Sikkim Manipal University

Scope of Indian Gems and Jewellery

Industry in International Market

A PROJECT REPORT

Submitted by

MONISHA KALA

Masters in Business Administration

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 Acknowledgement

“For any successful work, it owes its thanks to many”

I am grateful to Mr. Achin Jain whose encouragement, guidance and

support from the initial to the final level enabled me to develop an

understanding of the subject.

I am grateful to Dr. Devendra Sharma whose guidance enabled me

to complete the project as per requirements.

Lastly I offer my regards and blessings to all of those who supported me

in any respect during the completion of the project.

Signature of the student

( )

Name of the student

(Monisha Kala )

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 Table of Contents

SR.NO TOPIC PAGE NO

1. Acknowledgement 2
2. Introduction 5
3. Statement About the Problem 6
4. Objectives of the Study 7
5. Research Methodology 8
6. Evolution of Jewellery Industry in 10

India
7. Introduction to Indian Gems and 12

Jewellery
8. Introduction Of The Company
9.  Meaning of Silvex 14
10.  Vision 15

11.  Company Profile 16

12.  Products of the company 18

13. The Industry Structure 19
14. Facts & Figures of Indian Gems and 24

Jewellery
15. SWOT Analysis of Indian Gems & 25

Jewellery
16. Government policy 27
17. Strategies for Enhancing Exports to 30

US
18. Exports of Gems and Jewellery 33

Sector

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 19. Questionnaire Analysis 39
20. Future outlook 49
21. Conclusion 52
22. Bibliography 53
23. Annexure
24.  Questionnaire 54

Introduction

It is an opportunity to do the final project on Scope of Indian Gems and Jewellery

Industry in International Market which is the second largest earner of foreign
exchange only next to Textile sector. Project on Gems and Jewellery Sector of India is
uncommon & that on its export to US Market is rare. As we know, US, the largest
consumer in the world and hence is a lucrative market.

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Thus exports to US are everyone’s priority. There are many countries exporting to US
and are in direct competition with India. Thus every move of India shall be a strategic
move and shall have a long term benefit out it. Hence there is a requirement of
devising a strategy for the Indian Gems and Jewellery Sector for exports to US. This
strategy will help all the players in this sector to incorporate this strategy in its core
activities and get a competitive advantage over the other countries exporting to US.

So, selecting a project on “Scope of Indian Gems and Jewellery Industry in US

Market” is an obvious & important decision.

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

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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 original 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.

OBJECTIVES OF THE STUDY

 To review the present status of the Indian Gems and Jewellery Sector & Analyze

its contribution to the economy.

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 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 analysis the vital steps for improving the Gems & Jewellery export.

 To understand the importance and effectiveness of export in present market

situation.

 To examine in detail the US as a market for Gems and Jewellery and India’s

current performance in the market, with particular focus on Jaipur.

RESEARCH METHODOLOGY

The appropriate research design formulated is detailed below.

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Exploratory research: this kind of research has the primary objective of development

of insights into the problem. It studies the main area where the problem lies and also

tries to evaluate some appropriate courses of action.

The research methodology for the present study has been adopted to reflect these

realties and help reach the logical conclusion in an objective and scientific manner.

The present study contemplated an exploratory research

NATURE OF DATA
Primary data: Primary data will be collected through a questionnaire raised

among the Gems And Jewellery traders and manufacturers in

Jaipur

SAMPLE SIZE 100

SAMPLE AREA JAIPUR

SAMPLE UNIT GEMS AND JEWELLERY TRADERS &

MANUFACTURERS OPERATING IN JAIPUR, IN

PARTICULAR THE OWNERS, MANAGERS & OTHER

OFFICIALS OF GOSIL EXPORTS (JAIPUR)

SAMPLING TECHNIQUE RANDOM SAMPLING TECHNIQUE

Secondary data: secondary data that is already available and published .it could be

internal and external source of data. Internal source: which originates from the

specific field or area where research is carried out e.g. publish broachers, official

reports etc.

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External source: This originates outside the field of study like books, periodicals,

journals, newspapers and the Internet.

DATA COLLECTION
Secondary data has been used which is collected through articles, reports, journals,

magazines, newspapers reports prepared by research and internet.

SAMPLING TECHNIQUE

Random sampling technique has been employed to extract the fruitful results.

EVOLUTION OF JEWELLERY INDUSTRY IN INDIA

The Indian subcontinent has the longest continuous legacy of jewellery making
anywhere since Ramayana and Mahabharata times. While Western traditions were

