• 14th Pravasi Bharatiya Divas, Bengaluru
  • 14th Pravasi Bharatiya Divas, Bengaluru
  • A Coffee Table publication titled, "20 Mission Drive Social Impact Innovations" produced by Economic Diplomacy Division was released by the Hon'ble Prime Minister
  • Hon'ble Prime Minister Sh. Narendra Modi felicitating the 20 innovators selected through the MEA-NITI Aayog National Social Innovation Contest.
  • Global Technology Summit 2016 Click here for details
  • Global Technology Summit 2016 Click here for details
  • Ministry of External Affairs organises India-Latin Americas and the Caribbean (LAC) Conclave in Guadalajara, Mexico to enhance economic cooperation between India and LAC countries.
  • Ministry of External Affairs organises India-Latin Americas and the Caribbean (LAC) Conclave in Guadalajara, Mexico to enhance economic cooperation between India and LAC countries.
  • Global Technology Summit 2016 Click here for details
  • National Contest on Social Innovation, Pravasi Bhartiya Divas 2017
  • The Framework Agreement of the International Solar Alliance was opened for signing on 15 November 2016. On the first day of its opening 16 countries have signed the framework agreement. More countries are expected to sign the framework agreement in the coming days.
  • MEA - ED and BM Divisions along with Cll organized the India- Myanmar Business Roundtable on 19 October 2016 in New Delhi
  • ED Division continues MEAs engagement with Africa by sponsoring the India Africa Health Sciences Meet in New Delhi
  • 18 member multi-sector delegation from Nanjing, China interacting with Shri Nagaraj Naidu, Director & HOD, ED on 16 August 2016
  • Hon'ble Minister for External Affairs chaired Pravasi Bhartiya Diwas Panel-6 on "Edu, S&T & Innovation" on 30 July 2016. The Panel discussed tech solutions for societal problems, edu for tomorrow and Start Ups.
  • Hon'ble Prime Minister inaugurated investment guides for Indian investors who wants to do business with Kenya and Mozambique during his recent tri-nation visit to Africa. The publication was brought by ED Division with support from Indian Missions in Kenya and Mozambique.
  • Indian dignitaries at the inauguration of India pavilion at INNOPROM exhibition in Yekaterinburg Russia
  • ED Division facilitated visit of a Chinese delegation led by Mr Wang Hao, Mayor of Chaoyang district of Beijing Municipality and arranged meetings with officials of Municipal Corporation of Gurgaon and FICCI on 21 June 2016. (Press Release)
  • ED Division facilitates meeting of CEO of the British Columbia Investment Management Corporation Mr Gordon Fyfe and Team with Hon'ble Transport Minister Shri Nitin Gadkari and CEO NITI Aayog Shri Amitabh Kant on 16 June 2016
  • ED Division facilitates meeting of CEO of the British Columbia Investment Management Corporation Mr Gordon Fyfe and Team with Hon'ble Minister of Finance, Shri Arun Jaitley and CEO NITI Aayog Shri Amitabh Kant on 16 June 2016
  • Inter-Ministerial Meeting on Pharmaceuticals and Healthcare Sector in Africa
  • BRICS India 2016
  • Smt. Harsimrat Kaur Badal, Minister of Food Processing & Industry briefing representatives of foreign Embassies on opportunities in food processing sector in India in a meeting facilitated by ED Division on 17 March 2016 at Panchsheel Bhawan, New Delhi.
  • Investment
  • India at a glance
  • Trade
  • Economy

Industry & Sectors

Gems and Jewellery

Last Updated: October, 2016

Introduction

The Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 6-7 per cent of the country’s GDP. One of the fastest growing sectors, it is extremely export oriented and labour intensive.

Based on its potential for growth and value addition, the Government of India has declared the Gems and Jewellery sector as a focus area for export promotion. The Government has recently undertaken various measures to promote investments and to upgrade technology and skills to promote ‘Brand India’ in the international market.

India is deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour. India is the world’s largest cutting and polishing centre for diamonds, with the cutting and polishing industry being well supported by government policies. Moreover, India exports 95 per cent of the world’s diamonds, as per statistics from the Gems and Jewellery Export promotion Council (GJEPC). The industry has generated US$ 38.6 billion of revenue from exports in 2015-16, making it the second largest exporter after petrochemicals.

