Diamond

Six months into the fiscal year, and India is clearly importing more rough. In the April-October period, India imported a net of $6.02 billion worth of rough diamonds, a 45.4 percent increase from the first half of fiscal 2009-2010. According to provisional figures released by the Gem & Jewellery Export Promotion Council (GJEPC), India·s net rough diamond imports in October reached $797.7 million. The country imported a net of 8.96 million carats during the month. Year-over-year, the month·s net imports were a 43.2 percent increase in value but a small 2.3 percent increase in volume, once again demonstrating the rise in rough diamond prices. For the six month period, the volume of net imports increased by 14.2 percent to 72.7 million carats. Source : idexonline.com http://www.eximpolicy.net/clauses/diamond-and-jewellery-dollar-accounts.htm http://www.indiandata.com/import_procedures.html http://www.eximpolicy.net/chapters/general-provisions-regarding-imports.htm http://www.dateyvs.com/custom06.htm http://www.eximkey.com/find.asp?search=rough+diamond&submit=Search+&mode=allwords http://www.diamondworld.net/contentview.aspx?item=5334\ The Gem and Jewellery Export Promotion Council

International Gem Tower Construction Coincides With Anticipated NYC Real Estate .... Report on the 27th edition of the India International Jewellery Show ... Member Directory - Apply for Membership - Regional Offices www.gjepc.org/ - Cached ² Similar Gems and Jewellery

India, the largest consumer and importer of gold in the world, is projected to import ... Gems and jewellery exports to grow by 30-35 per cent in 2010-11 ... www.ibef.org/industry/gemsjewellery.aspx - Cached - Similar India's Gem and Jewellery Exports - IndiaOneStop

1 Nov 2003 ... US accounts for largest share (40 per cent) in India's gem and jewellery exports followed by Hong Kong (23 percent) and Belgium (12 per ... www.indiaonestop.com/gemsjewellery.htm - Cached - Similar

India's gems, jewellery exports rose by 7%

17 Feb 2009 ... India's gems, jewellery exports rose by 7% - India's gem and jewellery exports rose by 7. www.indianexpress.com/.../indias-gems-jewellery-exports.../424587/ - United States - Cached Similar Gems, jewellery exports up by 31% at Rs12979.19cr in Oct - The ...

23 Nov 2010 ... Gems and jewellery exports grew by 31 per cent in October to Rs 12979.19 crore (USD 2922.58 million) as compared to the corresponding period ... timesofindia.indiatimes.com/.../india.../Gems-jewellery-exports.../6975852.cms - Cached All India Gems & Jewellery Trade Federation

12 Apr 2010 ... All India Gems & Jewellery Trade Federation is a national trade federation for the promotion and growth of trade in gems and jewellery ... www.gjf.in/ - Cached - Similar INDIA: EXPORT OF GEMS AND JEWELLERY.(Brief Article) - IPR ...

INDIA: EXPORT OF GEMS AND JEWELLERY.(Brief Article) ... find IPR Strategic Business Information Database articles. Gems and Jewellery is a major Indian ... www.highbeam.com/doc/1G1-94441064.html - Cached Gems and Jewellery - INVESTMENT COMMISSION OF INDIA

4% of the global Gems & Jewellery market. Exports of over US$17 billion in 2006-07; about 14% of India's exports; India is the largest consumer of gold ... www.investmentcommission.in/gems_&_jewellery.htm - Cached - Similar Industry seeks VAT exemption on gems, jewellery exports

25 Nov 2010 ... The gems and jewellery industry is demanding that value-added tax (VAT) be exempted in Andhra Pradesh on exports of gems and jewellery, ... business-standard.com/india/...exemptiongems-jewellery-exports/416042/ - Cached

Gems and Jewellery - Welcome to India in Business : Industry ...

C. Mehendra Exports; J.B Brothers; Tara - Ultimo; Vaibhav Gems, Jaipur; Sheetal Manufacturing. Future Outlook. All India Gem and Jewellery Trade Federation ...

www.indiainbusiness.nic.in/industry.../gems-jewellery.htm - Cached - Similar

SURAT: In the first quarter of 2010, about $6 billion worth of polished diamonds were exported to different destinations like the US, China, Hong Kong, Japan, UAE, South America etc., a jump of 85 per cent compared to the first quarter export in the previous year. India, especially Surat cuts and polishes 60 per cent of the world's diamonds and sells 40 per cent of it to the US, the world's largest finished jewellery consumer. The industry, which contributes 12.51 per cent of the country's total merchandise export, accounts for nearly 55 per cent of the world's net exports of cut and polished diamonds in value terms, 90 per cent in terms of pieces and 80 per cent in terms of carats. In 2005, an astounding 92 per cent of all cut diamonds set in jewellery world-wide came from Surat where nine out of 11 diamonds of the world are cut and polished, making it the largest manufacturer of cut and polished diamonds in the world. From the $11 billion worth of polished diamond export in 200405, the industry has come a long way with the export of polished diamonds expected to cross $18 billion in 2010-11. The India International Jewellery Show (IIJS), the fifth largest diamond and jewellery trade show in the world held recently in Mumbai generated $858 million worth of business during five days last year it generated $500 million with a huge purchase from over 3,000 international buyers and about 26,000 domestic customers. "The success of the IIJS and all other international jewellery shows held during this year depict the revived consumer confidence across the world. This will further drive our polished diamond and jewellery export to a much higher level" said Sanjay Kothari, convenor of promotion, marketing and business development at GJEPC. Year Overall export of gems & jewellery Polished diamond export 2004-05 $15.50 billion $11 billion

2005-06 $16.71 billion $11.83 billion 2006-07 $17.15 billion $10 billion 2007-08 $20.91 billion $14 billion 2008-09 $25.31 billion $13 billion 2009-10 $.28 billion $17.54 billion

Read more: Polished diamond export to cross $18 bn in 2010-11 - The Times of India http://timesofindia.indiatimes.com/city/surat/Polished-diamond-export-to-cross-18-bn-in-201011/articleshow/6434462.cms#ixzz172nlZ800

Historical Gem Cutting Regions | Gujarat Province, India
Venice | Gujarat | Bruges | Amsterdam | Antwerp | Idar-Oberstein

Gujarat Province, India The ancient Gujarati port city of Barygaza (Broach), on the Gulf of Cambay, was at the crossroads of trade routes to China, Persia, Greece, and Portugal, and was a major trading center since the time of Ptolemy (c. 90 AD - c. 168 AD) [9]. Mughal jewellery, gold, silver, textiles, coral, ivory, pearls and gemstones all passed through Barygaza, making it a mecca for artisans, carvers, and stone-cutters for over 1000 years.

To this day a substantial diamond cutting industry has grown up in the cities of Ahmedabad, Bhavnagar, Mumbai, Navasari, and Surat in Gujarat province on the central-western coast of India, where a workforce of around 800,000 people cut and polish 80% to 90% of the world's diamonds in a

hodgepodge of 'cottage industry' style sweatshops and cutting houses. The average cutting-house employs 50 to 200+ workers. Labor costs in India are very low ($.60 to $1.00 per stone) when compared to the more industrialized diamond centers. In Mumbai alone, the diamond-cutting industry employs an estimated 100,000 workers. Much of India's diamond trade is controlled by a handful of wealthy families, many with the common surnames of Jhavari, Mehta, and Shah. Most of the 'diamantaires' in Gujarat's polishing industry are Jain, and ancient Indian religion and philosophy dating back to the 8th century BCE.

(photo to right) Jain Temple in Surat - jainworld.org

Surat, the 'Diamond City of India' Surat, a city by the Gulf of Khambat (aka the Gulf of Cambay), is considered one of the hubs of the global diamond trade, and "the diamond city of India." The De Beers controlled Diamond Trading Company (DTC) has demonstrated Gujarat's power in the diamond-cutting arena by increasing its take of the DTC's 125 lucrative 'sightholder' contracts to nearly 50 in 2005. It is estimated that India cuts, polishes, and exports over one-billion dollars worth of gems per year. Gitanjali Gems is India's largest manufacturer of diamonds, with cutting facilities in Surat's 'Special Economic Zone' and in Borivali, Mumbai. Some of the major firms in Gujarat's diamond industry are: Bhavani Gems, D. Navinchandra & Co, Gitanjali, M. Suresh & Co, Sanghavi Exports, Shree Ramkrishna Exports, Venus Jewels, and Vijaydimon. All are facilitated through the Hindustan Diamond Company Ltd. (HDC), and De Beers India.

