MUMBAI (CommodityOnline.com) -- The Indian gems and jewellery industry is competitive in the world market due to its low cost of production and availability of skilled labour.
In addition, the industry has a worldwide distribution network, which has been established over a period of time. India has set up more than 3,000 offices worldwide for promotion and marketing of Indian diamonds.
The Indian diamond industry has acquired leadership position in cutting and polishing of rough diamonds. India has the world's largest cutting and polishing industry, employing around 800,000 people (constituting 94% of global workers) with more than 500 high-tech laser machines.
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. India is expected to have its diamond bourse functioning at Mumbai in 2006. India is therefore a significant player in the world gems and jewellery market both as a source of processed diamonds as well as a large consuming market.
The sector is largely unorganised at present with a small but growing organised sector. The Indian gems and jewellery sector is also largely unorganised at present. There are more than 15,000 players across the country in the gold processing industry, of which only about 80 players have a turnover of over $4.15 million.
There are about 450,000 goldsmiths spread throughout the country. India was one of the first countries to start making fine jewellery from minerals and metals and even today, most of the jewellery made in India is hand-made.
The industry is dominated by family jewellers, who constitute nearly 96% of the market. Organised players such as Tata with its Tanishq brand, have, however, been growing steadily carving a 4% market share. As India's jewellery market matures, it is expected to get more organised and the share of family jewellers is expected to decline.
There are more than 6,000 players in domestic diamond processing industry. The average gestation period for setting up a diamond cutting and polishing unit is 15 months. The low gestation period, coupled with low capital cost allows easy entry into the sector.
This has led to the industry being largely characterised by a large number of small scale players. However, just as in the case of jewellery, the share of the organised sector has increased significantly in recent years due to an increase in demand for better and finer quality finished goods.
Presence of Traditional Pockets of Jewellery Manufacture
o Jewellery crafting by traditional goldsmiths is confined to a few regions in India. These pockets are widely separated and involve craftsmen whose skills have been handed down over generations. Surat is an important diamond processing centre, which exports around 80% of the production and has more than 3,500 diamond processing units.
o Jaipur is a key centre for polishing precious and semi-precious gemstones.
o Delhi and its neighbouring states are famous for manufacturing silver jewellery and articles.
o Calcutta is popular for its lightweight plain gold jewelry. This category of jewellery finds a large market in Tamil Nadu.
o Hyderabad is the centre for precious and semi-precious studded jewellery.
o Nellore is a source for hand made jewellery that has been supplying the Chennai market for quite a few decades. Belgaum in Karnataka and Nellore together specialise in studded jewellery using synthetic or imitation stones.
o Coimbatore in Tamil Nadu specialises in casting jewellery.
o Trichur in Kerala is another source for lightweight gold jewellery and diamond cutting.
o Mumbai is the centre for machine made jewellery. The city is also India's largest wholesale market in terms of volume.
While these clusters have evolved over time based on the availability of raw materials, skilled labour and market potential, these have been developed and made competitive through support from the government of India through its special economic zones and cluster development programmes.
The clusters help in building a globally competitive environment for the Indian gems and jewellery industry.
India Gems and Jewellery Industry - Highlights
Jewellery market size - $13 billion
Diamond jewellery - $1.2 billion
Gold jewellery market growth year on year - 15%
Diamond jewellery market growth - 27%
Courtesy: Indian Brand Equity Foundation
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