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heavily influenced by waxing and waning empires, India enjoyed a continuous
development of art forms for some 5000 years. One of the first to start jewellery
making were the peoples of the Indus Valley Civilization. By 1,500 BC the peoples of
the Indus Valley were creating gold earrings and necklaces, bead necklaces and
metallic bangles. Before 2,100 BC, prior to the period when metals were widely used,
the largest jewellery trade in the Indus Valley region was the bead trade. Beads in the
Indus Valley were made using simple techniques. First, a bead maker would need a
rough stone, which would be bought from an eastern stone trader. The stone would
then be placed into a hot oven where it would be heated until it turned deep red, a
colour highly prized by people of the Indus Valley. The red stone would then be
chipped to the right size and a hole drilled through it with primitive drills. The beads
were then polished. Some beads were also painted with designs. This art form was
often passed down through family; children of bead makers often learnt how to work
beads from a young age. Jewellery in the Indus Valley was worn predominantly by
females, who wore numerous clay or shell bracelets on their wrists. They were often
shaped like doughnuts and painted black. Over time, clay bangles were discarded for
more durable ones. In India today, bangles are made out of metal or glass. Other
pieces that women frequently wore were thin bands of gold that would be worn on the
forehead, earrings, primitive brooches, chokers and gold rings. Although women wore
jewellery the most, some men in the Indus Valley wore beads. Small beads were often
crafted to be placed in men and women’s hair. The beads were about one millimeter
long. A female skeleton (presently on display at the National Museum, New Delhi,
India) wears a carlinean bangle (a bracelet) on her left hand. India was the first
country to mine diamonds, with some mines dating back to 296 BC. India traded the
diamonds, realizing their valuable qualities. This trade almost vanished 1,000 years
after Christianity grew as a religion, as Christians rejected the diamonds which were
used in Indian religious amulets. Along with Arabians from the Middle East
restricting the trade, India’s diamond jewellery trade lulled. Today, many of the
jewellery designs and traditions are still used and jewellery is commonplace in Indian
ceremonies and weddings.

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INTRODUCTION TO INDIAN GEMS AND JEWELLERY
INDUSTRY

India is a leading player in the global gems and jewellery market. The gems and
jewellery industry occupies an important position in the Indian economy. It is a
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leading foreign exchange earner, as well as one of the fastest growing industries in the
country.
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.
 Gemstones
 Diamonds
 Colored Stones-precious, semi-precious, synthetic

 Jewellery
 Plain gold Jewellery
 Studded Jewellery
 Silver Jewellery
 Costume Jewellery

 Pearls

The two major segments of the GJ business in India are gold jewellery and diamond
jewellery. While a predominant portion of gold jewellery manufactured in India is for
domestic consumption, a predominant portion of rough, uncut diamonds processed in
India in the form of either polished diamonds or finished diamond jewellery is
exported. Gold jewellery forms around 80 per cent of the Indian jewellery market,
with the balance comprising fabricated studded jewellery that includes diamond
studded as well as gemstone studded jewellery. Preference for gold dominates the
domestic jewellery demand. The domestic demand for gold jewellery is estimated at
Rs. 390 billion in 2005, accounting for an estimated 80% of the Indian jewellery
market of Rs. 490 billion. The balance comprises diamond jewellery (Rs. 80 billion),
and other fabricated jewellery (Rs. 20 billion).
The Indian gems and jewellery industry is competitive in the world market due
to its low cost of production and the availability of skilled labor. In addition, the
industry has set up a worldwide distribution network, of more than 3,000 offices for
the promotion and marketing of Indian diamonds.

Changing Scenario
Yesterday Today

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 Unbranded Branded

Silver and Gold Jewellery Gold and Diamond Jewellery

Investment Investment + Fashion

Traditional Design Fashionable and Innovative Design

Introduction of the Company

SILVEX is a name coming up in the world of manufacturing and exporting, sterling,

silver & gold jewellery. SILVEX has been playing a leading role in the field of
manufacturing and exporting sterling silver & gold jewellery with precious & semi
precious stones for over a decade. Silvex is gradually becoming one of the leading
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manufacturers and the exporters of the sterling silver & gold jewellery with precious
and semi precious stones. Silvex is always harping on the innovative concept of
designing exquisite jewellery for the customer-oriented market. Silvex is always
prepared to manufacture the customer-oriented jewellery in the world jewellery
market. It is catering to the customer the customer-oriented jewellery based on eye-
catching designs.

Vision

 Since incorporation in 1994, we always believe that jewelry plays an

important role as an integral part of one’s daily attire. As jewelry becoming
more popular, people tend to be more selective in their jewelry demand. Based
on that, we have committed to provide our customers with a wide range of
valuable products selection at a reasonable price.

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 Recently jewelry industry is facing the most difficult period ever. The current
economic scenario has made people to think more before making decision to
buy jewelry. This resulted in the disappearing of many jewelry players since
they were going out of the business. Even though in this gloomy situation,
with conservative approach, we at SILVEX still exist and keep our dedication
to be more stable and sustained growth of better performance.

 Since the beginning, we managed to maintain the healthy management

principles, which have led us to the achievement of the lowest break-even
point in jewelry industry. Significantly we tower above the other players with
higher sales, sound financial reserves and high profitability.

 In the next few years, the industry will deal in harder time indicating by
dropping sales hitting the bottom line as a result of severe competition
amongst the players. The industry is expected to become more oligopoly. With
strong background, supported by sophisticated infrastructure, vertical
integration and dedicated experienced professional teamwork, we are being
exempted by this tougher time.

 Finally as the leading player in the industry, SILVEX Group will continue to
hold its commitment in providing customer satisfaction for people to look
stylist in affordable price.

Company Profile

 SILVEX Group was founded in 1994 by the two visionary and innovative
entrepreneurs Mr. Arvind Agarwal and Mr. Ravi Agarwal, as a result of their
passion for jewelry.

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 Driven by quality and adhering to punctuality, in a short span of time SILVEX
Group became one of the leading manufacturer & exporter of all types of
jewelries (Gold, Silver & Costume) from Jaipur, India.
 With state of art manufacturing facility and competent human resources,
SILVEX Group is fully equipped not only to meet, rather exceed the customer
expectations.
 SILVEX has bestowed the prestigious ISO 9001:2000 certification and has a
formidable reputation in international market.
 This stands reason enough to support why names of some distinguished brands
are associated with us.

