…Back on the shining trail
Precious metals and gemstones have been an integral part of the Indian civilisation since its recorded history. Gems and Jewellery (G&J) has been consumed by Indians for ages for both its aesthetic as well as investment value. India has the distinction of being the first country to introduce diamonds to the world. The country was also the first to mine, cut & polish and trade in diamonds.

The Indian G&J industry can be classified into various sub segments like diamonds, coloured stones, gold and silver jewellery, pearls, etc. However, the two major segments in India are gold and diamonds. India dominates the diamond processing trade with 11 out of 12 diamonds being cut and polished in India. India also dominates the gold and silver consumption globally with consumption of approximately 700 tonnes (gold) p.a. A major foreign exchange earner, the industry is also notable in providing employment to 1.5 mn people directly and indirectly.

The industry is characterised by a significantly large unorganised sector, labour-intensive operations, high working capital & raw material intensiveness, gold price volatility and export orientation. The demand for gold and diamond jewellery is driven by festivals, weddings and gifts, the increasing affluence of the middle class population and the increase in per capita spent on luxury items.

Though India plays a dominant role in the G&J industry in terms of processing and consumption, mining of gold and diamond is amongst the lowest in the world. India imports gold and rough diamonds along with other precious metals. Gold is purchased from countries like Switzerland, South Africa, Australia and UAE, and rough diamonds are sourced from Belgium, UK, Israel and UAE. There is an impact on the demand for gold given the record high price of gold in the last couple of years, but consumers have remained bullish on the precious metal and there is an increased investment-related demand for gold.

The key drivers for growth in the industry are increasing disposable income, conscious marketing efforts, rising young population with the urge to spend on jewellery since it’s regarded a fashion accessory. Indian G&J players are recognizing the importance of diversifying their business to emerging markets like China and the Middle East and not completely relying on the US as was the case before the financial crisis. However, it will be difficult to replace the US which is still the largest diamond market in the world. We now expect emerging market countries to be the engines of future growth for the diamond market as the demand from developed countries will remain subdued for some time to come.

Based on the gradual recovery in the global markets, CARE Research has investigated some of the leading indicators that signal a growing momentum in the Indian G&J sector. Factors like significantly lower inventory levels as compared to the period of financial crisis, a huge jump in export numbers, lower unemployment levels and stable rough diamond prices, all reveal a resurgence in the sector which was so critically impacted during the financial crisis when demand from developed countries plummeted.

The report elucidates facts on the Indian Gems & Jewellery Industry, supplemented by the latest available data. Emphasis is laid on the following topics to accomplish the report.

* Evolution and the current state of the industry.
* Product profile of various categories of gems and jewellery like diamond, gold, silver and coloured gemstones.
* Industry characteristics elaborated with respect to raw material, labour and working capital intensiveness, unorganised sector, export orientation and branding & certification.
* Demand-supply scenario and detailed discussion on demand drivers, increasing affluence and middle class population and shift in buying patterns.
* Extensive coverage on export & import trade with the latest three-year data on product-wise and country-wise exports of gems and jewellery and product-wise imports of gems and jewellery.
* Cost analysis analysing raw material cost and interest cost.
* A brief note on duty structure and government regulations in the industry.
* SWOT analysis and Porter’s Five Force model.
* A brief overview of five key companies with the latest three-year data on financial and operational parameters, company action-plan, their strengths and weaknesses and company outlook.

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