Wednesday, December 29, 2010
Gems & Jewellery Market in India
Gems and jewellery form an integral part of Indian tradition. A legacy passed from one generation to another. The components of jewellery include not only traditional gold but also diamond, platinum accompanied by a variety of precious and semi-precious stones.
The Indian gems and jewellery market is set to cross US$ 26 billion by 2012, on the back of improving lifestyle and availability of skilled labour, as per a report ‘Indian Gems and Jewellery Market – Future Prospects to 2011’, by RNCOS.
India, the largest consumer and importer of gold in the world, is projected to import around 500-550 tonnes of gold in 2010, as per AnjaniSinha, head of the Indian Bullion Market Association (IBMA).
As per the credit rating agency Crisil, the diamond industry in India is predicted to remain stable during 2010-11 due to improved prices and steady demand.
The Gem and Jewellery Export Promotion Council (GJEPC) predicts that the gems and jewellery exports would witness a rise of around 5 per cent year-on-year during FY11.
Although, the market is highly dominated by the unorganised players, with increase in consumer income and economic prosperity, the future of organised retail in India is very bright. The braded jewellery sector is estimated to reach US$ 2.2 billion by 2010 on the back of quality consciousness among target consumers, as per a McKinsey report.
The Gem and Jewellery Export Promotion Council's (GJEPC) performance figures for the financial year 2009-10 showcased the true resilience of the Indian industry over the last year whence it continued with its consistent plans of building trading relations and penetrating newer markets.
In its bid to enhance the market strategy, a gems and jewellery special economic zone (SEZ) sprawling over 40 acres with an investment of US$ 441.1 million is being planned to be set up by Gold Souk, the jewellery mall developer. The company plans to have residential apartments named Gold Souk City, apart from having gems and jewellery manufacturers from Thailand and Dubai who will open their units in India.
Total net imports of gems and jewellery in April 2009- June 2010, touched US$ 81.08 billion (provisional figures) as compared to US$ 56.43 billion posed in the corresponding period in the previous year, according to GJEPC.
India is one of the largest bullion markets in the world. It has been until now, the undisputed single-largest Gold bullion consumer.
Gold imports stood at 739 tonnes during April 2009-March 2010. According to SanjivBatra, Chairman and Managing Director, MMTC Ltd - the country's top gold importer, stated that the company is likely to import 200 tonnes of the precious metal in the current fiscal year.
The net imports of gold bars during April-June 2010 was estimated at US$ 11.36 billion (provisional), ascompared to US$ 16.66 billion the first quarter of last fiscal.
In the world official gold holdings ratings, India stood at 11th position with 557.7 tonnes of gold reserve as of June 2010, as per the World Gold Council.
India is the largest consumer of gold jewellery in the world, accounting for about 20 per cent of global gold consumption.
According to a release by the World Gold Council, during the first quarter of 2010 (Jan-Mar) India was ranked as the strongest performing market on the back of increase in consumer demand. The country registered an increase of 698 per cent to 193.5 tonnes.
India is the world's largest diamond cutting and polishing centre in the world.
Surat is India's diamond processing hub, contributing over 80 per cent of the country's diamond processing industry with annual revenue of around US$ 13.03 billion.
India is the world's largest diamond cutting and polishing centre in the world. It accounts for 60 per cent value share, 82 per cent by carats and 95 per cent share of the world market by number of pieces.It is the third largest consumer of polished diamonds after the US and Japan.
Due to the increasing gold prices, platinum jewellery has gained momentum in the past few years not only worldwide but also in India. As per the Platinum Guild International (India), the number of outlets selling platinum jewellery increased from 12 in 2000-01 to over 300 currently. It is predicted that the number of outlets selling platinum jewellery would increase to around 1,000 outlets in the next 2-3 years. Most platinum jewellery manufacturers are targettingconsumers in the age group 20-40 years with high disposable income.
The Indian costume jewellery market is also witnessing growth in the international market, as per the Export Promotion Council for Handicrafts. The industry body further stated that the Government is also working towards formulating an international compliance code for manufacturing costume jewellery.
The currentglobal costume jewellery and accessories market is estimated at US$ 16.3 billion, of which India only exports around US$ 53 million, thereby, providing a huge opportunity area for the Indian costume manufacturers.
Exports rose to US$ 8.89 billion during April-June 2010 from US$ 5.3 billion in the corresponding period last year, registering 67.6 per cent growth in the total gem and jewellery exports, as per data released by the Gem and Jewellery Export Promotion Council (GJEPC).
The figures for export of gold jewelleryin June 2010stood at US$ 610.40 million representing a growth of 39.6per cent as compared to US$ 437.24 million in June 2009.
The export of coloured gemstones stood at US$ 60.88 million reflecting a growth of 5.22 per cent in April-June 2010 as compared to US$ 57.86 million during the same period last year. During June 2010, US$ 23.94 million worth of coloured gemstones were exported.
The rough diamond exports stood at US$ 247.94 million whereas the cut and polished diamond exports posted a growth of 85.37 per cent with US$ 5.9 billion worth of exportsduring the first quarter of 2010-11. In June 2010 itself, cut and polished diamond exports stood at US$ 2.2 billion.
In order to open a new avenue for the bullion trader community with improved trading practices and increased delivery centres, the recent strategic tie-up between Bombay Bullion Association (BBA) and Indian Commodity Exchange Ltd (ICEX) has opened an avenue to harness the huge investment potential lying with the small and the unorganised players. It further offers membership to all the BBA members. It further, jointly deepens the markets in order to encourage wider participation, by providing multiple delivery centres across the country by leveraging on MMTC's and BBA's pan-India network. BBA will be an important stake holder in exchange's efforts in strengthening the delivery infrastructure and also in launching customised contracts suited to requirements of Indian markets.
In a move to boost the industry, the government has formulated new rules for faster clearance of import and export consignments of specific goods including jewellery and gems.
Furthermore, the government has incorporated some other measures like providing interest subvention of 2 per cent to labour intensive export sectors and duty drawback facilities, in order to promote gems and jewellery export.
The Road Ahead
The country-specific trade centre of India, the India Trade and Exhibition Centre (ITEC), will start functioning in Sharjah from October 2010. ITEC will be a one-stop-shop for Indian businessmen and small and medium enterprises (SMEs), which will assist them to explore potential markets and opportunities in the UAE, Gulf Cooperation Council (GCC) nations, the Middle East and North African region. ITEC will organise exhibitions every month till June next year with focus on gems and jewellery being showcased in April 2011. The exhibitors who will showcase their products in these exhibitions will be organised through the export promotion council.
The Gems and Jewellery Export Promotion Council has initiated IIJS Signature to promote India as the preferred source for jewellery and eventually build Brand India. Signature was conceptualised to showcase India's ability to produce quality jewellery that will match the lifestyle trends world over.
GJEPC hosted IIJS Mumbai 2010 considered to be the largest jewellery show in Asiain August, 2010 to highlight India's capabilities to manufacture jewellery in terms of design, craftsmanship and quality at par with international centres and also to foster relations with other markets around the world.