India has had a reputation for only cutting smaller diamonds, and the city of Bhavanagar is known for processing the smallest stones, with final polished sizes of between 0.5 and 2 points [2]. Until recently, the cities of Surat and Mumbai (Bombay) were also know for cutting and polishing smaller stones of lesser value, but this reputation is beginning to change. In recent years, modernization and a skilled labor force are positioning Gujarat's diamond industry to rival the prestige of Antwerp's Jewish community.

Government Cooperation According to the Times of India, as of April 1, 2006, the Gujarat state government has exempted Surat¹s diamond-cutting industry from state-imposed VAT (Value Added Tax) taxes.

On To: Italian & Flemish Renaissance Gem Cutters Old European Gemstone Cuts Fancy Gem Cuts & Fantasy Cuts Gem Cutting Technology, Equipment & Techniques

Bibliography & Suggestions for Further Study on Gem-Cutting and Lapidary

1. Victoria Finlay, Jewels: A Secret History

. Ballantine Books

2. Idex, Diamond Manufacturing in the Gujarati Community

. www.jhm.nl

3. The Bead Site, Roman Maps and the Concept of Indian Gems

. www.thebeadsite.com

4. Francesco Guerrera, Andrew Parke, The Changing Face of the Diamond Industry

. specials.ft.com

5. Gem & Jewellery Export Council, Advantage India - A Touch of Class

. www.iijs.org

6. Dan Bilefsky, Newcomers Jump-Start A Deep-Rooted Industry

. www.startupjournal.com

7. Chidanand Rajghatta, Indian diamantaires shining in Antwerp

. timesofindia.indiatimes.com

8. Untracht, Oppi., Traditional Jewellery of India. New York: Abrams

9. Jean Baptiste Tavernier, The Six Voyages.

A Project Report On A STUDY OF GEMS AND JEWELLERY EXPORT At Gosil Exports Pvt. Ltd. Submitted in partial fulfillment of the requirements of Post Graduation Diploma in Management 2008-2010 Ajay Yadav SUBMITTED TO

SINHGAD INSTITUTE OF MANAGEMENT AND COMPUTER APPLICATION (SIMCA), PUNE DE C LA RA T IO N I, the undersigned, hereby declare that the Project Report entitled A Study of Gems and Jewellery Export written and submitted by me to the Sinhgad institute of management and computer application (Pune) in partial fulfillment of the requirements for the award of Post Graduation diploma in Management under the guidance of Prof. Kanak Tara is my original work and the conclusions drawn therein are based on the material collected by myself. Date: Research Student Place: Pune Ajay Yadav

2

C ERT I FI C A TE This is to certify that the Project Report entitled A Study of Gems and Jewellery Export which is being submitted here with for the award of the Post Graduation Diploma in Management, Pune is the result of the original research work completed by Mr. Ajay Yadav. He completed the work under my supervision and guidance, and to the best of my knowledge and belief the work embodied in this Project Report has not formed earlier the basis for the award of any degree or similar title of this or any other University or examining body. 3

Dr. Apoorva Palkar Prof. Kanak Tara (Director SIMCA) (Project Guide) Date : Place : ACKNOWLEDGEMENT Words are indeed inadequate to convey my deep sense of gratitude to all those who have helped me in completing this summer project to the best of my ability. Being a part of this project has certainly been a unique and a very productive experience on my part. I am really thankful to Mr. Kailash Agarwal (Managing Director) for making all kinds of arrangements to carry the project successfully and for guiding and helping me to solve all kinds of quarries regarding the project work. His systematic way of working and incomparable guidance has inspired the pace of the

project to a great extent. I extend my warm thanks to Mr. Prakash Rijhvani (Manager), who guided me with their expert advice, which proved to be worth full for my project without which the project could have not at all been easy. 4

Last but not least I would like to thank all theemployees of Gosil Exports Pvt. Ltd. who have directly or indirectly helped me with their moral support for the completion of my project. I would also like to thank my course project guide and mentor Prof. Kanak Tara for assigning me a project of such a great learning experience and acquainting me with real life project financing and appraisal. TABLE OF CONTENT Executive Summary Chapter ~ 1 Introduction Gems & Jewellery Sector Classification Chapter ~ 2 Objectives of the Study Chapter ~ 3 Literature Review Gems & Jewellery Sector in India Diamond processing High-end jewellery Gems and Jewellery/ Background

5 Structural Characteristics Market Players in Gems & Jewellery Industry Diamond Exports in Gems & Jewellery Industry Chapter ~ 4 Gosil Exports Pvt. Ltd. Chapter ~ 5 Research Methodology Nature of Data Data Collection Tools of Analysis Chapter ~ 6 Data Presentation Present state of the industry: Diamonds Future prospective: Questionnaire Analysis Chapter ~ 7 Conclusions Bibliography Annexure 6

EXECUTIVE SUMMARY Diamonds, gems and Jewellery have been a part of the Indian civilization since its recorded history, the significance of the gems and Jewellery industry in the Indian economic scenario is a development of the

last three or four decades. In 1966-67, the export turnover of the Gems & Jewellery industry was just Rs 220 m representing a 3 per cent of total merchandise exports. However, it has now grown to become one of the leading export oriented industries in India recording an export turnover of around Rs 91617.53 Crore during 2008-09, making it a significant foreign exchange earner for the country. The gems and jewellery sector, which has seen a substantial fall in exports since 2007 due to the withdrawal of a 6 per cent duty concession under the Generalized System 7

of Preferences on jewellery exports to the US, has been severely affected by the economic meltdown. As a result, India s share of gems and jewellery exports to the US has come down from 36 per cent in 2006 to 20 per cent in 2009. The UAE was the largest importer of gems and jewellery from India in 2008-09, with a share of 31 per cent. This was followed by Hong Kong with a 25 per cent and the US with 20 per cent. The gems and jewellery sector accounted for 13 per cent of India s total merchandise exports. During April 2009, the total gems and jewellery exports of the country was $1,144 million, as against $1,740 million during the same period last fiscal, a fall of about 34 per cent. CHAPTER~1

INTRODUCTION Gems & Jewellery Sector Diamonds, gems and Jewellery have been a part of the Indian civilisation since its recorded history, the significance of the gems and Jewellery industry in the Indian economic scenario is a development of the last three or four decades. In 1966-67, the export turnover of the Gems & Jewellery industry was just Rs 220 m representing a 3 8

per cent of total merchandise exports. However, it has now grown to become one of the leading export oriented industries in India recording an export turnover of around Rs 875 bn during 2006-07 and contributing 16 per cent of total exports, making it a significant foreign exchange earner for the country. Classification: Gems & Jewellery Sector 1.Polished Diamonds: India is one of the best markets in the world in the polished diamonds for its world-class quality of diamonds as well as exquisite cutting skills. Over 83 per cent of India's Gems & Jewellery cut and polished diamonds account for exports. Jaipur and Surat are famous as world class polishing and designing centers. 2.Gem Stones: This category refers to the stones other than diamonds, these stones comes under two basic categories that are precious stones and Semi precious stones. There is a huge demand for these gemstones especially of Sapphire, Emerald and Ruby. India's exports of gems have crossed 5000000 carats this year. 3.Gold and Jewellery: This category represents the gold and Jewellery, which is

used in the manufacturing of various ornaments. Indian is the country that is the 9 largest consumer of gold in the world, In the year 2007 gold consumption in India was 850 tons 33% up from the last year. 4.Synthetic Stones: Synthetic diamond is diamond produced through chemical or physical processes in a laboratory. Like naturally occurring diamond it is composed of a threedimensional carbon crystal. Synthetic diamonds are also called cultured diamonds. Synthetic diamond is not the same as diamond imitation, which can be made of other material. This is an upcoming market in India. 10

