India's Gold & Jewelry Boom

Currently depressed by the global consumer slowdown, India's gold & jewelry sector is forecast to boom...

THE INDIAN CRAZE to Buy Gold and possess the yellow metal as the best form of safe investment continues despite the rising price, reports Commodity Online from Mumbai.

According to a new research report from India's RNCOS Industry Research Solutions – and with its consumption pegged at nearly 20% of world demand – India remains the world's largest gold consumer, despite the current drop in sales. And this share is expected to grow further, says RNCOS.

Its new $900 business report, entitled Indian Gems & Jewelry Market: Future Prospects to 2011, says India possesses the world's most competitive gems and jewelry market due to its low cost of production and the availability of skilled labor.

Highly skilled and low-cost manpower, along with strong government support in the form of incentives and local establishment of Special Enterprise Zones (SEZs), has been a major driver for the Indian gems and jewelry market, says RNCOS' report.

The research consultancy also says the gold market plays a vital role in the Indian economy, as it is a leading earner of foreign exchange and accounts for more than 12% of India's total exports.

Currently the Indian Gold and jewelry market remains highly fragmented, but is rapidly transforming into an organized sector.

The industry is facing a slowdown due to the global economic turmoil. But thanks to various government efforts and incentives – coupled with private sector initiatives and the abiding cultural love of gold – the Indian gems and jewelry sector is expected to grow at a compound average rate of some 14% between 2009 and 2012.

At present, the Indian gold, gems and jewelry market is dominated by small, fractured production units. However, the trend is set to change in the near future, RNCOS claims, with the branded jewelry market growing at an expected rate of more than 41% in the coming four years.

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