The Indian gems and jewellery industry has significant potential in both domestic and global markets due to its strengths across the value chain. India has competitive advantages in low production costs and skilled labor. It is a major player in diamond cutting and polishing as well as gold and jewellery manufacturing. While the industry remains largely unorganized, organized players are growing. The future of the industry looks promising as jewellery exports are expected to reach $16 billion by 2010, driven by India's capabilities and growing global demand.

1. R
IB PO
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Gems and Jewellery
The India Brand Equity Foundation collates, publishes and disseminates
well-researched and comprehensive information on the Indian economy and
industry. We present excerpts from a report on the Indian Gems and
Jewellery sector prepared by KPMG for IBEF
India is a leading player in the The Indian gems and jewellery indus- as well as a large consuming market.
global gems and jewellery market try is competitive in the world market due
The gems and jewellery industry occu- to its low cost of production and the The sector is largely unorganised
pies an important position in the Indian availability of skilled labour. In addition, at present with a small but grow-
economy. It is a leading foreign exchange the industry has set up a worldwide dis- ing organised sector
earner, as well as one of the fastest tribution network, of more than 3,000 The Indian gems and jewellery sector
growing industries in the country. offices for the promotion and marketing is largely unorganised at present. There
The two major segments of the sector of Indian diamonds. are over 15,000 players across the coun-
in India are gold jewellery and diamonds. The Indian diamond industry has the try in the gold processing industry, of
Gold jewellery forms around 80 per cent world's largest cutting and polishing which only about 80 players have a
of the Indian jewellery market, with the industry, employing around 800,000 peo- turnover of over $4.15 million (Rs 200
balance comprising fabricated studded ple (constituting 94 per cent of global million). There are about 450,000 gold-
jewellery that includes diamond studded workers) with more than 500 hi-tech smiths spread throughout the country.
as well as gemstone studded jewellery. A laser machines. The industry is well sup- India was one of the first countries to
predominant portion of the gold jewellery ported by government policies and the start making fine jewellery from minerals
manufactured in India is consumed in the banking sector with around 50 banks pro- and metals and even today, most of the
domestic market. However, a major por- viding nearly $3 billion of credit to the jewellery made in India is hand made. The
tion of the rough, uncut diamonds Indian diamond industry. India is expect- industry is dominated by family jewellers,
processed in India are exported, either in ed to have its diamond bourse function- who constitute nearly 96 per cent of the
the form of polished diamonds or finished ing at Mumbai in 2006. market. Organised players such as Tata
diamond jewellery. The largest consumer India is therefore a significant player in with its Tanishq brand, have, however,
of gold worldwide, India is also the lead- the world gems and jewellery market been growing steadily to carve a 4 per
ing diamond cutting nation. both as a source of processed diamonds cent market share.
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2. IBEF REPORT
and jewellery industry can be largely
attributed to its strength in diamond pro-
India’s Exports of Gems and Jewellery cessing. Value enhancement by the Indian
18000 diamond processing industry is the high-
15677
est among other countries, with a value
16000
addition worth $1.48 billion in 2004 com-
12127
14000 pared to $840 million in 2003.
11181
12000
9169
Jewellery manufacturing
8627
10000
$ million
7556
India has well-established capabilities
7110
8000
5972
in making hand-made jewellery in
6000
traditional as well as modern designs.
3813
2680
4000 Indian hand-made jewellery has always
1513
1167
2000 had a large ethnic demand in various
0 countries with sizeable Indian immigrant
2001-2002 2002-2003 2003-2004 2004-2005 populations such as the Middle East,
Total Diamond Jewellery South-East Asian countries, the USA and
Canada.
In recent times, India has also devel-
Source: Gems & Jewellery Export Promotion Council, India
oped capabilities in machine-made jew-
both in the domestic and international ellery. With imported or domestic
The Indian gems and jewellery markets for its skills and creativity. processed studding, Indian machine made
industry has significant potential In the global diamond market today, jewellery is expected to generate demand
India offers attractive opportunities Indian diamonds account for 55 per cent from non-ethnic jewellery markets as
across the industry value chain. share in value terms, 80 per cent share in well. The share of gold jewellery in India's
India's strengths offer attractive caratage (weight) terms and 90 per cent exports of gems and jewellery increased
opportunities across each of the elements share in volume terms. Today there is a from 9 per cent in 1994 to 22 per cent in
of the value chain. ready availability of an entire range of dia- 2004, an indication of growing accept-
monds in nearly every size, quality and ance in the world market.
Mining cut. In the area of diamonds, Indian jew-
India has significant reserves of gold, India offers the twin advantages of ellers have been focusing on moving up
diamond, ruby and other gem stones. Key skilled labour and low cost in the area of the value chain, from being polishers of
states with gem stone reserves and min- gemstone processing. rough diamonds to the manufacturing of
ing potential are Maharashtra, Madhya India's significance in the global gems jewellery. Exports of diamond jewellery
Pradesh, Orissa, Chattisgarh, Bihar and
Andhra Pradesh.
