The Hindu Business Line : Gem, jewellery add glitter to economy

The history of the Indian gem and jewellery, a $30-billion industry, began and flourished in the two leading States of Maharashtra and Gujarat. Exports from the industry fetched $17.1 billion in 2006-07 against $16.64 billion in 2005-06, showing a growth of 26 per cent.

The journey of a diamond is said to begin with mining of roughs followed by sourcing them by trading firms after which they trade it with the processors who then process the rough diamonds to manufacture cut and polished diamonds which then end with the trade of the polished diamonds.

Diamond processing

Today, India houses the worlds’ largest diamond processing (cutting and polishing) industry with an estimated 1,000,000 processors. India processes over 57 per cent of the world’s rough diamonds by value. It is said that 11 out of 12 stones (diamonds) set in jewellery are cut and polished in India. Surat in Gujarat is home to a majority of these diamond processors. India’s exports of cut and polished diamonds in calendar year 2006 stood at Rs 48,905.57 crore or 349.389 lakh carats down 9.25 per cent from Rs 53,892.02 crore or 419.9 lakh carats during same period in 2005.

Processing is done on rough diamonds in full range of sizes and qualities, including stones larger than 10 carats.

Diamond trading hub

After making its mark in the world diamond processing industry, the industry fraternity has taken up the motto to make ‘India the diamond trading hub’. Thus Mumbai, the financial capital of the country, is said to be Indian Antwerp in the making.

The current format of diamond trade has four different types of channels involved in the sourcing and trading of diamonds namely, centralised distribution, direct selling, rough trade and brokerage.

Bharat Diamond Bourse, a service oriented non-profit guarantee company, is an 18 lakh sq. ft. complex in Mumbai. It was set up with the primary objective of establishing necessary infrastructural facilities for promotion of export of diamonds, including jewellery from India and to make India an international trading centre. Instituted to cater to all the needs of the diamond trade, the bourse is anticipated to deal with over 30,000 people a day. The facilities here will include offices of diamond traders, strong rooms, lockers, customs clearance facilities with all the modern facilities required to carry day-to-day business.

High-end jewellery

As the gem and jewellery companies are based out of Mumbai, the city is home to various types of jewellery from the traditional to the high-end designer fashion jewellery. It is one of the largest producers and exporters of jewellery, which is estimated to be over $13 billion. Prominently, it accounts for over 15 per cent of the world jewellery fabrication pie.

Not only this, India is one of the fastest growing markets for jewellery, growing at the rate of 10.20 per cent per annum over the last five years. Today, the Indian consumer market for jewellery is said to be $13.1 billion, an increase of close to 8 per cent over the previous year. A study by KPMG says that India is set to realise total jewellery sales of $21 billion by 2010 and $37 billion by 2015. Currently, out of the eight key world retail markets, the US is number one accounting for 31 per cent of the jewellery sales. India and China follow with 8.3 and 8.9 per cent respectively.

According to the KPMG study, India’s growing importance in the global jewellery market is only expected to increase in the future. The total demand is expected to reach $18.25 billion in 2010 and to $ 28.28 billion in 2015. Diamond jewellery consumption in India is estimated to jump by 78 per cent in 2010.

Forecast

India and China together are predicted to emerge as a market equivalent to that of the US by 2015, according to the KPMG report on the global gems and jewellery industry – Vision 2015: Transformation for Growth. The industry can see capital infusion of around $ 10 billion, according to Mr Mehul Choksi, Chairman of the Gitanjali Group.

As per forecasts, by the year 2015, the industry will witness a good fragmentation in the jewellery retail business while keeping the area of diamond mining, sourcing, processing within the confines of either niche or mass players, says Mr Ashwin Jacob, Manager at KPMG Advisory Services Pvt. Ltd in India.

Mining is at the heart of the gem and jewellery industry as the activity is the only natural source of raw material for the industry. The Geological Survey of India has stated that India has a great potential for diamond deposits. Based on this and independent analyses, some of the diamond exploration companies are making efforts to make India another target destination for diamond exploration. Maharashtra features on the list of potential states for diamond exploration.

GJEPC

The Gem and Jewellery Export Promotion Council (GJEPC) is primarily involved in introducing the Indian gem & jewellery products to the international market and promoting exports. To achieve this, the Council provides market information to its members regarding foreign trade inquiries, trade and tariff regulations, import duties, and information about jewellery fairs and exhibitions. It also takes up relevant issues with government and agencies connected with exports and submit documents for consideration and inclusion in the Exim Policy. There are a lot of opportunities from setting up factories to retailing through showrooms for a prospective investor, said Mr Sanjay Kothari, Chairman of GJEPC.

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