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Gems and Jewellery

General

  • The Gems & Jewellery Industry is one of the fastest growing segments in India with an annual growth of approximately 15%. The Gem & Jewellery industry presently constitutes nearly 10.7% of India’s exports.
  • The domestic market is estimated at around US $ 16.1 billion and trade circles estimate it to grow to about US $ 25.2 billion in the next 2 – 3 years.
  • India is the largest consumer of gold in the world and consumes nearly 800 tons of gold, which accounts for nearly 20% of the world consumption. Of this, nearly 600 tons goes in making of gold jewellery.
  • India is emerging as the world’s largest trading centre for gold, which is targeted to touch US$ 16 billion by 2010.
  • India has an abundant supply of skilled manpower suited for designing and producing high volumes of exquisite jewellery at low labour costs.
  • Due to the very high export orientation of the industry, most of the large players have established their offices / subsidiaries / associates in nearly all the important trading centres of the world like USA, Singapore, Hongkong, China, UAE, Tokyo, Belgium, Tel Aviv, London etc.
  • India is the largest diamond cutting and polishing centre in the world and globally enjoys a 60% share in value, 82% share in caratage terms and 95% share in terms of pieces. Effectively, 9 out of 10 diamonds sold worldwide are processed in India.
  • India’s export of Gems & Jewellery products (constituting cut and polished diamonds, gold jewellery, coloured gemstones, pearls, non-gold jewellery, synthetic stones etc) was at US $ 21.2 billion in 2008 and is expected to be approx. US $ 20.1 billion in 2009.

Retail Sector

  • While recently there have been a growing trend of large business entities entering this sector, the Gems & Jewellery sector still continues to be dominated by small and medium sector entities.
  • With a growing middle class, the market for branded jewellery is expanding substantially and is expected to be in the range of US$ 2.2 billion by 2010.
  • Many of the large players in the industry are setting up retail chains of jewellery showrooms across India which market gold (plain and studded) jewellery, fusion jewellery, diamonds etc.
  • With gold being seen as an investment alternative, the market for gold coins / bars has increased substantially and is presently estimated at US $ 2.11 billion.

Opportunities and Challenges

  • With the phenomenal increase in the growth opportunities and scales of business operated, the challenges have also increased manifold.
  • Some of the significant challenges faced by the industry are
    • Price Risk of key raw materials
    • Foreign Exchange Risk
    • Security risk during mass scale production, handling and movement
    • Fast changing fashions, models etc
    • Credit Risk
    • Country / Territory Risk for market concentration in few countries.
    • Compliance risk has increased significantly as a result of the multinational operations of the industry
    • Ability of management in handling country specific challenges.
    • In case of diamonds, concentration of rough diamonds supply with a few suppliers is a major challenge
    • Increased international and domestic vigilance by authorities considering Gems & Jewellery products (eg. gold, diamonds etc) being considered as sensitive goods.
    • Scaling up the local systems and procedures to suit international standards and requirements.
    • Products are more based on discretionary and impulsive buying and hence get affected first during any downturn.

    While the challenges are many, the industry also offers significant growth opportunities considering the future outlook.

What we do

Suresh Surana & Associates has been involved in the Gems & Jewellery industry for over 2 decades and provides a wide range of professional services to this industry viz.

  • Internal / Management Audits (including Compliance audits)
  • International and Indian Taxation
  • Corporate Advisory and Structuring covering Tax / Foreign Exchange regulations, Double Taxation Avoidance Agreements (DTAA) regulations, Commercial regulations etc.
  • Advisory and assistance in outbound and inbound Foreign Direct Investments from and into India, formation / re-structuring of Joint Ventures, Mergers and Acquisitions etc.
  • Quality Management Systems covering compliance of standards defined by De Beers, Rio Tinto etc.
  • Operations Consulting covering lean management systems, JIT approach, Inventory management tools, preparation of Standard Operations Manuals (SOPs) defining pre-agreed systems and procedures etc and assisting in their implementation.
  • Financial Process Outsourcing
  • Transfer Pricing
  • Information Technology Solutions covering data and process automation, assisting in the identification and implementation of software, ERP etc.
  • Enterprise Risk Management enabling organizations to help identify, control and mitigate / manage risk across the organization.
  • Company Law compliance and Commercial documentation
  • Executive Search and Recruitment
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The site was last updated on: 14 September 2010