GITAM INSTITUTE of INTERNATIONAL BUSINESS GITAM Campus, Visakhapatnam (2009-11) A A Project Project Report Report On On “ “ A A STUDY OF GEMS AND JEWELLERY STUDY OF GEMS AND JEWELLERY INDUSTRY INDUSTRY ” ” Submitted to: Submitted By: Prof. B Padmanarayan VINAY BHANDARI 1 | Page
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GITAM INSTITUTE of INTERNATIONAL BUSINESS
GITAM Campus, Visakhapatnam
(2009-11)
AA
ProjectProject ReportReport
OnOn
““ AA STUDY OF GEMS AND JEWELLERYSTUDY OF GEMS AND JEWELLERY
INDUSTRYINDUSTRY ””
Submitted to: Submitted By:
Prof. B Padmanarayan VINAY BHANDARI
Section A
Roll No. 157
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TABLE OF CONTENT
S.No Executive Summary
1 Introduction
Gems & Jewellery Sector
Classification
2 Objectives of the Study
3 Literature Review
Gems & Jewellery Sector in India
Diamond processing
High-end jewellery
Gems and Jewellery/ Background
Structural Characteristics
Market Players in Gems & Jewellery Industry
Diamond
Exports in Gems & Jewellery Industry
4 Research Methodologies
Nature of Data
Data Collection
Tools of Analysis
5 Data Presentation
Present state of the industry:
Diamonds
Future prospective:
Questionnaire Analysis
6 Conclusions
7 Bibliography
8 Annexure
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Acknowledgement
This project has been a great and unique experience of immense value for
me and I would like to thank Prof. B Padmanarayan for their valuable
guidance, encouragement and motivation throughout the period of survey.
I extend my heartfelt thanks for all those who have provided me with
necessary information and rendering assistance for the completion of the
survey.
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EXECUTIVE SUMMARY
Diamonds, gems and Jewellery have been a part of the Indian civilization since its
recorded history, the significance of the gems and Jewellery industry in the Indian
economic scenario is a development of the last three or four decades. In 1966-67, the
export turnover of the Gems & Jewellery industry was just Rs 220 m representing a 3
per cent of total merchandise exports. However, it has now grown to become one of
the leading export oriented industries in India recording an export turnover of around
Rs 91617.53 Crore during 2008-09, making it a significant foreign exchange earner
for the country.
The gems and jewellery sector, which has seen a substantial fall in exports since 2007
due to the withdrawal of a 6 per cent duty concession under the Generalized System
of Preferences on jewellery exports to the US, has been severely affected by the
economic meltdown.
As a result, India’s share of gems and jewellery exports to the US has come down
from 36 per cent in 2006 to 20 per cent in 2009.
The UAE was the largest importer of gems and jewellery from India in 2008-09, with
a share of 31 per cent. This was followed by Hong Kong with a 25 per cent and the
US with 20 per cent. The gems and jewellery sector accounted for 13 per cent of
India’s total merchandise exports.
During April 2009, the total gems and jewellery exports of the country was $1,144
million, as against $1,740 million during the same period last fiscal, a fall of about 34
per cent.
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INTRODUCTION
Gems & Jewellery Sector
Diamonds, gems and Jewellery have been a part of the Indian civilization since its
recorded history, the significance of the gems and Jewellery industry in the Indian
economic scenario is a development of the last three or four decades. In 1966-67, the
export turnover of the Gems & Jewellery industry was just Rs 220 m representing a 3
per cent of total merchandise exports. However, it has now grown to become one of
the leading export oriented industries in India recording an export turnover of around
Rs 875 bn during 2006-07 and contributing 16 per cent of total exports, making it a
significant foreign exchange earner for the country.
Classification:
Gems & Jewellery Sector
1. Polished Diamonds: India is one of the best markets in the world in the polished
diamonds for its world-class quality of diamonds as well as exquisite cutting
skills. Over 83 per cent of India's Gems & Jewellery cut and polished diamonds
account for exports. Jaipur and Surat are famous as world class polishing and
designing centers.
2. Gem Stones: This category refers to the stones other than diamonds, these stones
comes under two basic categories that are precious stones and Semi precious
stones. There is a huge demand for these gemstones especially of Sapphire,
Emerald and Ruby. India's exports of gems have crossed 5000000 carats this year.
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3. Gold and Jewellery: This category represents the gold and Jewellery, which is
used in the manufacturing of various ornaments. Indian is the country that is the
largest consumer of gold in the world, In the year 2007 gold consumption in India
was 850 tons 33% up from the last year.
4. Synthetic Stones: Synthetic diamond is diamond produced through chemical or
physical processes in a laboratory. Like naturally occurring diamond it is
composed of a three-dimensional carbon crystal. Synthetic diamonds are also
called cultured diamonds. Synthetic diamond is not the same as diamond
imitation, which can be made of other material. This is an upcoming market in
India.
