GEMS & JEWELLERY

SUBMITTED BY

SIMRAN BEDI

NISHA RAMAN

Sem – 4,Sec-B

MBA-IB (2009-11)

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FLOW OF PRESENTATION• Overview• Production Centers • Domestic Industry• Trend in Export• Major Export Destinations • Export from India for last three years• Major Exporters in India• Major Competitors in the global market• Provisions in India’s Foreign Trade Policy • Quality Standards• Any other relevant Information

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GEMS AND JEWELLERY

Gems and Jewellery is an important emerging sector in the Economy. Ranked among the fastest growing sectors, it is also a leading sector for foreign exchange generation.

Major Segments The sector comprises of two major segments Gold• Comprises around 80% of the Indian jewellery market, balance comprising

fabricated studded jewellery (Diamonds and Gemstones).• High levels of manufacturing and domestic consumption. Diamonds• World's largest cutting and polishing Industry for diamonds.• Well supported by the banking sector and government policies.• Export potential for polished diamonds / finished diamond jewellery.

Sources:-ibef

GEMS & JEWELLERY INDUSTRY• One of the fastest growing segments in the Indian economy

with an annual growth rate of approximately 15 percent.• The current market size of the Indian Gem & Jewellery

Industry is US$ 25 Billion.• Total export of gems & jewellery in the year April-March,2010

was 29081.11 with a 2.36% growth rate & 16.27% share in the total export.

• The domestic market was guessed to be approximately USD16.1 billion in financial year 2009.

• Consumes nearly 800 tonnes of gold that accounts for 20 percent of world gold consumption, of which nearly 600 tonnes go into making jewellery

SOURCE- GJEPC

CONTD…• India's strength lies in the 2 million highly skilled workforces

in the country in the gem & jewellery sector, out of which 1 million are exclusively engaged in export production.

• The Gem & Jewellery Industry has started showing positive signs of revival and growth.

SOURCE- GJEPC

DIAMONDS INDUSTRY• Largest diamond cutting and polishing centre in the world—

with 60 per cent value share, 82 per cent carat share and 95 per cent share of the world market in terms of number of pieces.

• In the period of 9 months from April to December’09 exports of rough diamond declined by 37% to 157.09 lakh carats whereas the exports of cut & polished diamonds mounted by 18% to 407.36 lakh carats

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

• Exported cut and polished diamonds worth US$ 14.18 billion in 2007-08.

SOURCE- GJEPC

Contd…

• Manufactures diamonds of all cuts, shapes and sizes of all varieties like round, princess, baguettes and all fancy cuts.

• Has democratized Diamonds by mastering the art of cutting near gem quality diamond.

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OVERVIEW• Large market for Gems & Jewellery with domestic sales of

over $10 billion• 4% of the global Gems and Jewellery market• Exports of over $15.5 billion; over 18% of world’s exports• India is the largest consumer of gold jewellery in the world• Accounts for about 20% of world consumption• India is the largest diamond cutting and polishing centre in

the world• 60% value share, 85% volume share and 92% share of the

world market by number of pieces• Third largest consumer of polished diamonds after USA and

Japan

SOURCE- GJEPC

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Cont.- The GJ sector may be further categorized into the following sub-sectors

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

1. Gemstones ❑ Diamonds ❑ Colored Stones-precious, semi-precious, synthetic

2. Jewellery ❑ Plain gold Jewellery ❑ Studded Jewellery ❑ Silver Jewellery ❑ Costume Jewellery

3. Pearls

MAJORPRODUCTION CENTRES IN INDIA

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Source: official website of Gujarat ,as on 17/12/08.www.vibrantgujarat.com/detailed-sector-profiles/gems-jewellery.pdf

& KPMG ANALYSIS

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Trends in exports

EXPORTS• Total export of gems & jewellery in the year April-March,2010

was 29081.11 with a 2.36% growth rate & 16.27% share in the total export.

• Exports posted a modest growth of 1.45 per cent during 2008-09 at US$ 21.1 billion, primarily driven by gold jewellery exports, including medallions and ornaments.

• The country exported US$ 20.8 billion of gem and jewellery in 2007-08.

• The United Arab Emirates (UAE) was the largest importer of gems and jewellery from India in 2008-09, with a share of 31 per cent followed by Hong-Kong(25%) and U.S.A(20%). SOURCE- GJEPC

CONTD…

• The sector accounted for 13 per cent of India’s total merchandise exports.