Silvex Overview

Factory Area 45930 Sq. ft.

Production Area 38214.44 Sq. ft.
Office Area 5413.75 Sq. ft.

Dormitory 2301 Sq. ft.

Production Capacity 2500 – 3000 KGs/ MTH
Total No. Of Employee 350

Turnover In US$

2008 –2009 16.55 Million

2007 - 2008 11.11 Million
2006 – 2007 9.33 Million

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Export Market (As per Current & Last Year)

USA 45%
Europe & UK 23%
Others 36%

PRODUCTS OF SILVEX IMAGES

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 The Industry Structure

The Gems and Jewellery (G&J) market essentially comprises of

sourcing, processing, manufacturing and selling of precious metals and gemstones,
such as, Gold, Platinum, Silver, Diamond, Ruby, and Sapphire etc. The G&J market is
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a significant contributor to the Indian economy, based on the size of the domestic
market and through its contribution to the country’s exports. The GJ industry has
registered a remarkable growth with exports having grown from US $29.35 million in
1966-67 to US $ 21.11 billion in 2008-09 accounting for 19.1 percent of total Indian
exports. Export of cut and polished diamonds (CPD) accounts for 67% of the export
basket of Indian Gems and Jewellery and is therefore a leading foreign exchange
earner for India. India is the largest consumer of gold (around 20 percent of global
consumption) and also the largest diamond processor (around 90 percent by pieces
and 55 percent by value) of the global market.

Classification:

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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. Precious & Semi Precious Gem Stones:

This category refers to the stones other than diamonds; these stones come 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.

3. Pearls.

Pearls have been a source of fascination for centuries. They have been considered the
most magical and feminine of all gems and are the only one created by a living
organism. Pearls emanate a certain warmth and glow not found in other gems, due to
their unique beginnings.

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Due to the rarity and high price of natural pearls, cultured pearls feature
predominantly in jewellery stores. Side by side, it is very difficult to tell the difference
between a natural pearl and a high quality cultured pearl with the naked eye

4. Synthetic Stones / Fashion Jewellery.

Synthetic gemstones have the same properties as natural gems, but they are created in
a laboratory. Lab gems are becoming more common and more popular throughout the
jewelry industry. It's important to educate yourself about synthetic gemstones so that
you understand what you are buying when you purchase jewelry.

1. Gold Jewellery:

This category represents the gold Jewellery, which is used in the manufacturing of
various ornaments. Indian is the country that is the base of several types of pure gold
jewellery.

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2. Gold & Diamond Studded Jewellery:

This category represents the Diamond Jewellery which has taken a big leap in the
Indian Market. Emerging of various Diamond Jewellery Brands in the market proves
that Indian market adapts to this segment very well.

3. Platinum Jewellery.

Platinum is grayish white, exhibiting a metallic color somewhat between nickel and
silver. Platinum has an atomic weight of 195.23, which gives it a density almost as
great as gold. This means that it is very heavy for the amount of space it takes up. Its
scientific atomic symbol is PT and atomic number is 78. In its pure form it is harder
than gold and silver. In jewelry, typically 5% other metals are added to the platinum
to make an alloy soft enough to set precious stones securely in the jewelry settings.

4. Non – Gold Jewellery (Gold Foil Products)

Made From Pure Gold: The gold used in products has a purity of 999.9 in a
thousand. The products have been certified by the Assay offices in Taiwan, Hong
Kong, London and New York.

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Silicon Strength: A pure 24KT gold bar is compressed into a thin foil. Then a special
plastic silicon base is permanently fused to the delicate gold foil to give it strength &
support. The product of this fusion is referred to as 24KT Gold foil and is used to
create our unique collection. Our flower and jewellery collection has also been given
a lacer coating for protection & durability.

Blend of Technology and Tradition: A complete 24KT product is made of several

individual pieces that are laser cut for precision and consistency. These are then fused
by the dexterous hands of a traditional artisan.

Non Tarnishing: The products are created to last. They do not tarnish

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 Facts and Figures of Indian Gems and Jewellery

 Large market for Gems & Jewellery with domestic sales of over $10 billion
 4% of the global Gems and Jewellery market
 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),
India's exports of gems & jewellery (GJ) aggregated Rs. 15787.09 Crores
(US$3958.64million) during the month April-May- 08.
 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, i.e.,
60% value share, 85% volume share and 92% share of the world market by
number of pieces
 The Indian domestic diamond jewellery market was estimated at around Rs.
76 billion during 2005.
 China ranks sixth in the world in terms of diamond jewellery retail value,
ahead of India which is in seventh place. India ranks third in terms of diamond
value, while China holds the seventh position.
 Indian diamond jewellery industry is the third largest consumer of polished
diamonds after USA and Japan

 The majority of India’s diamond workforce is employed by small units that

process diamonds on a job-lot basis. The number of gold jewellery
manufacturing units is put at 0.1 million.

 India is the largest diamond cutting & polishing centre in the world, followed
by Israel and employs an estimated 2 million workers serving over 0.45
million goldsmiths, and around 0.1 million diamond processing units.