India's Gems and Jewellery sector has been contributing in a big way to the country's foreign exchange earnings (FEEs). The Government of India has viewed the sector as a thrust area for export promotion. The Indian government presently allows 100 per cent Foreign Direct Investment (FDI) in the sector through the automatic route.

Market size

The gems and jewellery market in India is home to more than 500,000 players, with the majority being small players.

India is one of the largest exporters of gems and jewellery and the industry is considered to play a vital role in the Indian economy as it contributes a major chunk to the total foreign reserves of the country. UAE, US, Russia, Singapore, Hong Kong, Latin America and China are the biggest importers of Indian jewellery.

The overall gross exports of Gems & Jewellery in April 2016 stood at US$ 3.23 billion, whereas exports of cut and polished diamonds stood at US$ 1.78 billion. Exports of gold coins and medallions stood at US$ 302.67 million and silver jewellery export stood at US$ 299.69 million in April 2016. The overall gross imports of Gems & Jewellery in April 2016 stood at US$ 2.90 billion.

According to a report by Research and Markets, the jewellery market in India is expected to grow at a Compound Annual Growth Rate (CAGR) of 15.95 per cent over the period 2014-2019.

The cumulative Foreign Direct Investment (FDI) inflows in diamond and gold ornaments in the period April 2000-March 2016 were US$ 772.05 million, according to Department of Industrial Policy and Promotion (DIPP).

During April-December 2015, India imported US$ 17.33 billion worth of raw material for gems and jewellery. With an 8 per cent share in polished diamonds, India has become the world's third largest diamond consumer.

Investments/Developments

The Gems and Jewellery sector is witnessing changes in consumer preferences due to adoption of western lifestyle. Consumers are demanding new designs and varieties in jewellery, and branded jewellers are able to fulfil their changing demands better than the local unorganised players. Moreover, increase in per capita income has led to an increase in sales of jewellery, as jewellery is a status symbol in India.

  • Rajesh Exports Limited (REL), a jewellery exporter and retailer, has won an export order contract worth Rs 1,045 crore (US$ 154.85 million) of designer range of gold and diamond-studded jewellery and medallions from Singapore.
  • KSS Limited, a digital and entertainment major, has forayed into the jewellery retailing business under the franchise model and is looking to open 500 stores under brand 'Bjewelz' which is owned by Birla Jewels Limited, a wholly owned subsidiary of KSS Limited.
  • De Beers Group, stated that India is one of the world's major markets for consumer sales of diamond jewellery and it has perhaps more growth opportunity than anywhere else in the world@.
  • Kerala-based Kalyan Jewellers plan to invest Rs 900 crore (US$ 133.55 million) over the next three years to expand its presence in the international markets like Sri Lanka, Singapore and Malaysia.
  • Melorra, a Bengaluru-based online jewellery start-up, has raised US$ 5 million funding from venture capital firm Lightbox Ventures, to build its brand, enhance its technology platform, and talent acquisition.
  • Major mining companies such as Rio Tinto, De Beers and Alrosa have decided to participate in the Indian Diamond Trading Centre (IDTC) which has been set up to eliminate the middlemen in diamond trade and allow Indian manufacturers to deal directly with miners.
  • India Bullion and Jewellers Association (IBJA) has signed an pact with the Bombay Stock Exchange (BSE) for setting up India’s first bullion exchange through a Special Purpose Vehicle (SPV), wherein IBJA and its constituents will hold 70 per cent and BSE will hold 30 per cent stake.
  • Global luxury brand Montblanc International has entered into a joint venture with India’s largest watch maker Titan Co Ltd and plans to start the retail operations in India by opening five Montblanc boutiques in Mumbai, Delhi, Hyderabad and Pune.
  • Jewellery major Joyalukkas plans to invest Rs 1,500 crore (US$ 220.08 million) on setting up 20 stores in India and 10 overseas. The new stores, which will come up almost in a year’s time, will add to the Thrissur-headquartered company's existing 95 outlets.
  • London-headquartered Gemfields, a multi-national firm specialising in colour gemstones mining and marketing, is planning to acquire colour gemstone mines in Odisha and Jharkhand, and participate in the exploration of the Kashmir sapphire mines in Jammu & Kashmir.
  • The India arm of US private equity (PE) firm Warburg Pincus picked up a minority stake in Kerala-based Kalyan Jewellers for Rs 1,200 crore (US$ 176 million). The jeweller plans to use the proceeds to fund its retail and manufacturing expansion plans.
  • Creador, a PE firm focused on long-term investments in growth-oriented businesses in Indonesia, India, Malaysia and Singapore, invested Rs 135 crore (US$ 20.28 million) for a minority stake in PC Jeweller Limited.
  • Indian exports will now receive concessional duty treatment in the US as it has renewed the Generalised System of Preferences retrospectively from August 1, 2013 – December 31, 2017.

