Q. What is the current market size of the Indian Gems & Jewellery sector?

A. The current market size of the Indian Gem & Jewellery Industry is US$ 25 Billion and share of Gem & jewellery sector in the total merchandise exports from India is 13.63%.

Q. How has the sector performed during 2009 and what according to you have been the strategies adopted to overcome the slowdown in the domestic and global market?

A. The Gem & Jewellery Industry has started showing positive signs of revival and growth. The overall exports of gems and jewellery products during April – November 2009, at US$ 17623.04 million had shown a marginal decline of 1.02% as compared to US$ 17804.96 million of the same period previous year. In the month of November 2009, the total exports of gems and jewellery products were US$ 2142.23 million registering a massive growth of 54.84% as compared to US$ 1383.54 million of same period previous year.

One of the major strategies adopted by the Council to overcome the slowdown in the global market was the voluntary stoppage of import of rough diamonds by the Indian diamantaires. Another effort is working out with government and banks for liquidity and interest cost reduction.

With an objective to revitalise from the recessionary period, Industry has started its aggressive promotional and marketing activities in the new untapped markets especially China & Russia and for the time being at the domestic market also to excite the demand for the gem & jewellery products.

Q. To what extent has the domestic market been able to provide a support to the sector when the exports were adversely affected by the recession?

A. The domestic market has given at least the support to sustain during very difficult times,when the exports were affected by the recession. Last year,the festive season of Diwali and New Year were extremely good for the local market which has given the cushion to the exporters to sell their blocked inventories to some extent in the Indian market. However, it may be noted that India consists of roughly 6% of total gem & jewellery sales of the world. Hence, there are limitations in giving support to the export sector.

Q. What are the emerging markets in this sector?

A. With an objective to diversify the markets for exports and decrease the dependence on US, the Council has started new initiatives in markets like China, Russia & CIS, Middle East and Europe.

Q. Why is India’s presence largely restricted to the lower-sized and lower-valued diamond market as oppose to higher value diamonds?

A. The Diamond Industry is a very skilled Industry. The skill sets that are developed by these workers are through the last 30 to 40 years. The skill of our workers in cutting and polishing of smaller diamonds, mainly of 1 carat and below is unique in the world. This skill has powered India to become a monopoly in cutting and polishing of smaller diamonds. However, in the recent times India has developed successfully the skill of cutting & polishing larger sized diamonds and also of all shapes & sizes which was previously the forte of Israel & Belgium.

Q. What is India’s share of diamond processing in terms of carat, weight and value in global market?

A. Indian Diamond Industry has established itself as the world’s largest manufacturing centre of cut and polished diamond for the last many years contributing 60% of the world’s supply in terms of value, 85% and 92% in terms of volume and pieces respectively. 11 out of 12 diamonds set in jewellery worldwide are processed in India.

Q. How much is the export of diamond studded jewellery from India? Why is this less tapped market?

A. The separate export figures of diamond studded jewellery are not available with the Council. India was traditionally concentrating on achieving the leadership status in cut & polished diamonds. Also, till 1991 the Gold Control Act restricted the export of metal & metal studded jewellery from India and hence the export of studded jewellery practically started after the Gold Control Act was withdrawn in 1991. In these 2 decades we have cornered around 9 to 10% of the world studded jewellery market in spite of fierce competition from other countries. We are still growing exponentially and is confident of cornering sizeable chunk of studded jewellery manufacturing of the world in the coming years.

Q. Have banks been in sync with industry requirements? If not, what are the problems that industry players have been facing regarding sourcing their capital requirements?

A. Indian Banks have acted as “Ideal Partners” in the remarkable development of the Indian Industry to achieve a monopolistic position in cutting & polishing of diamonds in the World.

However in recent times, the major problems faced by gem and jewellery exporters in sourcing their capital requirements are as follows:

• High interest rate being charged by the banks on export credit.
• Scarcity of dollar credit for sourcing of rough diamonds.
• Reduction in sanction on extension of credit limits to gem and jewellery exporters.
• Biased rating of gem & jewellery firms by Credit rating agencies in India.

Q. What are the issues that you think need to be addressed by the Government immediately?

A. The issues that need to be addressed by the Government of India immediately are as follows:

• Support in terms of tax incentives in the form of introduction of 80HHC for a minimum period of 3 years.
• Reduction of net profit rate under Benign Assessment procedure from 6% to 3%.
• Exclusion from the powers of the Authorized Officer, the power to seize any bullion, precious or semiprecious stones or jewellery which is held as stockin- trade of the business under the proposed Direct Tax Code (DTC).
• Continuation of all measures announced under Fiscal Stimulus packages for the Industry till end of 2011.
• Creation of a Diamond, Gem & Jewellery Dollar Fund to cater to the dollar credit needs of the exporters from the sector.
• Credit limits sanctioned to the exporters by banks as on 31/03/2009 may be continued to exporters of good track record (except for those whose accounts have been declared as NPA), till 31/03/2011 without putting additional conditions.
• Government should help in sourcing of rough diamonds from countries like Africa, Russia, Canada, South America & etc.
• Allowance of consignment import of rough diamonds for trading, assortment, auction etc to make India an “International Diamond Trading Hub”.

Q. What is your growth expectation in the next two years and according to your opinion what would be the potential growth areas?

A. Potential growth areas are in diamond studded jewellery & silver jewellery. Exports to non traditional markets like China, Russia and CIS will grow if they come up with trade friendly norms. 2009-10 will see around 5% growth from previous year’s exports and the same growth rate may continue in 2010-11.