India. Of this, 90 % are

processed by about 10,000 diamond units located in and around Surat alone. Rest of the diamond

units are located in Ahmedabad, Palanpur, Bhavnagar, Valsad and Navsari.

Belgian Ambassador Jean M. Deboutte in a press meet Friday said that they can strengthen their

economic ties with India by increasing their cooperation in the IT, non-conventional energy

sources and education along with gems and jewellery.

Gems and Jewellery Export Promotion Council (GJEPC) has strongly urged the Union

government to introduce presumptive tax system on the lines of Belgium and Israel, which will

make India the world's leading gems and jewellery hub and to protect its vanguard position as

the low-cost labour intensive global centre for diamond cutting and polishing activities.

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Belgium is an important trading partner for India and it is India`s 2nd largest trading partner in

the European Union.

Nine of ten diamonds in the world would have been cut and polished in India. And Belgium has

market in Gems and Jewellery through india.

Forty percent of gems and jewellery in Belgium are imported from India and almost seventy to

eighty percent Indians staying in Belgium are associated with the gems and jewellery trade.

Around 180 Belgian companies including small and medium enterprises are operating in India.

(Infinity, Xsyxys and Vincke. Quite a large number of Indian companies including Videocon,

TCS, ICICI Bank are doing business in Belgium.)

1. The government, for instance, has declared this sector as a thrust area for exports.

2. Gems & Jewellery Export Promotion Council (GJEPC) was established in 1966, the GJEPC is

the apex body of the Indian gems and jewellery industry, and has around 6,500 members across

India.

3. The primary goal of the Council is to introduce the Indian gems and jewellery to the

international market and to promote their exports.

4. It promoting the product image-building exercises through advertisements, publications and

audio-visual means.

5. The Council also aids better interaction and understanding between traders and government

6. The GJEPC runs many institutes that provide training in all aspects of manufacturing and

design in Mumbai, Delhi, Surat and Jaipur

7. Gem & Jewellery Trade Council of India (GJTCI) was founded in 2000, and is tasked with

resolving any issue arising from trade in gems and jewellery

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8 .The Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold jewellery in

India.

9. In the pre-liberalization period (prior to 1991), severe restrictions on the export and import of

gold from and into India were imposed

10. The reasons for imposing these restrictions were:

To reduce demand for, as well as availability of gold

To alter the savings preferences of the population in favour of investments other than

gold/silver

To stop smuggling of gold

To conserve foreign exchange resources

Gems & jewellery is global business so diamonds are purchase from all over the world. In 2006,

diamonds were sold about $70 billion. Diamond is a luxurious product.

Women are the primary market for diamonds. Government also framing the department for this

sector.

Diamonds are sale through following ways

1) Tender

2) Regular customer

3) Window sale

4) Non-arm length

The DTC sell about 47% global market and it follows approved process for selling the diamonds.

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Diamond jewellery and retail

Rough diamonds are polished and send in to the next sector of diamonds pipeline. They are

produced as per the fashion and consumer demand. Diamonds are splitting into higher value

diamonds for which there is a steady and decreasing smaller group diamonds.

Design and quality

Jewellery consumer are driven fashion and trend .they focus on hot design and product . it is a

difficult to make the price in comparing the quality .

Economic impact

Diamond industry is giving a generic job and business opportunities .difficult external factors

like economic social, political, legal environment is also affected mostly. It is difficult to

compare financial and economic benefit with gems & jewellery sector.

Fashion jewellery includes the alluminium jewellery, brass jewellery, lac jewellery, leather

jewellery, ivory jewellery, silver jewellery, beaded stone and tereactotta.

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strategy/strategy.aspx?sLang=e&target=Belgium.

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