India's on-going success in the gold, gems & jewelry industry continues to grow...
IN THE LAST few years, the purchasing power of the Indian middle class – plus surging income levels across the country – has enjoyed massive growth. This has resulted in consumption of gems and jewelry rising by about 11% in the last five years.
But what are the facts about India's gold, gems & jewelry sector?
- The jewelry industry in India contributes over 15% of the country's total exports and provides employment to 1.3 million people directly and indirectly.
- Gold jewelry forms around 80% of the Indian jewelry market, with the balance comprising fabricated studded jewelry (including diamonds) as well as gemstone studded jewelry.
- India consumes nearly 800 tonnes of Gold Bullion, accounting for about 20% of world gold consumption. Nearly 600 tonnes of it goes into making jewelry. The Indian jewelry market, estimated to be worth $13.5 billion in fiscal 2006-07, accounts for 8.3% of world jewelry sales by value according to a study by KPMG.
- The industry is well supported by Government policies and the banking sector. Around 50 banks provide nearly $3 billion credit to the Indian diamond industry. In addition, India is expected to have a diamond bourse soon.
- India is the world’s largest diamond processing center (cutting and polishing) with an estimated 1 million processors handling over 57% of the world’s rough diamonds by value. According to industry estimates, 11 out of 12 stones (diamonds) set in jewelry are cut and polished in India. Processing is done on rough diamonds in the full range of sizes and qualities, including stones larger than 10 carats.
- In terms of carat, India's share in the diamond sector is about 80% of the world market. Employing over 90% of the global diamond industry workforce, India also accounts for 90% of the volume of diamonds processed in the world.
- Exports from the industry fetched $17.1 billion in 2006-07 against $16.64bn in 2005-06, showing growth of 26%. While diamonds accounted for 64% of the total exports, gold jewelry accounted for 30%. Colored gem stones and other items accounted for roughly 1% each.
- Cut and polished diamond exports were $10.90 billion, while gold jewelry exports fetched $5.21bn. Colored gemstone exports yielded $246.48 million last fiscal, against $232.35m in 2005-06.
- This growth momentum has continued into the current fiscal year. The gems and jewelry export industry grew by a robust 27% during the first half of the current year at $9.4 billion, as compared to $7.4bn in the corresponding period of 2006 according to the Gems and Jewellery Export Promotion Council (GJEPC).
- The growth in diamond exports was 28%, in jewelry it was 21% and in colored gemstones it was 22%.
- The major destinations for Indian jewelry exports have been the United States, UAE, Hong Kong, Belgium and Israel.
In fact, the United States, UAE and Hong Kong together accounted for over 70% of the total exports in the previous fiscal year. But the increasing levels of disposable household income have resulted in record consumption levels in the domestic Indian jewelry and Gold Markets.
Indian jewelry demand rose by 70% during the first half of 2007 compared with the same period in 2006. Jewelry demand increased to 387 tonnes from 227 tonnes during the period.
Gold consumption, meanwhile, grew by 70% to 528 tonnes during the first six months of 2007, compared to 307 tonnes in the same period last year. India's total gold consumption in 2006 – including Gold Investment demand – was slightly over 700 tonnes.
While jewelry accounted for around 73% of gold demand, investments in the forms of coins and bars accounted for the rest.