Gems and Jewellery (GJ) has been used by the Indian civilisation since ages for both its aesthetic as well as investment purposes. Precious metals and stones have been an integral part of the Indian civilisation since its recorded history. India has the distinction of being the first country to introduce diamonds to the world. The country was also the first to mine, cut & polish and trade in diamonds.
The GJ industry can be classified into various sub-segments like diamonds, coloured stones, gold and silver jewellery, pearls, etc. However, the two major segments in India are gold and diamonds. India dominates the diamond processing trade with 11 out of 12 diamonds being cut and polished in India. India also dominates the gold and silver consumption globally with consumption of about 800 tonnes p.a. The industry holds prominent significance as it is a net exporter and provides employment to 1.3 mn people directly and indirectly. The industry is characterised by highly unorganised trade, labour-intensive operations, working capital & raw material intensiveness, price volatility of gold especially and export orientation. Demand for gold and diamond jewellery is driven by festivals and wedding, increasing affluent and middle-class population, increase in per capita spend on luxury items, etc. Though India plays a dominant role in the GJ industry in terms of processing and consumption, mining of gold and diamond is amongst the lowest in the world. India imports gold and rough diamonds along with other precious metals. Gold is purchased from countries like Switzerland, South Africa, Australia, UAE, etc and rough diamonds are sourced from Belgium, UK, Israel, UAE, etc. With political pressure to increase local beneficiation in African mining nations, new cutting and polishing centres like Botswana, Nambia, Angola will emerge, reducing India’s dominance in diamond processing.
We expect organised sales to grow due to changing buying preference by growing young population, the introduction of Hallmarking and Certifications. The key drivers for the industry growth are rising disposable income, conscious marketing efforts, rising young population with the urge to spend and jewellery regarded as a fashion accessory. However, with current economic crises worldwide, spend on luxury goods will reduce impacting the GJ industry considerably. Also, exports have taken a hit with key consuming nations like the US and Europe in recession. In this time of economic crises, with higher costs and reducing margins, we expect the large diamond processing companies to forward integrate to relatively higher-margin areas like jewellery fabrication/ retail. The industry is likely to witness consolidation with small players either shutting down operations or merging with larger players The Indian Gems and Jewellery (GJ) industry is dominated by diamond processing for exports and gold and silver consumption domestically. The Indian jewellery market is worth about Rs. 700 bn (USD 16 bn). Of this, domestic demand for gold jewellery is estimated at about 80% and the balance comprises diamond jewellery and other fabricated jewellery. Demand for gold in India has an inverse relationship with price volatility. With increased volatility in current months, the consumption has declined. However, gold is also considered a natural hedge against inflation and is considered a safer option in times of economic uncertainty which leads to gold demand in the form of retail investments and Exchange Traded funds (ETF). Prices of diamonds are dictated by the demand-supply gap with demand dominated in western countries, especially the US. In the current economic crisis, how will the Indian GJ industry cope up? What are the new emerging trends in the industry? What is the impact of local beneficiation in diamond processing? The report seeks to answer the above issues using reliable sources of primary and secondary data and our views on the same. This report on the GJ industry outlines the future demand growth for the industry, changing trend in the Indian retail jewellery market and future of diamond processing. The report is indispensable for any company in the GJ industry, banks/ FIs, policymakers, research & academic organizations, other international and national agencies, etc. Additionally, the monthly updates (for the period January-2009 to December- 2009) accompanying the subscription of the said report would form a potent tool for the subscribers to keep abreast of the happenings in the industry The report elucidates facts on the Indian Gems and Jewellery Industry, supplemented by the latest available data. Emphasis is laid on the following topics to accomplish the report.
Evolution and current state of the industry. The product profile of various categories of gems and jewellery like diamond, gold, silver and coloured gemstones. Industry characteristics elaborated with respect to raw material, labour and working capital intensiveness, unorganised sector, export orientation and branding & certification. Demand supply scenario and comment on-demand drivers being continuous traditional demand, increasing affluent and middle-class population and shift in buying patterns. Extensive coverage on export & import trade with the latest 3 years data on product wise and country wise exports of gems and jewellery and product-wise imports of gems and jewellery. Cost analysis analyzing raw material cost and interest cost. A brief note on duty structure and government regulations in the industry. SWOT analysis and Porter’s Five Force model. A brief overview of five key companies with the latest 3 years data on financial and operational parameters, company action plan, their strengths and weaknesses and company outlook
Companies Mentioned:
Gitanjali Gems Ltd. Rajesh Exports Ltd. Asian Star Co. Ltd Suashish Diamonds Ltd. Su-Raj Diamonds & Jewellery Ltd
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