• The export industry mainly comprises of small-to-large units based in various special economic zones (SEZs) supplying primarily diamond-studded jewellery

EXPORTS DATA

ITEMS 2005 2006 2007 2008 2009(APR-OCT)

CUT & POLISHED DIAMOND

53892.02 48905.57 57117.17 58649.45 45365.09

GOLD JEWELLERY 16498.21 22567.44 11637.12 9406.49 5572.37

COLOURED GEMSTONES

975.07 1062.27 1111.05 1197.55 834.80

ROUGH DIAMONDS 1865.49 2388.26 2280.32 3474.93 1992.95

SOURCE- GPEC

VALUE IN CRORES

SOURCE- GPEC

MAJOR EXPORTERS IN INDIA

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Major Exporters in India• RAGHUNANDAN PRASAD & SONS • S. ZAVERI & SONS JEWELLERS • JAGDISH & SONS • RIBY GEMS AND FASHION JEWELRY • BN GHOSH & CO. • MARUTI JEWELLERS• MILLENIUM STAR• SILVER STONE• SHRI RADHEY CHAIN• DD JEWELLERS

Source: The 2003-2008 World Outlook for jewlery-Prof. Philip M. Parker, Insead

Major Export Destinations

25.27

20.52

0.18

1.1

1.45

25.91

0.04

0.63

9.98

0.47

14.45

US A UA E C HINAS ING A P OR E U.K HONG K ONGNE THE R L A ND G E R MA NY B E L G IUMITA L Y OTHE R

Italy Hong Kong

Thailand

India

U.S.A

MAJOR PLAYER OF THE WORLD

UAE

Source: GFMS

IMPORT DATAITEMS 2005 2006 2007 2008 2009(APR-OCT)

ROUGH DIAMONDS 40039.14 38401.09 40170.65 40877.24 21898.13

GOLD BAR 7034.52 7905.74 9734.41 10820.32 13062.77

CUT & POLISHED DIAMONDS

16010.27 8832.61 17396.61 31209.45 27056.46

RS. IN CRORES

SOURCE- GPEC

IMPORT TREND

IN CRORES

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Major Importers• LEVIN HEALTH CARE• SUNSHINE CONSULTANCY SERVICES• KRISHNAM• HI INTERNATIONAL• SHREEJI GEMS & SILVERS• FAMMORE ENTERPRISES.PVT.LTD• SHIBINS• SARIT AXPORTS CONSORTIUM• SANJAY EXPORTS• MONTOSTONE

Net export from India for last two years

SOURCE- GJEPC

Net imports from India for last two years

SOURCE- GJEPC

Major Competitors in the global market

Source: The 2003-2008 World Outlook for jewllery-Prof. Philip M. Parker, Insead

FTP PROVISIONS

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Provisions in India’s Foreign Trade Policy

• Schemes for Gold / Silver / Platinum Jewellery- Exporters of gold / silver / platinum jewellery and articles thereof may import their essential inputs such as gold, silver, platinum, mountings, findings, rough gems, precious and semi-precious stones, synthetic stones and unprocessed pearls etc. in accordance with the procedure specified in this behalf.

• Replenishment Authorization Exporters may obtain Replenishment (REP) Authorizations from RA in accordance with procedure specified in HBP v1.

GOVERNMENT INITIATIVES• 100 percent foreign direct investment (FDI) in

gems and jewellery through the automatic route is allowed.

• The government has lowered import duty on platinum and has exempted rough colored precious gems stones from customs duty.

• Rough, semi-precious stones are also exempt from import duty.

CONTD…

• Setting up of SEZs and gems and jewellery parks to promote investment in the sector.

• The government abolished import duty on polished diamonds.

• The export of colored gemstones on a consignment basis has been allowed.

CONTD…• Duty-free import of consumables for metals

other than gold and platinum up to 2 percent of freight on board (f.o.b) value of exports.

• The government has raised the limit value of jewellery parcels for export through foreign post office (including via speed post) from US$ 50,000 to US$ 75,000 and the time period for re-import of branded jewellery remaining unsold has been extended from 180 days to 365 days.

CONTD…

• To neutralize duty incidence on gold jewellery exports, it has now been decided to allow Duty Drawback on such exports.

• To promote export of Gems & Jewellery products, the value limit of personal carriage have been increased from US$ 2 million to US$ 5 million in case of participation in overseas exhibitions.

SPECIAL FOCUS INITIATIVE• Import of gold of 1• 8 k and above is allowed under replenishment

scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content.

• Duty free import entitlement of commercial samples shall be Rs. 300,000.

• Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of exports.

