India Gems & Jewelry Market - Dec'13

India Gems & Jewelry Market

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OVERVIEW

Low cost of production and availability of highly skilled labor are the factors that have made India one of the most competitive jewelry markets in the world. Besides, various incentives of-fered by the government have further consolidated the country’s position as a leading destination for gems and jewelries.

The gems and jewelry industry majorly includes sourcing, processing, manu-facturing and selling of precious metals and gemstones such as Gold, Platinum, Silver, Diamond, Ruby, Sapphire, among others. The sector forms an integral part of the Indian economy as it forms a major component of the export-led growth. The industry has been growing at a good pace over the last few years and contributed for 14% of the revenues in India’s total merchandise exports in 2011-12 . Moreover, the country accounts for more than 20% of total gold consumption in the world which is expected to reach around 25% by 2017 as gold is all time favorite investment option for Indians.

Figure 1: Share of India in Global Gold Consumption (2013 & 2017)

Rest of the World

India

21%

79%

Source: RNCOS

Rest of the World

India

25%

75%


MARKET SIZE AND GROWTH RATE

The size of the Indian gems and jewelry mar-ket is estimated US$ 32 Billion in 2013 and is expected to be US$ 43 Billion by the end of 2017 on the back of increasing domestic demand. The country is one of the largest ex-porters of gems and jewelry and the industry is considered to play a vital role in the Indian economy as it is a leading foreign exchange earner.

On geographical front, Mumbai is the hub of India’s jewelry industry that receives the majority of the country’s gold and rough dia-mond imports. Mumbai has a considerable number of modern, semi-automatic factories and laser-cutting units, the majority of which are located in the special economic zone. However, most of the diamond processing is undertaken in Gujarat (primarily in Surat, Bhavnagar, Ahmadabad and Bhuj) and in Rajasthan (Jaipur).

Further, the two major segments of the sector in India are gold jewelry and gems studded jewelry. Gold jewelry forms around 80% of the Indian jewelry market, with the balance comprising fabricated studded jewelry that includes diamond and gemstone studded jewelry. The fabricated studded jew-elry segment also includes the demand for platinum which on the face of it seems like very less demanded metal. A predominant portion of the gold jewelry manufactured in India is consumed in the domestic market.

Among all studded jewelry, demand in the domestic and international markets was more for diamond-studded jewelry. About 60% of India’s studded jewelry was diamond jewelry. In future, it is expected that diamond jewelry will eat up the share of gold jewelry on ac-count of changing consumer preference and growing gold rate.

2011 2012e

CAG\R6.44%

2013e 2017f

Source: Gems and Jewellery Export promotion Council (GJEPC), RNCOSNote: e/f = RNCOS Estimation/Forecast

Figure-2: Gems and Jewelry Market (Billion US$), 2011-2013 & 2017


Source: RNCOS

Figure 3: India Gems & Jewelry Market Segmentation (%), 2013 & 2017

Gold Jewelry Studded Jewelry

Gold Jewelry Studded Jewelry

20.0%

25.0%

80.0%

75.0%

India’s gems and jewelry shipment made up about 14.28% of India’s total exports in 2012-13 down from 15.41% in 2011-12, with the Middle East taking most of the market. In FY 2012-13 exports fell more than 9%, hurt by weak demand from the de-veloped world . While the future outlook looks positive with an expected CAGR of more than around

3% during 2012-13 to 2016-2017 as the U.S. and Japanese jewelry markets are expected to bounce back and China’s growth is anticipated to remain stable in near future. The countries where demand is increas-ing for Indian jewelry include the UAE, the US, Russia, Singapore, Hong Kong, Latin America and China.


Among all, UAE is the major importer of Indian gems & jewelry with a share of more than 40%, followed by Hong Kong and USA. These three destination alone accounts for more than 80% of the total export of gems and jewelry from India.

Figure 4: Gems & Jewelry Import and Export (Billion US$), 2010-11 to 2012-13 & 2016-17

Source: JGEPC India, RNCOSNote: e/f = JGEPC Estimation/RNCOS Forecast

Exoprt Import

43.0 43.139.0

44.5

2010-11 2011-12 2012-13e 2016-17f

43.142.236.9

42.3

Figure 5: Top 5 Export Destinations for India Gems & Jewelry (%), 2012-13

Source: Ministry of Commerce and Industry

UAE

Hong Kong

USA

Belgium

Israel

Rest of the World

43.2%

23.5%

15.6%

5.7%

2.7%

9.3%


• Central banks across the world are pumping in more liquidity in India gems and jewelry market due to expected uncertainty in the global markets.

• Onset of festival season in India

• The government has taken number of measures to provide boost to gems and jewelry sector. Such measures include permission to import diamonds on consignment basis for certification/grading and re-export by specified agencies, increasing the limit of personal carriage of gems & jewelry products in case of participation in overseas exhibitions and in case of export promo-tion tours, and others.

