Gems and Jewellery (GJ) has been used by the Indian civilisation since ages for both its aesthetic as well as investment purposes. Precious metals and stones have been an integral part of the Indian civilisation since its recorded history. 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 GJ 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 about 800 tonnes p.a.. The industry holds prominent significance as it is a net exporter and provides employment to 1.3 mn people directly and indirectly.

The industry is characterised by highly unorganised trade, labour intensive operations, working capital & raw material intensiveness, price volatility of gold especially and export orientation. Demand for gold and diamond jewellery is driven by festivals and wedding, increasing affluent and middle class population, increase in per capita spend on luxury items, etc.

Though India plays a dominant role in the GJ 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, UAE, etc and rough diamonds are sourced from Belgium, UK, Israel, UAE, etc. With political pressure to increase local beneficiation in African mining nations, new cutting and polishing centres like Botswana, Nambia, Angola will emerge, reducing India’s dominance in diamond processing.

Expects organised sales to grow due to changing buying preference by growing young population, introduction of Hallmarking and Certifications. The key drivers for the industry growth are rising disposable income, conscious marketing efforts, rising young population with urge to spend and jewellery regarded as fashion accessory. However, with current economic crises 2

world wide, spend on luxury goods will reduce impacting the GJ industry considerably. Also, exports have taken a hit with key consuming nations like US and Europe in recession.

In this time of economic crises, with higher costs and reducing margins, expects the large diamond processing companies to forward integrate to relatively higher margin areas like jewellery fabrication/ retail. The industry is likely to witness consolidation with small players either shutting down operations or merging with larger players.

Executive Summary

1 Introduction

2 Evolution of the Industry

3 Product Profile

3.1 Diamonds

3.2 Gold

3.3 Silver

3.4 Coloured Stones

4 Industry Characteristics

4.1 Raw Material Intensive

4.2 Labour Intensive

4.3 Working Capital Intensive

4.4 Export Oriented

4.5 Largely Unorganised Sector

4.6 Branding & Certification

5 Demand Supply Scenario

5.1 Demand

5.2 Demand Drivers

5.3 Supply

6 Export Import Scenario

7 Cost Analysis

8 Capex Investment

9 Pricing Analysis

10 Duty Structure & Government Initiatives

10.1 Duty Structure

10.2 Government Initiatives

11 Analytical Model