CONTD…

• Duty Free Import Entitlement (based on FOB value of exports during previous financial year) of Consumables and Tools, for:

1. Jewellery made out of: (a) Precious metals (other than Gold & Platinum)– 2% (b) Gold and Platinum – 1% (c ) Rhodium finished Silver – 3%2. Cut and Polished Diamonds – 1%

CONTD…

• Extension in number of days for re-import of unsold items in case of participation in an exhibition in USA increased to 90 days.

• In an endeavor to make India a diamond international trading hub, it is planned to establish “Diamond Bourse (s)”.

QUALITY STANDARDS

• Maintains strict quality control and adheres to world quality standards such as:-

– ISO 9000-2000– Business Excellence Model– Best Practice Principles

• GJF has created a brand "TRUST MARK” based on high standards.

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Quality Standards

Trust markis an assurance to a customerof the commitment of thejewellery for his quality &best business practices

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HALLMARK CERTIFICATION• Hallmarking is the accurate determination and official recording of the

proportionate content of precious metal in gold. Hallmarks are thus official marks used in many countries as a guarantee of purity or fineness of gold jewellery.

• BIS was named as the sole agency in the country for Hallmarking of gold jewellery under the provisions of the BIS hallmark Act, 1986.

• BIS, as the National Standards Body of India is primarily engaged in the preparation and promotion of standards and operation of different quality certification schemes. In this context, the BIS Precious Metals Sectional Committee (MTD 10) has formulated and published the following Indian Standards on Gold and Gold Alloys:

• a) IS 1417 Grades of gold and gold alloys, Jewellery/Artefacts-Fineness and Marking b) IS 1418 Assaying of Gold in Gold Bullion, Gold alloys and Gold Jewellery/ Artefacts - Cupellation (Fire Assay Method) c) IS 2790 Guidelines for manufacture of 23,22,21,18,14 and 9 carat gold alloysd) IS 3095 Gold Solders for use in manufacture of Jewellery

ISSUES & CHALLENGES• Since October 2008, exports of gems and jewellery

products have been witnessing a sharp decline. The decline was reported to be 16 per cent, 34 per cent and 26 per cent in October, November and December 2008.

• Fresh orders declined by 20 percent in November and December .

• The unprecedented crisis and sluggish overseas demand has forced the industry to cut production by almost 25 per cent, resulting in job losses, according to the GJEPC.

CONTD…

• Fall in consumer demand and build up in inventory liquidity problems have led to loss of around two lakh jobs during the last six months.

• The closing down of units, mostly in Gujarat, has led to a situation where an estimated two lakh diamond workers have lost their jobs in Surat, the hub of gems and jewellery trade.

REFERENCES-• TOPIC: PRICE HISTORY Source: http://www.goldprice.org/gold-price-history.html(WORLD GOLD COUNCIL) • TOPIC: CORRELATION OF RETURN WITH GOLD Source: ecowin /calculations –world gold council

http://www.gold.org/deliver.php?file=/value/stats/statistics/xls/India_output.xls • TOPIC: COMPARISON OF EQUITIES AND GOLD Source: world gold council

http://www.research.gold.org/prices/equities/comparison.pdf

• TOPIC: DEMAND OF GOLD SOURCE: WORLD GOLD COUNCIL

http://www.gold.org/deliver.php?file=/pub_archive/pdf/GDT_2008.pdf

• TOPIC: INDIA OUTPUT SOURCE: WORLD GOLD COUNCIL http://www.gold.org/deliver.php?file=/value/stats/statistics/xls/India_output.xls

• TOPIC: DEMAND AND OUTPUT COMPARISON SOURCE: WORLD GOLD COUNCIL http://www.gold.org/deliver.php?file=/value/stats/statistics/xls/India_output.xls

• TOPIC: GOLD VOLUME AND VALUE COMPARISON Source: world gold council http://www.gold.org/deliver.php?file=/assets/file/pub_archive/pdf/GDT_Q4_2007.pdf • Gold in Percentage Source: world gold councilhttp://www.gold.org/deliver.php?file=/value/stats/statistics/xls/

Quarterly_Gold_and_FX_Reserves_June_2008.xls

• Exporters & Importers Source :gjepc• Importers Source :gjepc• PRODUCTION CENTRES Source: official website of Gujarat , as on 17/12/08. www.vibrantgujarat.com/detailed-sector-profiles/gems-jewellery.pdf

• Policies Source-Directorate general of foreign trade http://dgftcom.nic.in/exim/2000/policy/contents.htm