STATEMENT ABOUT THE PROBLEM India has been one of the most important countries for the production of Gems And Jewellery. One of the highlights is the production of Studded Jewllery. Studded Jewellery trading in India is age old as it is established by the fact that in 1650 A.D., sources report the employment of more than 60,000 workers in the Eluru mines, where they dug and washed the precious stones. Today though India has almost no raw Studded Jewllery left within her own soil still we produce 70% of the World gems in terms of quantity and 45% in terms of value. India is the original country which discovered gems and initiated gem craft. The gems produced here gave birth to a fabulous industry and global trade. Indian Gems and Jewellery Industry have achieved a premier position in the International market. Today India has been recognized as a significant manufacturing exporting center apart from its traditional strengths in handmade jewellery, the country has niche for itself in machine made commercial jewellery arena. The export industry has come of age and is now entering a new phase of development. Gearing up to achieve further growth, the industry has already captured a 55% share of world market by the turn of this century. India is a primary source of imports for the developed countries, mainly because of abundant availability of skilled and cheap labor, but now this no longer remains the competitive edge for India as heavy competition is faced by various countries like China, Thailand and Sri Lanka. But at the same time, India has managed to keep its position healthy and have brighter prospects ahead. 11

CHAPTER~2

OBJECTIVES OF THE STUDY To review the present status of the Indian Gems and Jewellery Sector & Analyze its contribution to the economy. To critically evaluate the export performance of Indian Gems And Jewellery sector over the years and its share in the global trade in Gems And Jewellery To study about the competitive position of Indian Gems and Jewellery export. To find out who is better potential importers of Indian Gems & Jewellery product. To analysis the vital steps for improving the Gems & Jewellery export. To understand the importance and effectiveness of export in present market situation. To examine in detail the Europe as a market for Gems And Jewellery and India s current performance in the market, with particular focus on Gosil Exports(Jaipur) 12

CHAPTER~3 LITERATURE REVIEW GEMS & JEWELLERY SECTOR IN INDIA Gems and jewellery play a significant role in Indian customs and traditions, making this sector integral to the economy and one of the fastest growing industries in the country. Worldwide, the gems and jewellery industry has been growing at a good pace and is currently estimated at over US$ 130 billion. In India, it accounts for nearly 20 per cent of total Indian exports. It provides employment to 1.3 million people directly and indirectly. Apart form being the world s largest diamond processing (cutting and polishing) country with an 80 per cent share in world market India s favorable trade policies have made India the hub for gems and jewellery.

Leading Branded jewellery is the new mantra in the market, having rapidly acquired a niche over the past few years. Increasing purchasing power and disposable incomes of India s middle class has resulted in consumption growth of this industry by about 11 per cent in the five-year period preceding 2006-07. Add to that the insatiable Indian craving for gems and jewellery, and the demand will skyrocket to US$ 20 billion by 2010 and US$ 30 billion in 2015, according to industry experts. India s gems and jewellery industry has been allowed 51 per cent foreign direct investments by the government in single brand retail stores attracting both global and domestic players to this sector. The burgeoning retail industry in India is instrumental in innovatively marketing and branding diamonds and traditional jewellery, making inroads in this sector and contributing to the nation s economy. According to a report 13

released by Technopak Advisors on Changing Retail Landscape in India, the jewellery and watches market is pegged at about US$ 13.52 billion. It is expected to register a 12 per cent growth by 2012, touching US$ 23.54 billion. India s economic boom in the country has translated into a large consumer market for jewellery and other luxury products, offering a lucrative opportunity for major brands to make their foray into the Indian market and establish their presence. Experts believe that by 2013, India will become the biggest consumer of jewellery. The history of the Indian gem and jewellery, a $30-billion industry, began and flourished in the two leading States of Maharashtra and Gujarat. Exports from the industry fetched $17.1 billion in 2006-07 against $16.64 billion in 2005-06, showing a growth of 26 per cent. But in past 1 year we have seen some decline due to recession. The journey of a diamond is said to begin with mining of roughs followed by sourcing them by trading firms after which they trade it with the processors who then process the rough diamonds to manufacture cut and polished diamonds which then end with the trade of the polished diamonds. Diamond processing Today, India houses the worlds largest diamond processing (cutting and polishing) industry with an estimated 1,000,000 processors. India processes over 57 per cent of the world s rough diamonds by value. It is said that 11 out of 12 stones (diamonds) set in jewellery are cut and polished in India. Surat in Gujarat is home to a majority of these diamond processors. India s exports of cut and polished diamonds in calendar year 2008 stood at Rs 48,905.57 crore or 349.389 lakh carats down 9.25 per cent from Rs 53,892.02 crore or 419.9 lakh carats during same period in 2007. 14

Processing is done on rough diamonds in full range of sizes and qualities, including stones larger than 10 carats. Diamond trading hub After making its mark in the world diamond processing industry, the industry fraternity has taken up the motto to make India the diamond trading hub . Thus Mumbai, the financial capital of the country, is said to be Indian Antwerp in the making. The current format of diamond trade has four different types of channels involved in the sourcing and trading of diamonds namely, centralised distribution, direct selling, rough trade and brokerage. Bharat Diamond Bourse, a service oriented non-profit guarantee company, is an 18 lakh sq. ft. complex in Mumbai. It was set up with the primary objective of establishing necessary infrastructural facilities for promotion of export of diamonds, including jewellery from India and to make India an international trading centre. Instituted to cater to all the needs of the diamond trade, the bourse is anticipated to deal with over 30,000 people a day. The facilities here will include offices of diamond traders, strong rooms, lockers, customs clearance facilities with all the modern facilities required to carry day-to-day business. High-end jewellery As the gem and jewellery companies are based out of Mumbai, the city is home to various types of jewellery from the traditional to the high-end designer fashion jewellery. It is one of the largest producers and exporters of jewellery, which is estimated to be over $13 billion. Prominently, it accounts for over 15 per cent of the world jewellery fabrication pie. 15

Not only this, India is one of the fastest growing markets for jewellery, growing at the rate of 10.20 per cent per annum over the last five years. Today, the Indian consumer market for jewellery is said to be $13.1 billion, an increase of close to 8 per cent over the previous year. A study by KPMG says that India is set to realise total jewellery sales of $21 billion by 2010 and $37 billion by 2015. Currently, out of the eight key world retail markets, the US is number one accounting for 31 per cent of the jewellery sales. India and China follow with 8.3 and 8.9 per cent respectively. According to the KPMG study, India s growing importance in the global jewellery market is only expected to increase in the future. The total demand is expected to reach $18.25 billion in 2010 and to $ 28.28 billion in 2015. Diamond jewellery consumption in India is estimated to jump by 78 per cent in 2010.

Forecast India and China together are predicted to emerge as a market equivalent to that of the US by 2015, according to the KPMG report on the global gems and jewellery industry Vision 2015: Transformation for Growth. The industry can see capital infusion of around $ 10 billion, according to experts. As per forecasts, by the year 2015, the industry will witness a good fragmentation in the jewellery retail business while keeping the area of diamond mining, sourcing, processing within the confines of either niche or mass players. Mining is at the heart of the gem and jewellery industry as the activity is the only natural source of raw material for the industry. The Geological Survey of India has stated that India has a great potential for diamond deposits. Based on this and independent analyses, some of the diamond exploration companies are making efforts 16

to make India another target destination for diamond exploration. Maharashtra features on the list of potential states for diamond exploration. The Gem and Jewellery Export Promotion Council (GJEPC) is primarily involved in introducing the Indian

gem & jewellery products to the international market and promoting exports. To achieve this, the Council provides market information to its members regarding foreign trade inquiries, trade and tariff regulations, import duties, and information about jewellery fairs and exhibitions. It also takes up relevant issues with government and agencies connected with exports and submit documents for consideration and inclusion in the EXIM Policy. There are a lot of opportunities from setting up factories to retailing through showrooms for a prospective investor Gems and Jewellery/ Background The two major segments of the gems & jewellery (GJ) business in India are gold and diamond jewellery. The GJ industry has an important role in the Indian economy. While a predominant portion of gold jewellery manufactured in India is for domestic consumption, a large portion of rough, uncut diamonds processed in the form of either polished diamonds or finished diamond jewellery is exported. With an estimated consumption of around 800 tonnes during 2007 (including jewellery consumption), India is the largest consumer of gold in the world. India is also estimated to hold nearly 14,000 tonnes of gold, accounting for nearly 9% of the world s cumulative mine production. Apart from its historical religious significance, gold is valued as an important savings and investment vehicle. 17