 India has several well recognised strengths which have made it a significant
force in the global Gems and Jewellery business, like i) highly skilled, yet

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 low-cost labour, and ii) established manufacturing excellence in jewellery and
diamond polishing.

SWOT ANALYSIS OF INDIAN GEMS & JEWELLERY

INDUSTRY:

Strengths:

 About one million craftsmen are associated with this industry. Their skills can be

utilized for designing and making modern Jewellery

 Availability of abundance of cheap and skilled labor in India.

 Presence of excellent marketing network spread across the world.

 Supportive government industrial/ EXIM policy.

Weaknesses:

 Small firms lacking technological/ export information expertise.

 Low productivity compared to labor in china, Thailand and Sri Lanka.

 As the major raw material requirements need to be imported, companies normally

stock huge quantities of inventory resulting high inventory carrying costs.

Opportunities:

 New markets in Europe & Latin America

 Growing demand in South Asian & Far East countries.

 Rupee value depreciating resulting in a windfall increase in the profitability.

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 Industry moving from a phase of consolidation

Threats:

 China, Sri Lanka and Thailand's entry in small diamond segment

 Infrastructure bottlenecks, absence of latest technology

 Unusual increase in the prices of gold and rough die

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 GOVERNMENT POLICY

Major measures undertaken by the government for Gems and

Jewellery sector (in 2007) include:
1. Reducing the value addition norms for gold and silver jewellery exports
from 7 percent to 4.5 per cent

2. Allowing 100 per cent FDI in the gems and jewellery sector through the
automatic route

3. Abolishing duty on polished diamonds in May 2007.

4. Setting up Gems and Jewellery Parks and SEZs to promote sectoral

investments.

Fiscal Stimulus Package (as on December 2008)

Some of the measures announced in the stimulus package for the benefit the gems and
jewellery sector include:
1. Increasing the Post Shipment Rupee Export Credit Period from 90 days to 180
days with effect from November 28, 2008.

2. Increasing the Pre-Shipment Rupee Export Credit Period from 180 days to 270
days with effect from November 15, 2008.

3. Providing an interest subvention of 2 percent up to March 31, 2009 subject to

minimum rate of interest of 7 percent per annum, to make pre and post
shipment export credit for labour intensive exports, such as gems & jewellery,
more attractive.

4. Allowing exporters to avail refund of service tax on foreign agent commissions of

up to 10 percent of FOB value of exports. They will also be allowed refund of
Service tax on output services while availing of benefits under Duty Drawback
Scheme.

5. Extending the prescribed interest rate as applicable to Post Shipment rupee export
Credit period (not exceeding BPLR minus 2.5 percentage points) to overdue bills
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 up to 180 days from the date of advance till further notice.

Export facilitation measures by the Ministry of Commerce &

Industry (as on 26th February 2009)

Gems and Jewellery, diamonds and precious metals have been given a special
boost by the Ministry of Commerce & Industry, the Export Promotion Council
or Gems and Jewellery and Star Trading Houses (in the Gems and Jewellery
sector), besides Diamond India Limited, MSTC Limited and STCL .
Surat in Gujarat, which is home to thousands of diamond units with lakhs of
diamond workers, has been recognized as “Town of Export Excellence”.
The authorized persons of Gems and Jewellery units in Export Oriented Units
shall be allowed personal carriage of gold in primary form up to 10 kg. in a
financial year subject to RBI and customs guidelines.

Highlights of New Foreign Trade Policy for the year 2009-2014

The following measures have been announced for gem & jewellery sector:
1. Import of gold of 8 k and above is allowed under
(a)Replenishment scheme subject to import being
(b)Accompanied by an Assay Certificate specifying
(c)Purity, weight and alloy content.

2. Duty Free Import Entitlement (based on FOB value of exports during

previous financial year) of Consumables and Tools, for:
(a)Jewellery made out of:
 Precious metals (other than Gold & Platinum)– 2%
 Gold and Platinum – 1%
 Rhodium finished Silver – 3%
 Cut and Polished Diamonds – 1%

(b) Duty free import entitlement of commercial samples shall be Rs. 300,000.
(c) Duty free re-import entitlement for rejected jewellery shall be 2% of FOB
value of exports.
(d) Import of Diamonds on consignment basis for Certification/ Grading & re-
export by the authorized offices/agencies of Gemological Institute of
America (GIA) in India or other approved agencies will be permitted.
(e) Personal carriage of Gems & Jewellery products in case of
holding/participating in overseas exhibitions increased to US$ 5 million
and to US$ 1 million in case of export promotion tours
(f) Extension in number of days for re-import of unsold items in case of
participation in an exhibition in USA increased to 90 days.
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 (g) In an endeavor to make India a diamond international trading hub, it is
planned to establish “Diamond Bourse (s)”.
(h) With an objective to meet the Dollar Credit needs of exporters, a
Committee has been constituted with Finance Secretary, Commerce
Secretary and Chairman IBA.

STRATEGY FOR ENHANCING

EXPORTS TO US MARKET

Ansoff’s Model

 Market Penetration (Present product-Present market)

 Provide EMI by tying up with banks in order to deliver the goods on time &
have low pressure on repaying the credit.
 Low cost and quality manufacturing.

 Product Development (New product-Present market)

 Find new applications to current users: Increasing the versatility of the

product in terms of usage. For example, provision for using pendant as
earrings, finger rings and vice versa.