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STATEMENT ABOUT THE PROBLEM
India has been one of the most important countries for the production of Gems and
Jewellery. One of the highlights is the production of Studded Jewllery. Studded
Jewellery trading in India is age old as it is established by the fact that in 1650 A.D.,
sources report the employment of more than 60,000 workers in the Eluru mines,
where they dug and washed the precious stones. Today though India has almost no
raw Studded Jewllery left within her own soil still we produce 70% of the World
gems in terms of quantity and 45% in terms of value. India is the country which
discovered gems and initiated gem craft. The gems produced here gave birth to a
fabulous industry and global trade.
Indian Gems and Jewellery Industry have achieved a premier position in the
International market. Today India has been recognized as a significant manufacturing
exporting center apart from its traditional strengths in handmade jewellery, the
country has niche for itself in machine made commercial jewellery arena. The export
industry has come of age and is now entering a new phase of development. Gearing
up to achieve further growth, the industry has already captured a 55% share of world
market by the turn of this century.
India is a primary source of imports for the developed countries, mainly because of
abundant availability of skilled and cheap labor, but now this no longer remains the
competitive edge for India as heavy competition is faced by various countries like
China, Thailand and Sri Lanka. But at the same time, India has managed to keep its
position healthy and have brighter prospects ahead.
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OBJECTIVES OF THE STUDY
To review the present status of the Indian Gems and Jewellery Sector
& Analyze its contribution to the economy.
To critically evaluate the export performance of Indian Gems And
Jewellery sector over the years and its share in the global trade in
Gems And Jewellery
To study about the competitive position of Indian Gems and Jewellery
export.
To find out who is better potential importers of Indian Gems &
Jewellery product.
To analysis the vital steps for improving the Gems & Jewellery
export.
To understand the importance and effectiveness of export in present
market situation.
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LITERATURE REVIEW
GEMS & JEWELLERY SECTOR IN INDIA
Gems and jewellery play a significant role in Indian customs and traditions, making
this sector integral to the economy and one of the fastest growing industries in the
country.
Worldwide, the gems and jewellery industry has been growing at a good pace and is
currently estimated at over US$ 130 billion. In India, it accounts for nearly 20 per
cent of total Indian exports. It provides employment to 1.3 million people directly and
indirectly.
Apart form being the world’s largest diamond processing (cutting and polishing)
country with an 80 per cent share in world market India’s favorable trade policies
have made India the hub for gems and jewellery.
Leading Branded jewellery is the new mantra in the market, having rapidly acquired a
niche over the past few years. Increasing purchasing power and disposable incomes of
India’s middle class has resulted in consumption growth of this industry by about 11
per cent in the five-year period preceding 2006-07. Add to that the insatiable Indian
craving for gems and jewellery, and the demand will skyrocket to US$ 20 billion by
2010 and US$ 30 billion in 2015, according to industry experts.
India’s gems and jewellery industry has been allowed 51 per cent foreign direct
investments by the government in single brand retail stores attracting both global and
domestic players to this sector. The burgeoning retail industry in India is instrumental
in innovatively marketing and branding diamonds and traditional jewellery, making
inroads in this sector and contributing to the nation’s economy. According to a report
released by Technopak Advisors on Changing Retail Landscape in India, the
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jewellery and watches market is pegged at about US$ 13.52 billion. It is expected to
register a 12 per cent growth by 2012, touching US$ 23.54 billion.
India’s economic boom in the country has translated into a large consumer market for
jewellery and other luxury products, offering a lucrative opportunity for major brands
to make their foray into the Indian market and establish their presence. Experts
believe that by 2013, India will become the biggest consumer of jewellery.
The history of the Indian gem and jewellery, a $30-billion industry, began and
flourished in the two leading States of Maharashtra and Gujarat. Exports from the
industry fetched $17.1 billion in 2006-07 against $16.64 billion in 2005-06, showing a
growth of 26 per cent. But in past 1 year we have seen some decline due to recession.
The journey of a diamond is said to begin with mining of roughs followed by sourcing
them by trading firms after which they trade it with the processors who then process
the rough diamonds to manufacture cut and polished diamonds which then end with
the trade of the polished diamonds.
Diamond processing
Today, India houses the worlds’ largest diamond processing (cutting and polishing)
industry with an estimated 1,000,000 processors. India processes over 57 per cent of
the world’s rough diamonds by value. It is said that 11 out of 12 stones (diamonds) set
in jewellery are cut and polished in India. Surat in Gujarat is home to a majority of
these diamond processors. India’s exports of cut and polished diamonds in calendar
year 2008 stood at Rs 48,905.57 crore or 349.389 lakh carats down 9.25 per cent from
Rs 53,892.02 crore or 419.9 lakh carats during same period in 2007.