Gold in Indian families remains the Indian bride s `Streedhan , the wealth she takes with her when she marries and which remains hers. Gold jewellery is the preferred jewellery worn by women in India irrespective of their religious beliefs. Gold jewellery is very popular among farmers, with an upsurge in gold sales after a good agricultural season. Buying of gold is also an important part of every stage of an Indian citizen s life at birth, marriage, construction of home, festivals, religious ceremonies, setting up of new business, and death. SIZE Large market for Gems & Jewellery with domestic sales of over $10 billion 4% of the global Gems and Jewellery market Exports of over US $15.5 billion; over 18% of India s exports. According to recent statistics of the Gems & Jewellery Export Promotion Council (GJEPC), India's exports of gems & jewellery (GJ) aggregated Rs. 15787.09 Crores (US$3958.64million) during the month April-May- 08. India is the largest consumer of gold jewellery in the world Accounts for about 20% of world consumption India is the largest diamond cutting and polishing centre in the world, i.e., 60%

value share, 85% volume share and 92% share of the world market by number of pieces 18

The Indian domestic diamond jewellery market was estimated at around Rs. 76 billion during 2005. China ranks sixth in the world in terms of diamond jewellery retail value, ahead of India which is in seventh place. India ranks third in terms of diamond value, while China holds the seventh position. Indian diamond jewellery industry is the third largest consumer of polished diamonds after USA and Japan Structural Characteristics The Indian Gems & Jewellery industry is highly fragmented with a large number of domestic private sector companies. The bulk of the GJ industry in India is concentrated in the unorganised sector. The majority of India s diamond workforce is employed by small units that process diamonds on a job-lot basis. The number of gold jewellery manufacturing units is put at 0.1 million. India is the largest diamond cutting & polishing centre in the world, followed by Israel and employs an estimated 2 million workers serving over 0.45 million goldsmiths, and around 0.1 million diamond processing units. India has several well recognised strengths which have made it a significant force in the global Gems and Jewellery business, like i) highly skilled, yet low- cost labour, and ii) established manufacturing excellence in jewellery and diamond polishing.

19

POLICY In 1990, the Gold (Control) Act was abolished, which had forbidden the holding of gold in bar form. In 1993, the GOI also permitted non-resident Indians (NRIs) to bring 5 kg of gold into the country twice yearly on the payment of import tax of Rs. 250 per 10 grams; this allowance was raised to 10 kg per trip in January 1997. In 1997, the GOI also permitted import and export of gold under Open General Licence. In the trade policy (2004-09) issued in April 2006, the GOI has allowed import of precious metal scrap and used jewellery for melting, refining and re- export of jewellery for higher utilisation of melting, refining and jewellery- making production capacity. Jewellery is permitted to be exported on a consignment basis, allowing exporters who have had to deal with the problem of unsold jewellery in foreign markets to now reimport the unsold pieces. steps taken include allowing exporters to re-import the rejected precious metal jewellery subject to refund of duty exemption benefits on the inputs only and not the duty on jewellery as was being done earlier; reduction in value addition norms for export of gold & silver jewellery from 7% to 4.5%. 100% FDI is permitted in the Gems & Jewellery sector through the automatic route 20

SEZs and Gems and Jewellery Parks have been set up to promote investments in the sector Cutting and polishing of gems and jewellery treated as manufacturing for the purposes of exemption under Section 10A of the Income Tax Act

Outlook India is the fastest-growing jewellery market in the world Branded jewellery likely to be the fastest-growing segment in domestic sales The sector is expected to grow at 40% p.a. to $2.2 billion by 2010 Exports expected to grow from $15.5 billion in 2005 to over $25 billion by 2010 India is the most technologically advanced diamond cutting centre in the world and has the opportunity to address one of the world s largest and fastestgrowing Gems and Jewellery markets Indian industry has been gaining prominence as an international sourcing destination for high quality designer jewellery Wal-Mart, JC Penney etc. are increasingly procuring jewellery from India 21

India's Exports of Gems & Jewellery (2000-03 to 2006-07) (In US$ million)

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A Project Report On A STUDY OF GEMS AND JEWELLERY EXPORT At Gosil Exports Pvt. Ltd. Submitted in partial fulfillment of the requirements of Post Graduation Diploma in Management 2008-2010 Ajay Yadav SUBMITTED TO

SINHGAD INSTITUTE OF MANAGEMENT AND COMPUTER

APPLICATION (SIMCA), PUNE DE C LA RA T IO N I, the undersigned, hereby declare that the Project Report entitled A Study of Gems and Jewellery Export written and submitted by me to the Sinhgad institute of management and computer application (Pune) in partial fulfillment of the requirements for the award of Post Graduation diploma in Management under the guidance of Prof. Kanak Tara is my original work and the conclusions drawn therein are based on the material collected by myself. Date: Research Student Place: Pune Ajay Yadav 2

C ERT I FI C A TE This is to certify that the Project Report entitled A Study of Gems and Jewellery Export which is being submitted here with for the award of the Post Graduation Diploma in Management, Pune is the result of the original research work completed by Mr. Ajay Yadav. He completed the work under my supervision and guidance, and to the best of my knowledge and belief the work embodied in this Project Report has not formed earlier the basis for the award of any degree or similar title of this or any other University or examining body. 3

Dr. Apoorva Palkar Prof. Kanak Tara (Director SIMCA)

(Project Guide) Date : Place : ACKNOWLEDGEMENT Words are indeed inadequate to convey my deep sense of gratitude to all those who have helped me in completing this summer project to the best of my ability. Being a part of this project has certainly been a unique and a very productive experience on my part. I am really thankful to Mr. Kailash Agarwal (Managing Director) for making all kinds of arrangements to carry the project successfully and for guiding and helping me to solve all kinds of quarries regarding the project work. His systematic way of working and incomparable guidance has inspired the pace of the project to a great extent. I extend my warm thanks to Mr. Prakash Rijhvani (Manager), who guided me with their expert advice, which proved to be worth full for my project without which the project could have not at all been easy. 4

Last but not least I would like to thank all theemployees of Gosil Exports Pvt. Ltd. who have directly or indirectly helped me with their moral support for the completion of my project. I would also like to thank my course project guide and mentor Prof. Kanak Tara for assigning me a project of such a great learning experience and acquainting me with real life project financing and appraisal. TABLE OF CONTENT Executive Summary Chapter ~ 1 Introduction

Gems & Jewellery Sector Classification Chapter ~ 2 Objectives of the Study Chapter ~ 3 Literature Review Gems & Jewellery Sector in India Diamond processing High-end jewellery Gems and Jewellery/ Background 5 Structural Characteristics Market Players in Gems & Jewellery Industry Diamond Exports in Gems & Jewellery Industry Chapter ~ 4 Gosil Exports Pvt. Ltd. Chapter ~ 5 Research Methodology Nature of Data Data Collection Tools of Analysis Chapter ~ 6 Data Presentation

Present state of the industry: Diamonds Future prospective: Questionnaire Analysis Chapter ~ 7 Conclusions Bibliography Annexure 6