Government Initiatives

The Reserve Bank of India has announced norms for gold monetisation scheme, which allows individuals, trusts and mutual funds to deposit gold with banks in return for interest, to help reduce gold imports and alleviate pressure on trade balance.

The Reserve Bank of India (RBI) has liberalised gold import norms. With this, star and premier export houses can import the commodity, while banks and nominated agencies can offer gold for domestic use as loans to bullion traders and jewellers. Also, India has signed a Memorandum of Understanding (MoU) with Russia to source data on diamond trade between the two countries. India is the top global processor of diamonds, while Russia is the largest rough diamond producer. The Government of India is planning to establish a special zone with tax benefits for diamond import and trading in Mumbai, in an effort to develop the city as a rival to Antwerp and Dubai, which are currently the top trading hubs for diamond.

Due to shortage of skilled manpower, the Gems and Jewellery Skill Council of India is planning to train over four million people till 2022. The council aims to train, skill and enhance 4.07 million people by 2022. The council plans to tie-up with the existing training institutes including Gemological Institute of America (GIA) and Indian Gemological Institute (IGI), along with setting up of new institutes in major diamond cutting and processing centres, Gems & Jewellery Export Promotion Council (GJEPC) said in a statement here.The GJEPC has also proposed to develop a jewellery park on Thane-Belapur Road which is around five kilometers from Mumbai with a view to boost the Mumbai-based jewellery industry by providing modern facilities and services. 

Indian Institute of Gems & Jewellery (IIGJ) Mumbai, a project of the Gem & Jewellery Export Promotion Council of India (GJEPC), has come-up with three-year Graduate Program in Jewellery Design & Manufacturing Techniques with an introduction to Management studies in collaboration with Welingkar Institute of Management.

In September 2015, the Government of India approved the gold monetisation plan in the form of revamped Gold Deposit Scheme (GDS) and the Gold Metal Loan (GML) Scheme to mobilise tonnes of gold stored in households and temples across the country. The Union Cabinet also approved the introduction of Sovereign Gold Bond Scheme, under which gold bonds denominated in grams of gold will be issued to individuals by the Reserve Bank of India (RBI), in consultation with Ministry of Finance.

Road Ahead

In the coming years, growth in Gems and Jewellery sector would be largely contributed by the development of large retailers/brands. Established brands are guiding the organised market and are opening opportunities to grow. Increasing penetration of organised players provides variety in terms of products and designs. Also, the relaxation of restrictions of gold import is likely to provide a fillip to the industry. The improvement in availability along with the reintroduction of low cost gold metal loans and likely stabilisation of gold prices at lower levels is expected to drive volume growth for jewellers over short to medium term. The demand for jewellery is expected to be significantly supported by the recent positive developments in the industry.

Exchange Rate Used: INR 1 = US$ 0.0149 as on September 29, 2016

References: Media Reports, Press Releases, Department of Industrial Policy and Promotion (DIPP), Reserve Bank of India, Gem & Jewellery Export Promotion Council

Note: @ - As per Mr Bruce Cleaver

DOING BUSINESS IN INDIA

A study has been done by Ernst and Young India with the intention of providing an overview of the investment climate, taxation, forms of business organisations, and business and accounting practices in India.

To view full Text Click Here