GEMS AND JEWELLERY SECTOR

SUBMITTED BY: YASHICA ARORA MEGHA MALHOTRA RICHA CHABRA GITIKA SINGH NUPUR SETHI GARIMA GUPTA

CHAPTER 1 INTRODUCTION

INTRODUCTION
India possesses world's most competitive gems and jeweler market owing to its low cost of production and availability of skilled labor.

Gems and jeweler form an essential part of the Indian tradition. The components of jeweler include traditional gold, diamond and platinum, accompanied by a variety of other precious and semi-precious stones.

SIZE
Large market for Gems & Jewelry with domestic sales of over $10 billion. 4% of the global Gems and Jewelry market . Exports of over $15.5 billion; over 18% of Indias exports. India is the largest consumer of gold jeweler in the world. India is the largest diamond cutting and polishing center in the world. Third largest consumer of polished diamonds after USA and Japan.

STRUCTURE
The Indian Gems & Jewelry industry is highly fragmented with

a large number of domestic private sector companies.

A large portion of the market is in the unorganized sector .

India is gaining prominence as an international sourcing

destination for high quality designer jewelry .

Walmart, JC Penney etc. procure jewelry from India .

INDIA'S POSITION IN GEMS AND JEWELLERY SECTOR

Gems and Jewelry is one of India 's leading foreign exchange earning sectors. It accounted for 16.7 per cent of India 's total

Merchandise Exports.
India Gems & Jewelry exports are expected to grow at a whopping 15 to 20 per cent in FY 2012. At present India exports 95% of the worlds diamonds.

KEY INDUSTRY COMPONENTS

Diamonds Gold Precious stones Platinum Pearl Silver

CHAPTER 2 CONCEPT, POLICY AND LITERATURE REVIEW

POLICY 100% FD is permitted in the Gems

& Jewelry sector through the

automatic route.

SEZs and Gems and Jewelry Parks

have been set up to promote

investments in the sector.

GOVERNMENT REGULATION AND

SUPPORT
The Indian gems and jeweler export industry had its modern beginning in the 1960s, when the Government of India introduced the Replenishment (REP) licence, allowing an importer to import rough diamonds worth 80 per cent of the value of his exports. The EXIM Policy for 2002-07 contains a special focus on exports of gems and jeweler through market access initiative schemes, duty free imports and appropriate adjustments in value addition norms. The government has set up various special economic zones (SEZ) for gems and jeweler industry with specific incentives provided to units in SEZs.

In order to give a boost to exports of gems and jeweler, Government took major policy initiatives during 2004-05.
Lowering import duty on platinum from US$ 12.2 per 10 gms to US$ 4.64.

Exempting rough colored precious gems stones from customs duty at the first stage itself instead of claiming reimbursements later. Rough semi precious stones are already exempt, aimed to further increase the exports of studded jeweler and platinum jeweler.

FTP PROVISIONS
Import of gold of 18 carat and above shall be allowed under the replenishment scheme.

Schemes for Gold / Silver / Platinum JewelryExporters of gold / silver / platinum jeweler and articles thereof may import their essential inputs such as gold, silver, platinum, mountings, findings,rough gems, precious and semi-precious stones,synthetic stones and unprocessed pearls etc. in accordance with the procedure specified in this behalf.

Replenishment Authorization
Exporters may obtain Replenishment (REP) Authorizations from RA in accordance with procedure specified in HBP v1.

 Diamond & Jewelry Dollar Accounts Firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jeweler plain,minakari and / or

studded with / without diamond and / orother stones, with a track

record of at least 3 years inimport or export of diamonds /coloured gemstones /diamond and coloured gemstones studded jeweler /

plaingold jeweler, and having an average annual turnover of Rs. 5

crore or above during preceding three licensingyears, may also carry out their business throughdesignated Diamond Dollar

Accounts (DDA).

 Duty free re-import entitlement for rejected jeweler shall be 2% of the FOB value

of exports - To promote the G&J exporters, this provision says that if your order is
rejected by foreign buyer you may re-import upto 2% of the FOB value of exports Cutting and polishing of gems and jeweler, shall be treated as manufacturing for the purposes of exemption under Section 10A of the Income Tax Act. Duty free import entitlement of consumables for metals other than Gold, Platinum shall be 2% of FOB value of exports during the previous financial year. Duty free import entitlement of commercial samples shall be upto Rs 100,000 Samples required for purchase orders can be acquired duty free upto Rs 1 Lac from foreign suppliers.