 Market Development (Present Product- New Market)

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  Expand geographically: Opening new outlets in US and increasing the number
of outlets in the existing cities.

 Diversification (New Product- New market)

 Related: Gold and diamond studded buckles in belts and footwear.

Key areas to focus for developing a strategy for Exports

to US

 Action Programmes for the Industry:

 Develop demand for jewellery as a category

 Promote jewellery as a category instead of distinct metals and stones:
“Unified Jewellery Marketing”
 Identify new product and consumer segments

 Manage the portfolio of markets:

 Re-establish value proposition in developed markets

 Maximize potential of emerging markets
 Identify markets of the future

Enhance image of the industry in the eyes of governments, regulators

and
Consumers:
 Publish information
 Promote transparency in business
 Professionalize and transform family-owned businesses
 Attract talent from luxury goods industries
 Reduce the cost of financing
 Players to select strategic position and enhance individual capabilities
 Compete on one of the four strategic positions:
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 Big brother (presence across the value chain)
 Volume player (large scale operations in a single segment)
 Specialist (possession of skills)
 Straddler (presence in adjacent segments)

 Critical capabilities for segments:

 Mining
 Sourcing and processing
 Jewellery fabrication

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 Exports of the Gems and Jewellery sector

The Gems & Jewellery sector has experienced high growth over the years on the back
of a buoyant performance in its exports. Total exports of Gems and Jewellery has
registered an impressive growth from US$ 2.99 bn in FY91 to 21.12 bn in FY09
which translates into a CAGR of around 11.47%. However, during FY01-FY02, the
slowdown in the US, which is the largest importer of India's gems and jewellery, and
some other importer countries, led to a demand contraction and a subsequent decline
in the export growth rate for the sector; while the decline was mainly in exports of cut
and polished diamonds (CPD), gold jewellery exports had remained resilient as it
registered a positive growth

Nonetheless, the increase in export growth rates since October 2009 can be partly
attributed to the base effect, as export figures had started declining in absolute value
terms since October 2008 due to the onslaught of the global financial crisis.

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The growth in Gems and Jewellery exports has been primarily driven by the CPD
segment over the years. As one of the largest cutting and polishing centre of
diamonds in the world, the Indian CPD segment has always held the largest share in
the total exports of gems and jewellery. India primarily focused on exports in cut and
polished diamonds owing to its traditional expertise in diamond cutting and
polishing. Growing by around an annual average growth rate of 9%, this segment
held an average share of around 83% in the net exports of gems and jewellery during
FY92 to FY02. However, since, FY03, its share shrank to around 69%. Even though
its share in net exports had fallen, it had continued to register an average growth rate
of around 13% during the above mentioned period. CPD exports grew from US$
7.11 bn in FY03 to US$ 13.02 bn in FY09; however, over the years, the fall in the
share of CPD exports has been increasingly replaced by the growth in exports of gold
jewellery.

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The share of gold jewellery in India's net exports of gems and jewellery increased
from merely 6.80% in 1990-91 to 16.50% in FY03 and to 32.47% in FY09. Exports
of gold jewellery (as shown in the graph below) also witnessed an increase from US$
1.51 bn in FY03 to US$ 6.86 bn in FY09 at a CAGR of 28.69%.

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Recognizing the growing acceptance of Indian gold jewellery in the world market the
government had initiated several measures including a medium term strategy in
FY06.

The following measures were a part of this medium-term strategy:

a. Hallmarking and certification of gold to aid the development of Indian brands

in the jewellery market.
b. Integration throughout the jewellery supply chain from mining of raw
materials to retailing of end products as well as joint venture manufacturing
with the leading suppliers of the world.
c. Developing market intelligence with a focus on key markets including NRIs.

Measures such as gradual liberalization of gold import in the country and opening of
gold trading in exchanges had also provided a boost to the gold segment.

Under the Market Development Assistance and Market Access Initiative scheme of
the Government undertaken during the foreign trade policy of 2004-09, steps have
also been taken to encourage: creation of training infrastructure to impart skills to
artisans in jewellery designing; participation of exporters in international fairs, and
arrangement of buyer seller meets abroad to showcase the quality and variety of
Indian products.

Page | 35
The share of exports of coloured gemstones in India’s net exports is very small.
Moreover, India is a net importer of pearls and synthetic stones. In fact, rough
coloured gemstones, synthetic stones and raw pearls are largely imported for value
addition and for preparation of final products, which are then sold either in the
domestic or international market. India has a rich resource of highly skilled and low
cost labourers which is effectively utilized by the Indian manufacturers in this sector
for creation of highly value added goods.

Even though platinum jewellery is highly sought-after in the international markets,

India does not export the same because it lacks natural resources for platinum;
however, platinum bars are imported into India, though in very low quantities, as the
demand for platinum jewellery is restricted to high-end customers and is not very
robust.

Page | 36
However, over the last 2 years, exports to Hong Kong and UAE have grown rapidly.
Exports of gems, jewellery and precious stones to UAE have grown steeply during
the last three years. India’s export to UAE registered a growth of 34.94% during
FY07 and 30.63% in FY08. This growth is driven by UAE’s growing tourism and
multicultural population. It is expected that this growth momentum will continue and
several other opportunities will open up in the Middle East market for the Indian
gems and jewellery sector.

Considering that the slowdown in India’s traditional export regions such as US has
affected the exports for this sector, India is looking towards diversifying its export
market to Latin America, China, Russia and the CIS countries.

