Few may know that the very first commercial discoveries of diamonds were in India in 4th century BC. Since then, India has come a long way in this fascinating world of diamond and diamond jewellery. Today, with the demand for diamond jewellery growing at a little over 30 + % per year in India, the industry is poised for major growth in the coming years.
China and India jointly would account for over 30% of the global diamond market in 2015. And by 2020, the two countries would surpass the United States, currently the world's biggest consumer, with a 40% share. Though Mainland China and Hong Kong have entered the industry recently, the growth registered in the diamond trade is tremendous. They have also recorded $9 billion in annual global sales in 2011-12 and jointly share 24% share of the world diamond market. China and India will vie for the biggest market status in the future, but with history backing it, India will always remain bigger than China market, purely by the buying patterns prevalent in India.
Understanding the need for promotion of diamond and diamond jewellery, Indian manufacturers as well as retailers spend huge funds in various activities besides ads released in print/electronic media. For the past few years, India has been stressing on the need for generic promotions of diamonds and diamond jewellery to help the other stakeholders in the pipe line. Appeals have been made to mining companies in particular to create funds for the promotional activities. As a step towards this, the Gems & Jewellery Export Promotion Council (GJEPC) has initiated drives by roping in local diamond jewellery manufacturers, wholesalers and even large retailer to create a fund to promote diamonds as a category in India and abroad. But, surely such generic promotional initiatives would be more successful if the mining companies together make a combined effort in this direction.
As the diamond jewellery market is growing in leaps and bounds in India, the industry’s worry seem to be the threat posed by the manmade diamonds. Credibility is at stake here and the industry members have taken strong steps to monitor the situation carefully. Total transparency and disclosure is advocated to people dealing with lab-grown diamonds. However, this does not mean the natural diamond industry is not threatened about losing the credibility and trust that they have carefully nurtured among consumers for the past many decades. Consumers, meanwhile, rely and trust on their regular jewellers, especially for hi-end jewellery, from whom they have been purchasing jewellery for years.
The Indian domestic market, in the past, has been predominantly pure gold/colour stone studded jewellery market, with of course a small share in diamond jewellery of quality diamonds only. But now, India, which is known as one of the biggest consumers of gold jewellery, is also big on diamond jewellery. In recent years, India, with its rising middle class, many companies who were exclusively exporters as well as many large retailers are making inroads into the country to set up retail outlets. Not surprising that overseas jewellers are following suit as well.
India and China will, in the future, be the two biggest markets to look out for, considering their burgeoning economic growth. A study of the past two decades of economic growth, one sees India changed dramatically, with a voracious appetite for diamond jewellery. The middle class, with its fairly strong purchasing power, is now estimated to be a little over 250 million. China, though a new comer, is also making long strides with high diamond jewellery sales in their domestic market. The growth of China market is at tangent with India, which reflects the upward economic growth in that country with purchasing power of consumers going up. So these two happening markets will be on focus in the coming years. India and China are driving global demand for diamond jewellery.
The Indian consumers love for the yellow metal is well known the world over. Gold jewellery will always be in very good demand in India as that pocket of ‘ gold' jewellery consumers will always exist, if not grow! But diamond jewellery is not far behind with affordable jewellery making its presence in the market. Fashion/fad making a strong impact on the younger generation, demand for diamond jewellery is growing by the day. Indians are also not anymore obsessed with 22karat diamond jewellery as in the past, though for pure gold jewellery 22k is preferred. Slowly, but surely, consumers are going in for 18k, 14k or even lesser karat gold diamond studded jewellery, which reduces the price considerably. To cater to this section, manufacturing companies are making the ‘everyday’ diamond jewellery made more affordable by using small size diamonds. Such less expensive diamond jewellery is a big ‘hit’ among the younger generation, who are fashion conscious and buy jewellery for fun and not as an investment. The reasons behind growth of demand in diamond jewellery in India could not only be an increasing disposable income, but also the growing number of working women. As this segment has immense growth potential, many existing as well as new companies , are looking to tap for a piece of the pie.
The beginning of 2000s saw a sea change in the domestic diamond jewellery market. Till then diamond jewellery was something not to be aspired by the middle/lower middle class ... gold was all that they could dream of. Earlier, in India purchasing diamond jewellery was limited to a very small elite segment of the population but over the years there has been a paradigm shift in that, diamond jewellery has now found its way in various segments of consumers. But market leaders like DTC (via Gitanjali), Tanishq were the ‘change makers’. With the entry of these players, the affordable diamond jewellery took off like never before. “Democratisation of diamonds” did they call it? And post 2000, a major transformation took place in the domestic Indian market. Diamond jewellery was not anymore only for the rich. And the rest, as they say is history.
Today, countless brands sell less expensive diamond jewellery which is bought in par with any gold jewellery. Gold has been slowly replaced by silver too, though the Indian market is still to catch on with the metal like overseas markets. Online shopping of diamond jewellery is catching on too...which was a never heard of thing in the past! But some still feel ‘democratisation’ was a wrong move as it removed the mysticism from Diamonds, something that should have been retained ... but again, a debatable topic ... and for another story.
The high-end couture diamond jewellery demand in the niche Indian market is always very good, which includes the Wedding Jewellery. Patronised by celebrities, Film stars and the rich connoisseurs, jewellery manufacturers of hi-end jewellery (customised or ready-made); have been catering to their ever increasing domestic clients. It is no wonder that the bigger stones / solitaires are in high demand in the Indian diamond market, so much so that shortages for such stones are reported all the time.
Looking at the total gold / diamond jewellery market in India, while pure gold jewellery still holds its position, diamond jewellery (which earlier comprised of hardly 15 percent) is now said to be over 50% of the market. The key trends in the diamond jewellery market of India are the changing taste and preferences of the discerning consumers. Festive season sales, Wedding season sales, emergence of new distribution channels and inclination towards branded jewellery etc make a major impact.
Apparently, the diamond jewellery market in India is close to Rs.70, 000 crore now and currently growing at almost 30 + % per annum. Domestic players are putting in all efforts and using all the tricks in the book to attract customers into their showrooms. While all the major metros/ cities are crowded with jewellery outlets with varieties of jewellery from all over the country.
TATA’s Tanishq boasts of showrooms all over the country just like other chains like Joy Alukkas, Malabar Gold and Diamonds, Gitanjali and a host of others with multiple outlets. In line with Forevermark, the diamond brand from the De Beers Group of companies, which is making a mark in the domestic market with ever-growing patrons for its jewellery, there are many more overseas brands making a beeline into the country. India appears as a very attractive opportunity for major global brands to establish their presence here. The Indian Government's decision to allow foreign direct investment (FDI) up to 51 per cent in single brand retail stores has attracted various foreign players to the Indian market as well. The Government of India has reduced the customs duty on import of Gold Findings (small component such as hook, clasp, clamp, pin, catch, screw back) from 10 per cent to 4 per cent. India possesses the world's most competitive gems and jewellery market due to its low cost of production, highly skilled, low-cost and best artisan force for designing and crafting jewellery, along with strong government support in the form of incentives and establishment of Special Economic Zones (SEZs). So, it will be no surprise if the Indian diamond jewellery market emerges as the bigger than any other country in the world, including China.
The recent fall in gold prices has not had any effect at all on the demand for diamond studded gold jewellery in the Indian domestic market.
Aruna Gaitonde for Rough&Polished, Mumbai