EXECUTIVE SUMMARY Diamonds, gems and Jewellery have been a part of the Indian civilization since its recorded history, the significance of the gems and Jewellery industry in the Indian economic scenario is a development of the last three or four decades. In 1966-67, the export turnover of the Gems & Jewellery industry was just Rs 220 m representing a 3 per cent of total merchandise exports. However, it has now grown to become one of the leading export oriented industries in India recording an export turnover of around Rs 91617.53 Crore during 2008-09, making it a significant foreign exchange earner for the country. The gems and jewellery sector, which has seen a substantial fall in exports since 2007 due to the withdrawal of a 6 per cent duty concession under the Generalized System 7

of Preferences on jewellery exports to the US, has been severely affected by the economic meltdown. As a result, India s share of gems and jewellery exports to the US has come down from 36 per cent in 2006 to 20 per cent in 2009. The UAE was the largest importer of gems and jewellery from India in 2008-09, with a share of 31 per cent. This was followed by Hong Kong with a 25 per cent and the US with 20 per cent. The gems and jewellery sector accounted for 13 per cent of India s total merchandise exports. During April 2009, the total gems and jewellery exports of the country was $1,144 million, as against $1,740 million during the same period last fiscal, a fall of about 34 per cent. CHAPTER~1 INTRODUCTION Gems & Jewellery Sector Diamonds, gems and Jewellery have been a part of the Indian civilisation since its recorded history, the significance of the gems and Jewellery industry in the Indian economic scenario is a development of the last three or four decades. In 1966-67, the export turnover of the Gems & Jewellery industry was just Rs 220 m representing a 3 8

per cent of total merchandise exports. However, it has now grown to become one of the leading export oriented industries in India recording an export turnover of around Rs 875 bn during 2006-07 and contributing 16 per cent of total exports, making it a significant foreign exchange earner for the country. Classification: Gems & Jewellery Sector 1.Polished Diamonds: India is one of the best markets in the world in the polished diamonds for its world-class quality of diamonds as well as exquisite cutting skills. Over 83 per cent of India's Gems & Jewellery cut and polished diamonds account for exports. Jaipur and Surat are famous as world class polishing and designing centers. 2.Gem Stones: This category refers to the stones other than diamonds, these stones comes under two basic categories that are precious stones and Semi precious stones. There is a huge demand for these gemstones especially of Sapphire, Emerald and Ruby. India's exports of gems have crossed 5000000 carats this year. 3.Gold and Jewellery: This category represents the gold and Jewellery, which is used in the manufacturing of various ornaments. Indian is the country that is the 9 largest consumer of gold in the world, In the year 2007 gold consumption in India was 850 tons 33% up from the last year. 4.Synthetic Stones: Synthetic diamond is diamond produced through chemical or

physical processes in a laboratory. Like naturally occurring diamond it is composed of a threedimensional carbon crystal. Synthetic diamonds are also called cultured diamonds. Synthetic diamond is not the same as diamond imitation, which can be made of other material. This is an upcoming market in India. 10

STATEMENT ABOUT THE PROBLEM India has been one of the most important countries for the production of Gems And Jewellery. One of the highlights is the production of Studded Jewllery. Studded Jewellery trading in India is age old as it is established by the fact that in 1650 A.D., sources report the employment of more than 60,000 workers in the Eluru mines, where they dug and washed the precious stones. Today though India has almost no raw Studded Jewllery left within her own soil still we produce 70% of the World gems in terms of quantity and 45% in terms of value. India is the original country which discovered gems and initiated gem craft. The gems produced here gave birth to a fabulous industry and global trade. Indian Gems and Jewellery Industry have achieved a premier position in the International market. Today India has been recognized as a significant manufacturing exporting center apart from its traditional strengths in handmade jewellery, the country has niche for itself in machine made commercial jewellery arena. The export industry has come of age and is now entering a new phase of development. Gearing up to achieve further growth, the industry has already captured a 55% share of world market by the turn of this century. India is a primary source of imports for the developed countries, mainly because of abundant availability of skilled and cheap labor, but now this no longer remains the competitive edge for India as heavy competition is faced by various countries like China, Thailand and Sri Lanka. But at the same time, India has managed to keep its position healthy and have brighter prospects ahead. 11

CHAPTER~2 OBJECTIVES OF THE STUDY To review the present status of the Indian Gems and Jewellery Sector & Analyze its contribution to the economy. To critically evaluate the export performance of Indian Gems And Jewellery sector over the years and its share in the global trade in Gems And Jewellery

To study about the competitive position of Indian Gems and Jewellery export. To find out who is better potential importers of Indian Gems & Jewellery product. To analysis the vital steps for improving the Gems & Jewellery export. To understand the importance and effectiveness of export in present market situation. To examine in detail the Europe as a market for Gems And Jewellery and India s current performance in the market, with particular focus on Gosil Exports(Jaipur) 12

CHAPTER~3 LITERATURE REVIEW GEMS & JEWELLERY SECTOR IN INDIA Gems and jewellery play a significant role in Indian customs and traditions, making this sector integral to the economy and one of the fastest growing industries in the country. Worldwide, the gems and jewellery industry has been growing at a good pace and is currently estimated at over US$ 130 billion. In India, it accounts for nearly 20 per cent of total Indian exports. It provides employment to 1.3 million people directly and indirectly. Apart form being the world s largest diamond processing (cutting and polishing) country with an 80 per cent share in world market India s favorable trade policies have made India the hub for gems and jewellery. Leading Branded jewellery is the new mantra in the market, having rapidly acquired a niche over the past few years. Increasing purchasing power and disposable incomes of India s middle class has resulted in consumption growth of this industry by about 11 per cent in the five-year period preceding 2006-07. Add to that the insatiable Indian craving for gems and jewellery, and the demand will skyrocket to US$ 20 billion by 2010 and US$ 30 billion in 2015, according to industry experts. India s gems and jewellery industry has been allowed 51 per cent foreign direct investments by the government in single brand retail stores attracting both global and domestic players to this sector. The burgeoning retail industry in India is instrumental

in innovatively marketing and branding diamonds and traditional jewellery, making inroads in this sector and contributing to the nation s economy. According to a report 13

released by Technopak Advisors on Changing Retail Landscape in India, the jewellery and watches market is pegged at about US$ 13.52 billion. It is expected to register a 12 per cent growth by 2012, touching US$ 23.54 billion. India s economic boom in the country has translated into a large consumer market for jewellery and other luxury products, offering a lucrative opportunity for major brands to make their foray into the Indian market and establish their presence. Experts believe that by 2013, India will become the biggest consumer of jewellery. The history of the Indian gem and jewellery, a $30-billion industry, began and flourished in the two leading States of Maharashtra and Gujarat. Exports from the industry fetched $17.1 billion in 2006-07 against $16.64 billion in 2005-06, showing a growth of 26 per cent. But in past 1 year we have seen some decline due to recession. The journey of a diamond is said to begin with mining of roughs followed by sourcing them by trading firms after which they trade it with the processors who then process the rough diamonds to manufacture cut and polished diamonds which then end with the trade of the polished diamonds. Diamond processing Today, India houses the worlds largest diamond processing (cutting and polishing) industry with an estimated 1,000,000 processors. India processes over 57 per cent of the world s rough diamonds by value. It is said that 11 out of 12 stones (diamonds) set in jewellery are cut and polished in India. Surat in Gujarat is home to a majority of these diamond processors. India s exports of cut and polished diamonds in calendar year 2008 stood at Rs 48,905.57 crore or 349.389 lakh carats down 9.25 per cent from Rs 53,892.02 crore or 419.9 lakh carats during same period in 2007. 14

Processing is done on rough diamonds in full range of sizes and qualities, including stones larger than 10 carats. Diamond trading hub After making its mark in the world diamond processing industry, the industry fraternity has taken up the motto to make India the diamond trading hub . Thus Mumbai, the financial capital of the country, is said to be Indian Antwerp in the making.