Processing is done on rough diamonds in full range of sizes and qualities, including
stones larger than 10 carats.
Diamond trading hub
After making its mark in the world diamond processing industry, the industry
fraternity has taken up the motto to make ‘India the diamond trading hub’. Thus
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Mumbai, the financial capital of the country, is said to be Indian Antwerp in the
making.
The current format of diamond trade has four different types of channels involved in
the sourcing and trading of diamonds namely:
Centralized distribution
Direct selling
Rough trade
Brokerage
Bharat Diamond Bourse, a service oriented non-profit guarantee company, is an 18
lakh sq. ft. complex in Mumbai. It was set up with the primary objective of
establishing necessary infrastructural facilities for promotion of export of diamonds,
including jewellery from India and to make India an international trading centre.
Instituted to cater to all the needs of the diamond trade, the bourse is anticipated to
deal with over 30,000 people a day. The facilities here will include offices of diamond
traders, strong rooms, lockers, customs clearance facilities with all the modern
facilities required to carry day-to-day business.
High-end jewellery
As the gem and jewellery companies are based out of Mumbai, the city is home to
various types of jewellery from the traditional to the high-end designer fashion
jewellery. It is one of the largest producers and exporters of jewellery, which is
estimated to be over $13 billion. Prominently, it accounts for over 15 per cent of the
world jewellery fabrication pie.
Not only this, India is one of the fastest growing markets for jewellery, growing at the
rate of 10.20 per cent per annum over the last five years. Today, the Indian consumer
market for jewellery is said to be $13.1 billion, an increase of close to 8 per cent over
the previous year. A study by KPMG says that India is set to realize total jewellery
sales of $21 billion by 2010 and $37 billion by 2015. Currently, out of the eight key
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world retail markets, the US is number one accounting for 31 per cent of the jewellery
sales. India and China follow with 8.3 and 8.9 per cent respectively.
According to the KPMG study, India’s growing importance in the global jewellery
market is only expected to increase in the future. The total demand is expected to
reach $18.25 billion in 2010 and to $ 28.28 billion in 2015. Diamond jewellery
consumption in India is estimated to jump by 78 per cent in 2010.
Forecast
India and China together are predicted to emerge as a market equivalent to that of the
US by 2015, according to the KPMG report on the global gems and jewellery industry
– Vision 2015: Transformation for Growth. The industry can see capital infusion of
around $ 10 billion, according to experts.
As per forecasts, by the year 2015, the industry will witness a good fragmentation in
the jewellery retail business while keeping the area of diamond mining, sourcing,
processing within the confines of either niche or mass players.
Mining is at the heart of the gem and jewellery industry as the activity is the only
natural source of raw material for the industry. The Geological Survey of India has
stated that India has a great potential for diamond deposits. Based on this and
independent analyses, some of the diamond exploration companies are making efforts
to make India another target destination for diamond exploration. Maharashtra
features on the list of potential states for diamond exploration.
The Gem and Jewellery Export Promotion Council (GJEPC) is primarily involved in
introducing the Indian gem & jewellery products to the international market and
promoting exports. To achieve this, the Council provides market information to its
members regarding foreign trade inquiries, trade and tariff regulations, import duties,
and information about jewellery fairs and exhibitions. It also takes up relevant issues
with government and agencies connected with exports and submit documents for
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consideration and inclusion in the EXIM Policy. There are a lot of opportunities from
setting up factories to retailing through showrooms for a prospective investor
Gems and Jewellery/ Background
The two major segments of the gems & jewellery (GJ) business
in India are gold and diamond jewellery. The GJ industry has
an important role in the Indian economy. While a
predominant portion of gold jewellery manufactured in India
is for domestic consumption, a large portion of rough, uncut
diamonds processed in the form of either polished
diamonds or finished diamond jewellery is exported. With
an estimated consumption of around 800 tonnes during 2007
(including jewellery consumption), India is the largest consumer of gold in the world.
India is also estimated to hold nearly 14,000 tonnes of gold, accounting for nearly 9%
of the world’s cumulative mine production. Apart from its historical religious
significance, gold is valued as an important savings and investment vehicle.
Gold in Indian families remains the Indian bride’s `Streedhan’, the wealth she takes
with her when she marries and which remains hers. Gold jewellery is the preferred
jewellery worn by women in India irrespective of their religious beliefs. Gold
jewellery is very popular among farmers, with an upsurge in gold sales after a good
agricultural season. Buying of gold is also an important part of every stage of an
Indian citizen’s life—at birth, marriage, construction of home, festivals, religious
ceremonies, setting up of new business, and death.
SIZE
Large market for Gems & Jewellery with domestic sales of over $10 billion
4% of the global Gems and Jewellery market
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Exports of over US $15.5 billion; over 18% of India’s exports. According to
recent statistics of the Gems & Jewellery Export Promotion Council (GJEPC),