GOVERNMENT INITIATIVES

100 percent foreign direct investment (FDI)in gems and jeweler through theautomatic route is allowed. The government has lowered import duty onplatinum and has exempted rough coloredprecious gems stones from customs duty.

Rough, semi-precious stones are alsoexempt from import duty Setting up of SEZs and gems and jeweler parksto promote investment in the sector. The government abolished import duty onpolished diamonds. The export of colored gemstones on aconsignment basis has been allowed.

 Duty-free import of consumables for metals otherthan gold and platinum up to 2 percent of freighton board (f.o.b) value of exports.
The government has raised the limit value of jeweler parcels for export through foreign postoffice (including via speed post) from US$ 50,000to US$ 75,000 and the time period for re-import of branded jeweler remaining unsold has beenextended from 180 days to 365 days.

To neutralize duty incidence on gold jeweler exports, it has now been decidedto allow Duty Drawback on such exports. To promote export of Gems & Jewelleryproducts, the value limit of personalcarriage have been increased from US$ 2million to US$ 5 million in case of participation in overseas exhibitions.

In an endeavor to make India adiamond international trading hub, it isplanned to establish Diamond Bourse(s).

SPECIAL FOCUS INITIATIVS

MDA - To promote export of Gems & Jewelleryproducts, the 13 value limits of personalcarriage have been increased from $ 2 millionto US$ 5 million in case of participation inoverseas exhibitions. Surat in Gujarat have been recognized as Towns of Export Excellence, for diamonds.

 Gems and jeweler EOUs may source gold /silver / platinum through nominated agencies on loan / outright purchase basis. Units obtaining gold/ silver /

platinum from nominated agencies, either on loan basis

or outright purchase basis shall export gold / silver / platinum within 90 days from date of release.

STRATEGIES
Branding of Jewelry Hallmarking of jewelry Increasing Market Presence of Platinum Jewelry Change in Product Portfolio Continuous Skill Development Technology Up gradation Establishing Diamond Bourses Increase in Exploration Activities Enhancing Visibility through Continuous Participation in International Exhibitions

FUTURE OF THE INDIAN JEWELLERY MARKET

Indias jeweler market is only expected to increase in the future with total estimated jeweler sales of US$ 21 billion by 2010 and US$ 37 billion by 2015. Diamond jeweler consumption in India is also estimated to jump by 78 per cent in 2010. Branded jeweler is likely to be the fastest-growing segment in domestic sales. The sector is expected to grow at 40 per cent annually to touch US$ 2.2 billion by 2010.

Indian diamond jeweler industry is the third largest consumer of polished diamonds after USA and Japan. The organized gems and jeweler sector is anticipated to grow rapidly in near future. Various factors like cheap labor cost, better designs and manufacturing practices, are making the country an attractive destination for cutting and polishing of diamonds.

LITERATURE REVIEW
Kishore Sharma (1960) Factors determining India's export performance Rashmi Bang (1997) The Export-diversifying Impact of Japanese and US Foreign Direct Investments in the Indian Manufacturing Sector

MAJOR PLAYERS
Gitanjali Group Su-Raj Diamonds & Jewelry Ltd. Suashish Diamonds Ltd. Shrenuj & Co. Ltd. Tanishq Hindustan Diamond Co. Pvt. Ltd. Vaibhav Gems Ltd. Asian Star Co Ltd. Rajesh Exports Limited

CHAPTER 3
DATA AND ANALYSIS

CHAPTER 4
CONCLUSION AND RECOMMENDATIONS

OPPORTUNITIES FOR THE SECTOR

Entering New Markets Cutting and Polishing of Large-Sized Diamonds Value Addition Jewelry Retail Outsourcing Hub

CHALLENGES
Challenges Unorganized Sector Impact of Recession Rise in Prices Possible Threats from China and from Other Countries Producing Diamonds Low Level of Technology Absorption R&D and Product Development

SUGGESTIONS
Government must liberalize the custom duties and procedures. The government has to encourage the domestic exporters and help them to export their product in International Market. The exporter of Gems and Jewelry must know the procedures to be followed in the export.

REFERENCES
http://www.eximguru.com/exim/dgft/exim-policy/20092014/chapter_4_duty_exemption_remission_schemes.aspx http://jeweler.indiabizclub.com/info/gem_and_jewellery_industry_o verview http://www.eximbankindia.com/op/op138.pdf http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-

sectors/gems-jeweler.htm
http://www.ibef.org/industry/gemsjewellery.aspx