• Financial assistance is also given to these sectors under ‘Market Development Assistance’ and ‘Market Access Initiative’ schemes to organize/participate in exhibitions, fairs, buyers-seller meets and reverse buyers-sellers meets etc. through their respective Export Promotion Councils.

• The Indian government has increased import duty on gold jewelry to 15% from 10%, in a move aimed more at protecting the domestic jewelry industry rather than stemming overseas purchases to narrow its current account deficit.

Opportunities

• Persistently higher inflation is leading to reduced discretionary spending by the consumers. Rising gold prices on account of falling rupee are making it harder for buyurs to afford gold jewelry.

• India’s GDP growth slowed to 5.7% in FY 2013 compared to 6.2% in FY 2012, implying lower per capita income, fewer jobs and lesser spending power for consumers.

Challenges

Opportunities & Challenges


Keeping in view its past performance, the industry’s inherent strengths and growth prospects, the foot-wear industry aims to augment production, thereby enhancing its exports from the current levels. Ac-cording to Assocham, exports are expected to grow at a CAGR of 15% in the next 5 years. The industry will continue to focus on the European countries and the US markets for exports.

With more and more Indian woman joining the workforce, the ladies footwear market in all the cat-egories/segments will grow rapidly throwing up huge opportunities in an area yet to be fully tapped by various players.

The government is considering the creation of training centres where the laborers can be imparted training and making efforts towards provision of new and advance technology to the footwear industry so that it can become more competitive. Further, it is looking into the fact that the footwear industry needs to improve cost competitiveness through value chain efficiencies. There should be implementa-tion of best practices at a firm level and at the sectoral level through cluster based approach by setting up cross-industry clusters and supporting them through governmental interventions on infrastructure like port clearances and power. All this, would increase the efficiency and scale of operations of the in-dustry and would attract more and more FDI. The footwear sector had seen only INR 500 Crores of FDI in 2012 (Which is only 0.65 percent of India’s total FDI in 2012).

The total imports of footwear of US in 2012 were 2,28,19,69,730 pairs, with majority of imports being from China. The share of India in total footwear imports of USA was just 0.6%, creating an opportunity for India to further increase its exports to USA in the future, by warding off competition with China through supply of better quality products.

Future Outlook


With the country achieving a leading position in gems and jewelry sector across the globe, more and more companies are making a foray in the lucrative jewelry market.

Presently, the gems and jewelry industry in India is highly fragmented and comprises of more than 500,000 gems and jewelry players across the country, with the majority being small players.

Though organized retail accounts for about 4-6% of the entire market, Indian is increasingly getting acclaimed as an international sourcing destination for high-quality designer jewelry. Global companies such as Walmart and JC Penney source jewelry from India.

Gili Jewelry ties up with Jet Privilege, frequent flyer programGili has entered into a tie-up with Jet Privilege, the frequent flyer program from Jet Airways that gives all Jet Privilege (JP) members certain added benefits when they purchase Gili jewelry.

Gili jewelry brand opens stores in Mumbai and Jaipur Gili opened two new stores, one each in Thane, Mumbai and Jaipur. Gili now has eight stores across the Mumbai region, while the Jaipur store is its second in the Pink City.

Gili jewelry store in KochiJewelry brand Gili has opened its first outlet in Kerala at Lulu Mall in Kochi. The store offers a range of dia-mond and platinum jewelry ranging from ethnic and traditional designs.

Titan to halt expansion of large Tanishq storesTitan Industries Ltd, India’s largest branded jewelry retailer, is cutting back on expansion of big shops, partly because of difficulties in finding appropriate locations at affordable prices.

Tanishq to expand footprint in eastern IndiaTanishq aims to expand its footprint in eastern India, comprising Odisha, West Bengal, north-eastern states and Jharkhand with opening of more number of outlets.

Tanishq launches Inara diamond jewellery collectionTanishq, the jewellery retail brand of the Tata Group has launched a new diamond jewellery collection entitled Inara. There are over 120 unique designs of diamond jewellery pieces across necklace, bangles, earrings and cocktail rings priced between Rs.2 lacs and Rs.6 lacs.

Jewellery designer Nirav Modi plans string of retail storesDiamond jewelry designer Nirav Modi, whose Golconda Lotus necklace fetched INR 160 Million at a Christie’s auction, announced to open at least 10 retail stores in India and overseas and introduce pieces at lower price points.

Major Brands & Players

• Gili• Tanishq• Carbon• Oyzterbay• Trendsmith• RelianceRetail• DamasJewellery• GitanjaliGemsLtd.• Swarovski• DiamondTradingCompany• VardhamanDevelopers• Alukkas• Viswa• DevjiDiamonds• GoldSoukIndia

Key Players

Recent Developments


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