The current format of diamond trade has four different types of channels involved in the sourcing and trading of diamonds namely, centralised distribution, direct selling, rough trade and brokerage. Bharat Diamond Bourse, a service oriented non-profit guarantee company, is an 18 lakh sq. ft. complex in Mumbai. It was set up with the primary objective of establishing necessary infrastructural facilities for promotion of export of diamonds, including jewellery from India and to make India an international trading centre. Instituted to cater to all the needs of the diamond trade, the bourse is anticipated to deal with over 30,000 people a day. The facilities here will include offices of diamond traders, strong rooms, lockers, customs clearance facilities with all the modern facilities required to carry day-to-day business. High-end jewellery As the gem and jewellery companies are based out of Mumbai, the city is home to various types of jewellery from the traditional to the high-end designer fashion jewellery. It is one of the largest producers and exporters of jewellery, which is estimated to be over $13 billion. Prominently, it accounts for over 15 per cent of the world jewellery fabrication pie. 15

Not only this, India is one of the fastest growing markets for jewellery, growing at the rate of 10.20 per cent per annum over the last five years. Today, the Indian consumer market for jewellery is said to be $13.1 billion, an increase of close to 8 per cent over the previous year. A study by KPMG says that India is set to realise total jewellery sales of $21 billion by 2010 and $37 billion by 2015. Currently, out of the eight key world retail markets, the US is number one accounting for 31 per cent of the jewellery sales. India and China follow with 8.3 and 8.9 per cent respectively. According to the KPMG study, India s growing importance in the global jewellery market is only expected to increase in the future. The total demand is expected to reach $18.25 billion in 2010 and to $ 28.28 billion in 2015. Diamond jewellery consumption in India is estimated to jump by 78 per cent in 2010. Forecast India and China together are predicted to emerge as a market equivalent to that of the US by 2015, according to the KPMG report on the global gems and jewellery industry Vision 2015: Transformation for Growth. The industry can see capital infusion of around $ 10 billion, according to experts. As per forecasts, by the year 2015, the industry will witness a good fragmentation in the jewellery retail business while keeping the area of diamond mining, sourcing, processing within the confines of either niche or mass players. Mining is at the heart of the gem and jewellery industry as the activity is the only natural source of raw material for the industry. The Geological Survey of India has

stated that India has a great potential for diamond deposits. Based on this and independent analyses, some of the diamond exploration companies are making efforts 16

to make India another target destination for diamond exploration. Maharashtra features on the list of potential states for diamond exploration. The Gem and Jewellery Export Promotion Council (GJEPC) is primarily involved in introducing the Indian gem & jewellery products to the international market and promoting exports. To achieve this, the Council provides market information to its members regarding foreign trade inquiries, trade and tariff regulations, import duties, and information about jewellery fairs and exhibitions. It also takes up relevant issues with government and agencies connected with exports and submit documents for consideration and inclusion in the EXIM Policy. There are a lot of opportunities from setting up factories to retailing through showrooms for a prospective investor Gems and Jewellery/ Background The two major segments of the gems & jewellery (GJ) business in India are gold and diamond jewellery. The GJ industry has an important role in the Indian economy. While a predominant portion of gold jewellery manufactured in India is for domestic consumption, a large

portion of rough, uncut diamonds processed in the form of either polished diamonds or finished diamond jewellery is exported. With an estimated consumption of around 800 tonnes during 2007 (including jewellery consumption), India is the largest consumer of gold in the world. India is also estimated to hold nearly 14,000 tonnes of gold, accounting for nearly 9% of the world s cumulative mine production. Apart from its historical religious significance, gold is valued as an important savings and investment vehicle. 17

Gold in Indian families remains the Indian bride s `Streedhan , the wealth she takes with her when she marries and which remains hers. Gold jewellery is the preferred jewellery worn by women in India irrespective of their religious beliefs. Gold jewellery is very popular among farmers, with an upsurge in gold sales after a good agricultural season. Buying of gold is also an important part of every stage of an Indian citizen s life at birth, marriage, construction of home, festivals, religious ceremonies, setting up of new business, and death. SIZE Large market for Gems & Jewellery with domestic sales of over $10 billion 4% of the global Gems and Jewellery market Exports of over US $15.5 billion; over 18% of India s exports. According to recent statistics of the Gems & Jewellery Export Promotion Council (GJEPC), India's exports of gems & jewellery (GJ) aggregated Rs. 15787.09 Crores (US$3958.64million) during the month April-May- 08. India is the largest consumer of gold jewellery in the world Accounts for about 20% of world consumption India is the largest diamond cutting and polishing centre in the world, i.e., 60% value share, 85% volume share and 92% share of the world market by number of pieces 18

The Indian domestic diamond jewellery market was estimated at around Rs. 76 billion during 2005. China ranks sixth in the world in terms of diamond jewellery retail value, ahead of

India which is in seventh place. India ranks third in terms of diamond value, while China holds the seventh position. Indian diamond jewellery industry is the third largest consumer of polished diamonds after USA and Japan Structural Characteristics The Indian Gems & Jewellery industry is highly fragmented with a large number of domestic private sector companies. The bulk of the GJ industry in India is concentrated in the unorganised sector. The majority of India s diamond workforce is employed by small units that process diamonds on a job-lot basis. The number of gold jewellery manufacturing units is put at 0.1 million. India is the largest diamond cutting & polishing centre in the world, followed by Israel and employs an estimated 2 million workers serving over 0.45 million goldsmiths, and around 0.1 million diamond processing units. India has several well recognised strengths which have made it a significant force in the global Gems and Jewellery business, like i) highly skilled, yet low- cost labour, and ii) established manufacturing excellence in jewellery and diamond polishing. 19

POLICY In 1990, the Gold (Control) Act was abolished, which had forbidden the holding of gold in bar form. In 1993, the GOI also permitted non-resident Indians (NRIs) to bring 5 kg of

gold into the country twice yearly on the payment of import tax of Rs. 250 per 10 grams; this allowance was raised to 10 kg per trip in January 1997. In 1997, the GOI also permitted import and export of gold under Open General Licence. In the trade policy (2004-09) issued in April 2006, the GOI has allowed import of precious metal scrap and used jewellery for melting, refining and re- export of jewellery for higher utilisation of melting, refining and jewellery- making production capacity. Jewellery is permitted to be exported on a consignment basis, allowing exporters who have had to deal with the problem of unsold jewellery in foreign markets to now reimport the unsold pieces. steps taken include allowing exporters to re-import the rejected precious metal jewellery subject to refund of duty exemption benefits on the inputs only and not the duty on jewellery as was being done earlier; reduction in value addition norms for export of gold & silver jewellery from 7% to 4.5%. 100% FDI is permitted in the Gems & Jewellery sector through the automatic route 20

SEZs and Gems and Jewellery Parks have been set up to promote investments in the sector Cutting and polishing of gems and jewellery treated as manufacturing for the purposes of exemption under Section 10A of the Income Tax Act Outlook India is the fastest-growing jewellery market in the world Branded jewellery likely to be the fastest-growing segment in domestic sales The sector is expected to grow at 40% p.a. to $2.2 billion by 2010 Exports expected to grow from $15.5 billion in 2005 to over $25 billion by 2010 India is the most technologically advanced diamond cutting centre in the

world and has the opportunity to address one of the world s largest and fastestgrowing Gems and Jewellery markets Indian industry has been gaining prominence as an international sourcing destination for high quality designer jewellery Wal-Mart, JC Penney etc. are increasingly procuring jewellery from India 21

India's Exports of Gems & Jewellery (2000-03 to 2006-07) (In US$ million) ITEMS 2002-03 2003-04 2004-05 2005-06 2006-07 Cut & Polished Diamonds 6187 5972 7111 8627 11182 Coloured Gemstones 203 183 192 178 193 Gold Jewellery 1150 1167

1513 268 3813 Pearls 3 3 4 4 3 Non-Gold Jewellery 56 64 85 99 129 Synthetic Stones 2 2 1 1 1 Costume/Fashion Jewellery 10

10 10 10 sales to Foreign Tourist 12 13 13 18 TOTAL 7622 7414 8929 11620 15320 Exports to Rough Diamonds 157 142 241 536 358 Net Exports

7779 7556 9170 12156 15678 SOURCE: GJEPC, India 22

MARKET PLAYERS IN GEMS & JEWELLERY INDUSTRY In the recent years a large number of players have been attracted to the Indian gems and jewellery retail sector: Reliance Retail is planning an aggressive entry into the jewellery retail market through its about 400 to 500 jewellery retail outlets across the country. Damas India, part of one of the largest jewellery retail outlets in the world, is adding 16 new stores to its present dozen stores in India. Swarovski, the global crystal goods manufacturer and marketer plans to set up 30 stores by 2009, from the current 13. The Gitanjali Group bought 'Nakshatra', the premium brand of jewellery promoted by Diamond Trading Company (DTC) Mumbai-based Vardhaman Developers plans to build four more jewellery malls in the city and is already set to launch Jewel World-Mumbai s first jewellery mall. Dubai-based Joy Alukkas has recently opened its largest showroom in Chennai. Viswa and Devji Diamonds a partnership between the Indian group and the top jewellery retailer in UAE opened its first diamond retail outlet. Gitanjal Gems Ltd opened its first luxury jewellery mall in Gurgaon, where a

number of international brands have started their retail business. Gold Souk India has plans for bringing 100 Souks in 100 months 23

