The gems and jewellery industry occupies an important position in the Indian economy. According to the report issued by India Law Offices, it is a leading foreign exchange earner, as well as one of the fastest growing industries in the country.
The two major segments of the sector in India are gold jewellery and diamonds. Gold jewellery forms around 80 per cent of the Indian jewellery market. Besides, India has the world's largest cutting and polishing diamond industry. It is well supported by government policies and the banking sector with around 50 banks providing nearly $3 billion of credit to the Indian diamond industry.
India was one of the first countries to start making fine jewellery from minerals and metals and even today, most of the jewellery made in India is hand-made.
India was the first country to introduce diamonds to the world, the first to mine, cut and polish them as well as trade them. The cutting and polishing of diamonds and other precious stones is one of the oldest traditions in India. In the global diamond market today, Indian diamonds account for a 55 per cent share in value terms, 80 per cent share in caratage (weight) terms.
Before the liberalization of the Indian economy in 1991, only the Minerals and Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold. The abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely.
In 1993, gold and diamond mining were opened up for private investors and foreign investors were allowed to own half the equity in mining ventures.
In 2001, India had the highest demand for gold in the world; 855 tons were consumed a year, 95% of which was used for jewellery.
India in 2009 faced its weakest year since gold trade was freed up in 1997. Record high prices and a failed monsoon cut imports by 33 percent from the previous year to 480 tonnes. The Indian jewellery market is one of the largest in the world, with a market size of $13 billion. It is second only to the US market of $40 billion and is followed by China at $11 billion. The gold jewellery market is growing at 15 per cent per annum and the diamond jewellery market at 27 per cent per annum.
The United States and Hong Kong were the largest importers of gems and jewellery from India, with a share of 26 per cent each, followed by UAE at 21 per cent.
India is the largest consumer of gold in the world, followed by China and Japan. India consumes nearly 700 tonnes of gold that accounts for 20 per cent of world gold consumption, of which early 600 tonnes go into making jewellery.
India's imports of gold in the last seven years in metric tonnes, according to World Gold Council data:
Gold imports
2010 - 365*
2009 - 480
2008 - 712.6
2007 - 769.2
2006 - 715.5
2005 - 721.6
2004 - 614.5
* Jan to June
Imports are high partly because of the large population of about 1.2 billion. Per capita gold consumption is only 0.7 grams, half that of the United States and one-third of the Middle East, according to World Gold Council (WGC) estimates.
India’s G&J industry is highly unorganized and fragmented with 96 percent of the total players being family owned businesses. India's gold market is estimated to have more than 300,000 jewellers, mostly small, family-run businesses, a WGC study showed. The gold processing industry has around 15,000 players, with only 80 having revenues over USD 5 million.
India's 2010/11 budget raised the import duty on gold and platinum to 300 rupees ($6.65) per 10 grams from 200 rupees earlier.
Investment purchases of gold have been rising faster than jewellery purchases. WGC's latest data shows the investment to jewellery ratio was approximately 15:85 in 2009.
Major regulating bodies in India’s jewelry industry:
Gem&Jewellery Export Promotion Council, GJEPC, was set up in 1966 for promoting precious stones and jewelry exportations. The Council is involved in developing medium-term exports strategies for various sectors including gems and jewellery, as well as explores the possibility of direct procurement of rough diamonds from mining countries, performs marketing surveys, etc.
The Gem and Jewellery Trade Council of India (GJTCI) is established with the main aim of boosting the gem and jewellery trade of India. It plays an important role in showcasing the Indian gem and jewellery to the international market. It also indulges itself in disseminating latest information to its jeweler-members and in educational activities for market participants.
The Bureau of Indian Standards is a national standards body of India is responsible for hall marking of gold jewellery and certification of its purity.
Branding appears to be one of major market trends in India’s jewelry industry. According to experts, branded jewelry (which does not exceed 4% of the market as it is pointed out by India Law Offices) will be steadily growing in the jewelry trade in India.
Key brands in the Indian jewellery segment:
Gili (established in 1994), Tanishq (1984), Carbon (1996), Oyzterbay (2001), Trendsmith (2001).
Dasha Platonova, Editor of the Rough&Polished Asian Bureau in Shanghai