Page | 37
 QUESTIONNAIRE ANALYSIS
1. Role of the Gems & Jewellery industry to the Indian economy.

 Very Significant -------------------------------- 19 per cent

 Significant -------------------------------------- 38 per cent

 Insignificant ------------------------------------ 20 per cent

 Very insignificant ----------------------------- 07 per cent

 Do not know/ can not say -------------------- 16 per cent

Interpretation:
As may be seen from the above response that the Gems & Jewellery sector in India
contributes significantly to the Indian economy

Page | 38
2. Contribution of the Gems & Jewellery sector.
 Employment ------------------------------------------- 72 per cent

 Export -------------------------------------------------- 46 per cent

 GDP---------------------------------------------------- 32 per cent

 Other sectors ----------------------------------------- 25 per cent

 Do not know/ can not say --------------------------- 07 per cent

Interpretation:
Gems & Jewellery sector occupies an important place in the Indian economy as it
contributes significantly to employment generation and export earnings. The
economic importance of the sector also lies in its high employment potential, high
capital investment, high value addition and continuously increasing demand both in
the domestic and overseas markets.

Page | 39
3. The Impact of globalization and liberalization to the Gems &

Jewellery export.

 Accelerated the export ------------------------------------ 76 per cent

 Adversely affected the export --------------------------- 10 per cent

 Did not affect the export --------------------------------- 07 per cent

 Do not know/ can not say ------------------------------- 07 per cent

Interpretation:
Indian Gems & Jewellery are now available in global markets, so also foreign crafts
in our shops. Gems & Jewellery constitute a significant segment of the decentralized
sector of our economy and its importance is being felt when it is assessed that it
provides employment to lakhs of jewellery –makers scattered especially in the weaker
sections of our society such as SCs, STs and the women, producing goods worth
thousands of Crores of Rupees per year.

Page | 40
4. The growth of e-commerce is beneficial to Gems & Jewellery sector.

 Agree ------------------------------------------ 68 per cent

 Disagree -------------------------------------- 20 per cent

 Do not know/ Can not say ------------------ 12 per cent

Interpretation: With the growth of e-commerce strategy, the Indian Gems &
Jewellery marketing strategy has been strengthened, leading to increase in the volume
of trade in the Gems & Jewellery sector.

Page | 41
5. Better potential importers of Indian Gems & Jewellery product.

 USA -------------------------------------------- 52 per cent

 UK --------------------------------------------- 22 per cent

 Germany -------------------------------------- 15 per cent

 Other countries ------------------------------ 11 per cent

Interpretation: The largest export market for Indian Gems & Jewellery is the
United States. In the changing world scenario, Gems & Jewellery products exported
to various countries form a part of lifestyle products in international market. The
impact is due to the changing consumer taste and trends.

Page | 42
6. Exported product from India to other country.

 Diamond studded jewellery ------------------------ 15 per cent

 Necklaces ---------------------------- 32 per cent

 Bangles --------------------------------------------- 28 per cent

 Rings & Other products ------------------------------------ 25 per cent

Interpretation: As far as the products which are exported out of the country, the
respondents felt that it is the Diamond studded jewellery, Necklaces, Bangles, Rings
& Other products which dominate the export composition of the Gems & Jewellery
products.

Page | 43
7. The challenges of the Gems & Jewellery export.

 Better quality products from foreign companies -------- 33 per cent

 Competition in the domestic sector ----------------------- 23 per cent

 Lack of institutional support ------------------------------- 25 per cent

 Other factors ------------------------------------------------- 12 per cent

 Do not know/ can not say ---------------------------------- 07 per cent

Interpretation: There are various problems and challenges that stand as barriers to
the export market of the Indian Gems & Jewellery products. These include better
competitiveness of the foreign companies followed by lack of institutional support,
competition in the domestic sector and other factors.

Page | 44
8. The vital steps for improving the Gems & Jewellery export.

 Establishing Gems & Jewellery special economic zones -------- 30 per cent

 Promotion of Gems & Jewellery in the rural areas --------------- 20 per cent

 Special support to the Gems & Jewellery sector in the trade policy -----27

per cent

 Institutional financing ---------------------------------------- 15 per cent

 Other measures ------------------------------------------------- 08 per cent

Page | 45
Interpretation: Setting up Gems & Jewellery special economic zones
accompanied with institutional support and other promotional measures can be
effective to improve the export potential of the Indian Gems & Jewellery products.

9. Competition of India with china, Philippines and Thailand in regarding

Gems and Jewellery export.