GOLD The gems and diamonds industry contributes over 15 per cent of India's total exports. The industry is jewellery industry is predominantly divided into two segments: Gold jewellery and fabricated studded jewellery (diamonds as well as gemstone studded jewellery) India consumes nearly 800 tonnes of gold accounting for about 20 per cent of the world gold consumption.....of which nearly 600 tonnes goes into making jewellery. According to The World Gold Council (WGC) total gold supply in the second quarter this year stood (Q2FY08) at 840 tonnes, whereas the demand was 944 tonnes. A study by KPMG reveals the Indian jewellery market to be US$ 13.5 billion in fiscal 2006-07, accounting for 8.3 per cent of world jewellery sales. DIAMOND The Indian diamond trade generates over US$ 4 billion per annum in exports, its large labor force is integral to catapulting the country as the biggest diamond cutting center for small roughs. India was known to have diamond mines many centuries ago and has continued to maintain its tradition of diamond cutting with an estimated 1 million processors handling over 57 per cent of the world s rough diamonds by value. 11 out of 12 stones (diamonds) set in jewellery are cut and polished in India (processing is done on rough diamonds in full range of sizes and qualities, including stones larger than 10 carats).24

India's share in this sector is about 80 per cent of the world market. India also accounts for 90 per cent of the volume of diamonds processed in the

world. India employs over 90 per cent of the global diamond industry workforce. 'Diamond jewellery consumption is likely to jump to nearly 80 percent in 2010 and over 95 per cent between 2010 and 2015,' according to Assocham.. India to develop jewellery industry :a global market India has offered technical support and skill-training help to top diamond and gold producing African nations, including South Africa, to develop their gem and jewellery industry. India believes it would be beneficial for the African nations, the largest producers of rough diamonds and gold, as well as India, which is its biggest consumer. Employment Almost the entire gold and diamond sold or processed in India is imported. Having futuristic arrangements and agreements with top diamond and gold producing nations will help this crucial sector to thrive. The aim is to make India a global hub for diamond market. Africa alone accounted for nearly 50 per cent of the world's total diamond production, India was specifically looking at South Africa, Botswana, Ghana, Namibia and Angola for rough diamonds. Most of the rough diamonds came from Antwerp in 25

Belgium, but now major suppliers had shown keen interest in supplying uncut stones directly to Indian companies. Diamond imports India's diamond imports in 2006-07 stood at $9 billion, while that of gold was $11 billion. Interestingly, India is the largest diamond cutting and polishing centre in the world. India is also the world's top gold consumer, accounting for about 20 per cent of global demand at 800 tonnes annually. Joint venture initiatives India has also proposed to develop the gem and jewellery industry of these Africa nations, besides providing skill training. Then there could be joint venture initiatives between the companies and trade bodies of India and African nations. 26

CHAPTER~4 GOSIL EXPORTS PVT LTD. HISTORY OF GOSIL EXPORTS Gosil Exports pvt. ltd. (established in 1998) is a premier fine jewelry manufacturer serving the needs of wholesale customers. Based in India Gosil is renowned for its commitment to expertise creativity, quality, value and professionalism. Gosil commits being the leading color stone jewelry manufacturers through a pledge of exceptional selections, professional service and excellent value. We promise the legacy of trust earned over9 years of selling fine jewelry, which will be nurtured in an environment where customer satisfaction is paramount. We promise to be as dependable as the diamonds and color stone Jewelry we sell. Gosil exports pvt.ltd. brings to you exclusive designs that are an amalgamation of regal antiquity and contemporary trends. Our current manufacturing strength could produce up to 30,000 to 40,000 articles per month under different process and with variety of colored gemstone combinations which is a major key strength for us, be it a regular calibrate gemstone or one under the exotic gemstone category. 27

Our management principles are based on the natural evolution processess where in each member tries to achieve the next level of betterment for the overall benefit of the society. Our jewels are created like art objects. In our unique creations, Gosil Exports has drawn inspirations from many sources- from the nature, from the ancient cultures and civilizations. Gosil Exports has a whole gamut of designs and techniques, involving the mix of gold with rich stones- emeralds, rubies and sapphires and most famously with diamonds that work so well on gold. We are a reputed manufacturer, exporter and trader of a vast collection of jewellery including Diamond Jewellery, Gemstones Jewellery Gold Jewellery, and Precious Stone. Refined designs, combining the finest aesthetic looks with the highest quality are the distinguishing elements that characterize our products. Each single piece is made with the greatest care and attention. Among our top priorities are excellent customer service and the final satisfaction. Everything that

contributes towards reaching the above objectives is a duty for us. Gosil exports have a huge client base from international markets. Gosil exports believe in building long-term business relationships with our customers. For us, quality is the foremost concern and every step is taken diligently to ensure that each product, besides being attractive, is also a specimen of the best quality. Gosil Exports also customize specific designs as per the special needs/requirements of the buyers. To ensure flawless quality, Gosil Exports subject our products to multiple rounds of checks. 28

Our team of quality control professionals monitors each and every level of the manufacturing stage, right from the procurement of raw material to the dispatch of finished products in the market. The Diamonds & gems stones, Gosil Exports use in our products are of superior quality brought from different parts of the world so that Gosil Exports can guarantee customer satisfaction. The design of our finest pieces of jewelry gives us another edge over others. Gosil Exports specialize in: Diamonds, Rings, Pendant, Bracelet, Earrings and Ring Sets, Gemstone Rings, Gemstone Pendant, Gemstone Bracelet, Gemstone Earrings, Gold, Precious Stones. So Gosil Exports believe in building long-term business relationships with our customers. Our whole team is dedicated to serve customers and provide them with innovative jewelry designs that are liked by people of all age groups. GOSIL EXPORTS (P) LTD. E-70, EPIP, SITAPURA, JAIPUR-303905, INDIA. TEL: +91-141-5142065 FAX: +91-141-2771064 Email:marketing@ gos ilexports .com 29

PRODUCTS OF GOSIL EXPORTS 30

GOSIL EXPORTS Product Name : Rhodium Plated Bracelets GOSIL EXPORTS Product Name : Rhodium Plated Bracelets 31

GOSIL EXPORTS Product Name : Rhodium Plated Bracelets GOSIL EXPORTS Product Name : Rhodium Plated Pendent Sets CHAPTER~5 RESEARCH METHODOLOGY 32

The appropriate research design formulated is detailed below.

Exploratory research: this kind of research has the primary objective of development of insights into the problem. It studies the main area where the problem lies and also tries to evaluate some appropriate courses of action. The research methodology for the present study has been adopted to reflect these realties and help reach the logical conclusion in an objective and scientific manner. The present study contemplated an exploratory research NATURE OF DATA Primary data: primary data will be collected through a questionnaire raised among the Gems And Jewellery traders and manufacturers in Jaipur SAMPLE SIZE 100 SAMPLE AREA JAIPUR SAMPLE UNIT GEMS AND JEWELLERY TRADERS & MANUFACTURERS OPERATING IN JAIPUR, IN PARTICULAR THE OWNERS, MANAGERS & OTHER OFFICIALS OF GOSIL EXPORTS (JAIPUR) SAMPLING TECHNIQUERANDOM SAMPLING TECHNIQUE Secondary data: secondary data that is already available and published .it could be internal and external source of data. Internal source: which originates from the 33

specific field or area where research is carried out e.g. publish broachers, official

reports etc. External source: This originates outside the field of study like books, periodicals, journals, newspapers and the Internet. DATA COLLECTION Secondary data has been used which is collected through articles, reports, journals, magazines, newspapers reports prepared by research scholars, universities and internet SAMPLING TECHNIQUE Random sampling technique has been employed to extract the fruitful results. CHAPTER~6 DATA PRESENTATION 34

SWOT ANALYSIS OF INDIAN GEMS & JEWELLERY INDUSTRY: Strengths: About one million craftsmen are associated with this industry. Their skills can be utilized for designing and making modern Jewellery Availability of abundance of cheap and skilled labor in India. Presence of excellent marketing network spread across the world. Supportive government industrial/ EXIM policy.

