The Indian gems and jewellery industry is the fastest growing jewellery market in the world. Recognised as the diamond polishing capital of the world, the country is gaining prominence as an international sourcing destination for high quality designer jewellery with global retail majors such as Wal-Mart and JC Penney procuring jewellery from India. The presence of highly skilled, low-cost labour enables India to design and make high volumes of exquisite jewellery at relatively low cost. According to Credit Analysis and Research Limited (CARE), the domestic jewellery market in India is pegged at US$ 16 billion.

Industry structure

With consumer consciousness increasing, the future of organised retail in India is very bright. The organised sector of the gems and jewellery industry in India is estimated to grow at 40 per cent per annum to US$ 2.2 billion by 2010. The increasingly savvy Indian consumer is becoming partial to branded jewellery which is associated with better services, premium quality products and attractive exchange policy. The growing popularity of machine-made jewellery over traditional handcrafted jewellery is also spurring the growth of the organised retail segment.

A study released by the Bullion Association of India in March 2009, stated that the share of branded jewellery in the total market was growing at a pace of 20-30 per cent annually. The number of gold retailers in the country has increased by 40 per cent since the year 2000, with 150 domestic and over 65 international established brands, the study said. According to the CARE report on the Indian gems and jewellery industry, 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 per annum. The industry provides employment to 1.3 million people.

Gold

According to the World Gold Council's latest, "Gold Demand Trends Report", gold tonnage off-take in the fourth quarter of 2009 totalled 180.7 tonnes worth US$ 6.39 billion, up 17 per cent from 154.4 tonnes in the previous quarter and up 13 per cent from 159.6 tonnes in the fourth quarter of 2008.

• India is the largest consumer of gold jewellery in the world, accounting for about 20 per cent of global gold consumption
• The Reserve Bank of India, bought 200 metric tonnes of gold worth US$ 6.7 billion from the International Monetary Fund in October 2009
• A small village town called Chavakkad in central Kerala, a southern Indian state, consumes 20 per cent of all gold sold in the country.

Diamond

Surat is India's diamond processing hub, contributing over 80 per cent of the country's diamond processing industry with annual revenue of around US$ 13.03 billion. In recent years, Dubai, being a port location, had developed into a diamond distribution centre in West Asia. According to industry estimates, 10-15 per cent of India's total polished diamond exports go through Dubai.

According to a new report by RNCOS on the Indian jewellery market, the cost per carat for cutting and polishing diamond is US$ 10 in India as compared to US$ 17 in China and US$ 150 in Belgium.

India is the largest resource hub in diamond cutting and processing. Low cost of labour involved in the production of finished diamonds has lured global attention, thereby resulting in the growth of the industry.

• India is the largest diamond cutting and polishing centre in the world
• It accounts for 60 per cent value share, 82 per cent by carats and 95 per cent share of the world market by number of pieces
• It is the third largest consumer of polished diamonds after the US and Japan.

Exports

According to The Gem and Jewellery Export Promotion Council, exports of gems and jewellery from India, rose 45 per cent over December 2008 to touch US$ 1.89 billion in December 2009.

Exports during the April-December 2009 period, increased to US$ 19.6 billion from US$ 19.1 billion a year earlier. Exports of cut and polished diamonds in the April-December 2009 period stood at US$ 12.06 billion as compared to US$ 11.5 billion in the corresponding period in the previous year.

The UAE, led by Dubai, is the largest destination for India's gems and jewellery, accounting for 31 per cent of the country's total exports, followed by Hong Kong (25 per cent) and the US (20 per cent).

Moreover, The Gem And Jewellery Export Promotion Council is looking at tapping newer markets for diamonds and diamond jewellery, such as China, the Middle East and Russia.