 Very competitive --------------------------------- 18 per cent

 Competitive --------------------------------------- 35 per cent

 Lacks competitive strength --------------------- 20 per cent

 Not at all competitive --------------------------- 12 per cent

 Do not know/ can not say ---------------------- 15 per cent

Page | 46
10. Future of the market of the Gems & Jewellery export in India.
 Very good ------------------------------------------- 24 per cent
 Good ------------------------------------------------- 35 per cent
 Not good -------------------------------------------- 20 per cent
 Do not know/ can not say ------------------------ 31 per cent

Page | 47
 Future Outlook

Future growth in gold jewellery business is likely to driven by increased exports to

US and other markets, and domestic consumption. Although domestic consumption
has increased in 2005-08, consumption per capita is still very low, reflecting the high
proportion of the rural population and the social infrastructure of the country (the
rural population accounts for approximately 65-70% of domestic gold demand). The
export business has been constrained by an inability to compete in global markets on
basis of price and superior design capabilities. Historically, Indian gold jewellery
designs have not found much favor in global markets because of their local and
chunky designs. India has not adapted its designs to meet the occidental tastes. Thus,
the Indian industry and WGC has introduced international jewellery designing
competitions among the Indian artisans to create greater awareness about Indian
artisans in the global market and also to expose Indian artisans to global design
developments. There has also been an initiative by Gems and Jewellery Export
Promotion Council (GJEPC) and the WGC to set up a number of design centers,
targeted at training Indian jewellers in international manufacturing and
designing skills. Such initiatives are likely to enhance the prospects of Indian
gold and GJ jewellery exports business.
The Indian diamond cutting and polishing industry has thrived because of increased
exports. At present, India is the world's leading diamond cutting and polishing centre.
The sharp increase in the exports of GJ during recent years is primarily attributable to
pick-up in demand in major markets like the US, Belgium, Israel, and Hong Kong. GJ
exports have also benefited from the supportive policy measures of the Government
of India. Reflecting a pickup in demand in global market since 2002, Indian exports of
cut and polished diamonds have increased at a 3-year CAGR of 16% during FY2004-
08.
The structure of the diamond-processing industry will change considerably and
India’s share of the processing pie will drop from 57 per cent today to around 49 per
cent (in value terms) by 2015. China will emerge as a strong player with 21.3 per cent

Page | 48
of the diamond processing share. By 2015, around nine per cent of the world's
diamonds, in volume terms, will be processed locally by mining countries, with
Angola, Namibia, and Botswana emerging as profitable CPD centres in Africa.
Fragmentation of supply sources and slow diamond jewellery growth will make the
rough diamond industry more demand sensitive.
The rough diamond industry has seen trends such as increased fragmentation of
rough diamond supply, emergence of new mines, local beneficiation movement in
mining countries and a bull-run in precious metal prices. Jewellery fabrication has
been affected by accelerating fashion cycles, relative factor costs between
manufacturing and consuming nations, and volatile metal prices have fuelled a drive
towards moving fabrication to low cost countries.

The eight key scenarios that are likely to impact the industry are:
 Mining countries encourage local beneficiation and capture a share of the
polishing industry.
 Supply sources get fragmented and rough supply increases.
 Consolidation occurs across the jewellery value chain.
 Existing centers of the industry lose out in favor of new ones.
 Substitutes such as synthetic diamonds and non-precious metals capture a
share of the precious jewellery market.
 Demand for plain gold jewellery declines.
 Large emerging retail markets such as China and India organize and
consolidate.
 Jewellery loses out to competing luxury goods.

The industry has the potential to grow beyond USD 230 billion. The study estimates
the range of impact to be around USD 50 billion, taking the industry size to USD 280
billion by 2015. In such a situation, the industry would be growing at a CAGR of 6.7
per cent, an increment of 2.1 per cent over the realistic case. At this rate, the industry
would be growing faster than the Gross Domestic Product (GDP) per capita and
would be claiming a share of the market from other luxury goods. Diamond and plain
gold jewellery (product segments) and India and China (markets) will contribute the
bulk of this incremental growth. This additional growth will also have a salutary
impact on other parameters of industry health –inventory levels (will decrease from
19 per cent to 7.5 per cent), value addition will increase in the intermediate stages of
the value chain (for example, in polishing from 29 per cent to 34 per cent).

Page | 49
The Indian GJ industry has been built on polishing lower size and quality stones.
Looking forward, since India already enjoys domination in the world cut and polished
diamond market in general, and for smaller-sized diamonds in particular, the scope for
significant increase in market share and growth in the traditional small size diamond
exports is limited. Industry leaders are now seeking further growth through processing
of larger size stones, and manufacture of diamond jewellery. Indian industry can now
increasingly process the full range of sizes and qualities of stones utilizing not only a
cheap and abundant workforce, but also advanced technologies. Future growth is
likely to be largely driven by the cutting and polishing of medium and large stones
(currently dominated by Belgium and Israel), with higher realizations. The Indian GJ
industry is already reporting increased growth in the larger-size segment. Export data
from the GJEPC also report a gradual shift in Indian exports to higher value segments,
reflected in higher p/c. Larger-sizes command higher p/c realizations and profits. Bulk
buyers from the US and the European Union are increasingly buying Indian diamond
studded jewellery, because of its affordability. Significant domestic and export
opportunities for Indian industry could also arise because of a major promotional
programmed launched by DTC for leading Indian diamond and Jewellery
manufacturers and exporters to boost the marketing of their products in India and
abroad. Under this programmed, which is known as supplier of choice, the DTC takes
marketing initiative, targeted at creating incremental demand for diamonds and
jewellery through direct partnerships with sight holders and retailers. The diamond
industry is optimistic that the recent healthy growth in world GDP, and increased
marketing expenditure could result in increased demand growth. Both China and India
represent potential new sources of demand for diamonds. China has the potential to
become a leading consumer of diamond jewellery. China's retail sales in recent years
have shown strong growth relative to other centers. In India, diamonds are an
established consumer product, but the potential size of the market is only just being
recognized, especially in comparison with annual gold demand. The long-term
outlook for the Indian diamond and jewellery industry continues to be positive. India's
competitive advantage is likely to centre on its skilled labour combined with a ready
adoption of leading-edge technology and an increasing degree of vertical integration.