Weaknesses: Small firms lacking technological/ export information expertise. Low productivity compared to labor in china, Thailand and Sri Lanka. As the major raw material requirements need to be imported, companies normally stock huge quantities of inventory resulting high inventory carrying costs. Opportunities: New markets in Europe & Latin America Growing demand in South Asian & Far East countries. Rupee value depreciating resulting in a windfall increase in the profitability. Industry moving from a phase of consolidation Threats: China, Sri Lanka and Thailand's entry in small diamond segment 35

Infrastructure bottlenecks, absence of latest technology Unusual increase in the prices of gold and rough dia PRESENT STATE OF THE INDUSTRY: 36

The year 2007-08 has witnessed a growth in all the major segments of the Gem and Jewellery industry and the total exports stood at Rs.67500 crore, a growth of 29.27% as compared to the previous year. Exports of diamond have continued to rise and the Jewellery sector has turned in another recordbreaking performance. India s share of the world's polished diamond market is 60 per cent in terms of value, 85 per cent in terms of volume and 92 per cent in terms of pieces. Global gold Jewellery consumption increased 33% in the year 2005, the buoyant demand in countries like India, the Gulf States, China and Turkey pulled up the overall figures. Since early 90's, the Jewellery has averaged a growth of over 30%, making India the fastest growing Jewellery exporter in the world and also in the year 2004 the demand for gold Jewellery in India increased by 29% in value to become the fastest growing Jewellery market in the world. 2004-05 2005-06 2006-07 2007-08 Diamonds 37

India enjoys domination in the world cut and polished diamond market and smaller diamonds in particular, which was amply reflected in the export growth of diamond industry with a total export of US$ 11181.48 million (48000 crore) for the year ended 31st March, 2008 as compared to US$ 8627.48 million (37000 crore) against the corresponding period in last year.

Jewellery The year 2007-08 was a good year for the global Jewellery sales as well as to the Company. Demand was fuelled by good economic growth and improved demand particularly from Asia and the Middle East. Gold Jewellery sales in United States of America increased by 4% in 2007 to a huge 73000 crore. The Jewellery sector recorded a massive growth of 49.23% for the year ended 31st March 2008. The demand for the diamond Jewellery will continue to grow stronger due to continued marketing support by the industry especially in the U.S., India and China. The Jewellery has an ever-increasing market abroad and the company with its manufacturing facility comparable to international standards has been able to capture a reasonable portion of the same. While opportunities are abundant, political uncertainty could affect this industry most. Major Players: Vaibhav Gems Ltd. Classic Diamond (India) Ltd. Shrenuj & Company Ltd. Goldiam international Ltd. 38

Su-raj Diamonds & Jewellery Ltd. Rajesh Exports Pvt. Ltd. Financial Comparison

* Figures up to March 2008 Topics Shrenuj & Company Ltd. Goldiam International Ltd. Rajesh Exports Pvt. Ltd Su-Raj Diamonds & Jewellery Ltd. Vaibhav Gems Ltd. Classic Diamond (India) Ltd. Adjusted EPS (Rs) 10.24 14.95 125.42 7.62 13.39 17.19 Cash EPS (Rs)

12.61 15.78 127.47 8.31 14.56 20.11 Book Value (Rs) 104.46 102.83 211.62 121.56 60.54 204 Dividend Per Share (Rs) 3 2.5 10 1.2 2.5 1.8 Return On Net Worth (%) 9.8 17.82

29.08 6.27 23.62 8.42 Return On Capital employed (%) 8.99 15.2 73.1 8.76 24.49 8.56 Operating Profit Margin (%) 7.35 11.39 -1.43 4.41 10.04 6.8 Gross Profit Margin (%) 6.82 10.77

-1.46 4.18 9.31 6.44 Net Profit Margin (%) 2.28 13.48 1.01 2.98 9 2.12 Current Ratio 6.39 4.44 16.51 3.57 7.56 5.82 Quick Ratio 2.92 3.83 15.3 2.93

4.47 3.47 Long term debt to equity 2.26 0 0.2 0 0 2.17 Total Debt to equity 2.26 0 4.33 0.42 0.44 2.17 Interest Cover (times) 2.24 68.09 3.07 4.36

10.33 1.97 Assets Turnover Ratio 8.2 11.28 76.52 20.6 10.64 17.53 39

Average

Raw Material Holding (in Days) 0 34.47 0 20.77 97.44 0 Average Finished Good Holding (in Days) 0 5.26 4.83 33.2 1.66 0 Number of days of net working capital 230.91 183.36 65.41 208.78 164.39 263.21 Inventory Turnover Ratio2.42 11.28 71.72

7 4.71 2.81 Export as % of Total Sales 0 100.61 99.17 94.35 99.64 0 Bonus component in Equity (%) 0 70.42 0 26.2 69.07 0 FUTURE PROSPECTIVE: With the world economy doing well and increase in the personal disposable income of the general public demand for the gems and Jewellery has increased worldwide. This year Jewellery sector grew by 49%. Exports contribute 70% of the total sales of the 40

industry. With United States contributing most (35%) in the export bill. With rupee value depreciating against the U.S. dollar there may be a windfall increase in the profitability in the coming times for the industry. Many companies are on the hunt for acquiring subsidiaries Indian companies will able to strengthen their retail network. One of the areas of concern for the industry is the surge in the prices of rough diamond pieces and India depends upon other countries but with the proposal of increase in the FDI limit on mining from 74% to 100%, dependence on the other countries will be reduced. Overall with the economic fundamentals looking good, favorable government policies and exploration of the newer markets industry looks all set for a good time ahead. Government Policy: Levy of two per cent excise duty on premium branded Jewellery. 100 per cent Export Oriented Units (EOUs) and units in the Export Processing Zones (EPZs)/Special Economic Zones (SEZs), enjoy a package of incentives and facilities, which include duty free imports of all types of capital goods, raw material, and consumables in addition to tax holidays against export. Currently 74% FDI in Mining, 100% proposed. 41

QUESTIONNAIRE ANALYSIS 1. Role of the Gems & Jewellery industry to the Indian economy. Very Significant-------------------------------19 per cent Significant-------------------------------------38 per cent Insignificant------------------------------------

20 per cent Very insignificant----------------------------07 per cent Do not know/ can not say-------------------16 per cent 0% 5% 10% 15% 20% 25% 30% 35% 40% Very Significant Significant Insignificant Very insignificant Do not know/ can not say Very Significant 19% Significant 38% Insignificant 20%

Very insignificant 7% Do not know/ can not say 16% 42

Interpretation: As may be seen from the above response that the Gems & Jewellery sector in India contributes significantly to the Indian economy 43

2. Contribution of the Gems & Jewellery sector. Employment------------------------------------------72 per cent Export-------------------------------------------------46 per cent GDP---------------------------------------------------32 per cent

Other sectors----------------------------------------25 per cent Do not know/ can not say--------------------------07 per cent 0% 10% 20% 30% 40% 50% 60% 70% 80% Employment Export GDP Other sectors Do not know/ can not say Employment 72% Export 46% GDP 32% Other sectors

25% Do not know/ can not say 7% 44

Interpretation: Gems & Jewellery sector occupies an important place in the Indian economy as it contributes significantly to employment generation and export earnings. The economic importance of the sector also lies in its high employment potential, high capital investment, high value addition and continuously increasing demand both in the domestic and overseas markets. 45

3. The Impact of globalization and liberalization to the Gems & Jewellery export. Accelerated the export------------------------------------ 76 per cent Adversely affected the export-------------------------- 10 per cent Did not affect the export--------------------------------- 07 per cent Do not know/ can not say-------------------------------

07 per cent 0% 10% 20% 30% 40% 50% 60% 70% 80% Accelerated the export Adversely affected the export Did not affect the export Do not know/ can not say Accelerated the export 76% Adversely affected the export 10% Did not affect the export 7%

Do not know/ can not say