Orissa has deposits of ruby and has Share of Gold jewellery has increased in
about 20 varieties of various gemstones
India’s exports of gems & jewellery
such as rhodoline, garnet, aquamarine
etc. Andhra Pradesh has gold and dia-
mond bearing areas, as well as occur- 1% 1%
100% Others
rences of semi-precious and abrasive 9% 4%
90% Export of Rgh Diamonds
stones spread over different districts. 2%
22%
Recognising the potential of the large 80% Gold Jewellery
unexplored gemstone reserves, the 1% Coloured Gem Stones
70%
Government of India as well as different
state governments have been taking ini- 60%
tiatives to open up the sector for explo-
50%
ration by global players.
40%
88% 71%
Gemstone processing
30%
India was the first country to introduce Cut & Polished Diamonds
diamonds to the world - the first to mine, 20%
cut and polish them as well as trade 10%
them. The cutting and polishing of dia-
monds and other precious stones is one of 0%
the oldest traditions in India and the coun- 1993-94 2003-04
try has earned a considerable reputation
Source: Gems & Jewellery Export Promotion Council, KPMG Analysis
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3. IBEF REPORT
are expected to increase in the future.
The central and various state govern- Value addition in the Indian diamond processing industry
ments in India have come out with policy
Exports of finished
incentives to promote jewellery manufac- diamonds
10000
turing. 8627.5
9000
8000 7110.6
Certification 6647.8
Following the World Diamond 7000 5971.9
6186.7 7141.0
Council's statement on adopting credible 6000 6271.0
$ million
and effective measures against the trade 5000
in conflict gems, the Indian government 4000 4812.3
4349.8 4205.5
Imports of rough
has tightened its certification process for diamonds
3000
international trade. The Gems & Jewellery 2000
Promotion Council is India's certification 1000
authority. The government's Central 0
Board of Excise and Customs has banned
1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
the import or export of rough diamond
shipments, which are not accompanied
by a Kimberley Process certificate Precious Metals Jewellery
launched in Switzerland. Certification for Gold The Indian jewellery market is one of
quality diamonds and jewellery has given The current consumption of gold in the largest in the world, with a market
a fillip to exports and has resulted in India is estimated at over 900 tonnes, size of $13 billion. It is second only to the
greater acceptance of Indian products in used mostly in 20 / 22 carat jewellery. US market of $ 40 billion and is followed
the world market. Nearly 95 per cent of gold is used to man- by China at $11 billion.
ufacture gold jewellery for the domestic The gold jewellery market is growing
Technology markets and the remaining 5 per cent is at 15 per cent per annum and the dia-
The Indian gems and jewellery industry exported. Gold consumption in India is mond jewellery market at 27 per cent per
has made rapid strides in design, powered primarily aimed at investment. annum.
by a new generation of young, profession- The emergence of branded jewellery is
ally trained, technology driven designers. Silver a new trend that is shaping the Indian
Many of India's jewellery manufacturing India annually consumes around 4,000 jewellery market. Branded jewellery is a
facilities are equipped with the latest CAD tonnes of silver. Silver jewellery and other relatively new concept in the sector, and
/ CAM and other advanced design sys- articles for personal use, account for the has positioned itself on the quality, relia-
tems. Technology solutions are also avail- bulk of the sales especially in the rural bility and wearability factors. The brand-
able for production control, supply chain areas. India is also the third largest indus- ed jewellery market in India is estimated
and inventory management in the jewellery trial user of silver in the world, after the at $111.6 million per annum. Trends also
industry. The Special Economic Zones and US and Japan. show that traditional handcrafted jew-
Gems and Jewellery Parks developed in ellery is slowly giving way to machine-
various states offer technology-enabled Platinum made jewellery.
environments that are conductive to Platinum or white gold, targeted at the
growth and quality production. premium jewellery segment, is gaining Future Outlook
The gems and jewellery industry in preference among designers and con- The future of the industry is quite
India is a good blend of modern manufac- sumers globally. While India's share in the promising. More and more buyers across
turing and design techniques with the tra- global platinum jewellery market is grow- the world are turning to India as their pre-
ditional skills of the Indian artisan. The ing by 19 per cent annually, it continues ferred source for quality jewellery.
Indian industry is also compliant with to be less than one per cent in the global The Gems and Jewellery Export
international norms such as the Kimberly platinum jewellery market. Given the Promotion Council (GJEPC) is looking at
Process and the Patriot Act. global growth and the maturing of the exploring new markets, such as Latin
With well-established capabilities Indian market to international trends, this American countries. The industry also
across the value chain, India is an attrac- represents an area of potential growth in plans to make India a trading centre for
tive potential market in the gems and jew- India. cut and polished diamonds, and is closely
ellery sector. working with the government of India in
Gemstones this regard. The long term prospects
The domestic industry has been Due to the popularity of gemstone- looks good with jewellery exports expect-
growing at a significant rate studded jewellery across the globe, ed to touch $16 billion in 2010 according
The gems and jewellery sector in India India's gemstone industry has been grow- to industry estimates.
has been growing across all key seg- ing with an estimated turnover of Full report can be accessed at
ments, as detailed below. $0.22 - 0.26 billion. www.ibef.org.
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