Page | 50
 CONCLUSION

Growth in global demand for jewelry may slow from the 5.2 percent Compounded

Annual Growth Rate (CAGR) it registered since 2000, to 4.6 percent by 2010 or

2015, unless appropriate collective action is taken by players in the industry.

The projection is based on an assessment of the impact of eight key business trends

that the two bodies believe will affect the performance of the industry. These trends

include: the local beneficiation in the mining countries; fragmentation of supply

sources and an increase in rough supply; consolidation across the value chain; rise of

new centers for jewelry manufacturing; growth in the use of synthetics and non-

precious metals in jewelry; a decline in demand for plain gold jewelry; organization

and consolidation in the emerging markets of India and China; and intense

competition from other luxury goods.

Based on the findings, the report estimates that worldwide jewelry sales will rise from

$146 billion in 2005 to $185 billion in 2010 and $230 billion in 2015. However, it

stresses that if the industry as a whole focuses on “growing demand for jewelry as a

category” and “strengthening industry-level and enterprise-level capabilities” in the

“next 12-18 months,” sales could reach $280 billion in 2015, registering a CAGR of

6.7 percent.

Page | 51
 BIBLIOGRAPHY

Reference Site

http://www.census.gov/foreign-
trade/statistics/product/enduse/imports/c0000.html
As retrieved on November 10, 2009
http://commerce.nic.in/eidb/default.asp
As retrieved on November 10, 2009
http://www.gjepc.org/
As retrieved on November 5, 2009
http://importexport.suite101.com/article.cfm/thailands_top_imports_exports_20
08#ixzz0WALU6faD
As retrieved on November 5, 2009
http://indian-gem.blogspot.com/
As retrieved on November 5, 2009

Page | 52
 ANNEXURE

QUESTIONNAIRE

1. How do you perceive the contribution of the Gems & Jewellery industry

to the Indian economy?

 Very Significant -------------------------------- 19 per cent

 Significant -------------------------------------- 38 per cent

 Insignificant ------------------------------------ 20 per cent

 Very insignificant ----------------------------- 07 per cent

 Do not know/ can not say -------------------- 16 per cent

2. Select the areas in which the Gems & Jewellery sector contribute

significantly. You can choose more than one option.

 Employment ------------------------------------------- 72 per cent

 Export -------------------------------------------------- 46 per cent

 GDP---------------------------------------------------- 32 per cent

 Other sectors ----------------------------------------- 25 per cent

 Do not know/ can not say --------------------------- 07 per cent

Page | 53
3. How did the policies of globalization and liberalization affect the

export scenario of the Gems & Jewellery in India?

 Accelerated the export ------------------------------------ 76 per cent

 Adversely affected the export --------------------------- 10 per cent

 Did not affect the export --------------------------------- 07 per cent

 Do not know/ can not say ------------------------------- 07 per cent

4. Do you agree that with the growth of e-commerce strategy, Indian Gems

& Jewellery sector has been positively benefited from this?

 Agree ------------------------------------------ 68 per cent

 Disagree -------------------------------------- 20 per cent

 Do not know/ Can not say ------------------ 12 per cent

5. Which countries are the better potential importers of Indian Gems &

Jewellery products?

 USA -------------------------------------------- 52 per cent

 UK --------------------------------------------- 22 per cent

 Germany -------------------------------------- 15 per cent

 Other countries ------------------------------ 11 per cent

6. What are the products which are exported from India to other countries?

 Diamond studded jewellery ------------------------ 15 per cent

 Necklaces ---------------------------- 32 per cent

Page | 54
  Bangles --------------------------------------------- 28 per cent

 Rings & Other products ------------------------------------ 25 per cent

7. What are the problems of the export of the Gems & Jewellery products
from India?
 Better quality products from foreign companies -------- 33 per cent
 Competition in the domestic sector ----------------------- 23 per cent
 Lack of institutional support ------------------------------- 25 per cent
 Other factors ------------------------------------------------- 12 per cent
 Do not know/ can not say ---------------------------------- 07 per cent

8. What are the measures that can be taken for improving the export
potential of the Gems & Jewellery sector in India?
 Establishing Gems & Jewellery special economic zones ---------- 30 per cent

 Promotion of Gems & Jewellery in the rural areas ----------------- 20 per cent

 Special support to the Gems & Jewellery sector in the trade policy - 27 per cent

 Institutional financing ---------------------------------------- 15 per cent

 Other measures ------------------------------------------------- 08 per cent

9. How do you compare the export potential of the Indian Gems & Jewellery
products when compared with other countries Gems & Jewellery
products like that of china, Philippines and Thailand?
 Very competitive --------------------------------- 18 per cent

 Competitive --------------------------------------- 35 per cent

 Lacks competitive strength --------------------- 20 per cent

 Not at all competitive --------------------------- 12 per cent

Page | 55
  Do not know/ can not say ---------------------- 15 per cent

10. Future of the market of the Gems & Jewellery industry in India.

 Very good ------------------------------------------- 24 per cent

 Good ------------------------------------------------- 35 per cent

 Not good -------------------------------------------- 20 per cent

 Do not know/ can not say ------------------------ 31 per cent

Page | 56