UBM Publication

India's Leading Gems & Jewellery Companies

The Indian Gems & Jewellery Industry is the back bone of the economy by being one of the major contributors towards the export led growth of India. The industry has gained global popularity because of its talented craftsmen, its superior practices in cutting and polishing fine diamonds and precious stones and its cost-efficiencies.

Dun & Bradstreet India (D&B India) carried out a comprehensive study based on primary survey to capture the pulse of the gems and jewellery industry. The survey focuses on understanding the current size and scale of the gems and jewellery sector in terms of their business operations, marketing channels, growth drivers, technology adoption, exports and major hindrances faced by the companies.

Around 48% of the gems and jewellery companies are private limited entities
The survey furnished that around 48% of the respondent were private companies, while around 27% were proprietary companies. Partnership and public entities firms constitute the balance 25% of the firms surveyed.

A second finding elaborated on income levels, with around 29% of the public limited companies in the highest income bracket of above र 2,500 mn while 9% of the private companies occupied the income bracket between र 1,000 mn to र 2,500 mn. Furthermore, majority of the company’s ownership recorded the lower income bracket of up to र 250 mn. Moreover, 7% of the private companies fell in the income bracket of र 500 mn to र 1,000 mn while 19% of the proprietary companies occupied the income bracket between र 1,000 mn to 2,500 mn.

Further, of the total respondents, some firms have diversified operations. Nearly one-third of the companies were into manufacturers whereas exporters constitute around 27%. Around 13% of the total surveyed companies act as a trader while 5% work as importers.

Precious metal jewellery companies account for one third share of the sample companies
The sector is highly-fragmented and unorganized, and is characterized by family-owned operations. However, over the last few years, more organized players have been entering the sector. The products in the sector can be categorized as gemstones, jewellery and pearls, which can be further segmented into diamonds, colored stones (precious, semi-precious and synthetic), studded jewellery, costume jewellery, gold and silver.

The survey revealed that majority of the companies were in the business of precious metal in both plain and studded jewellery followed by cut and polished diamonds. Merely 7% of the companies were in the business of costume and fashion jewellery.

Companies with income below र 1,000 mn emerged as more export oriented than their larger peers
According to Gems and Jewellery Export Promotion Council (GJPEC), the total exports of Gems and Jewellery during FY13 stood at US$ 39.03 bn, with a share of nearly 15% to India’s total exports. Among the surveyed companies, 58% of the respondents reported that their exports revenues contributed less than 20% of their total income, while 20% of the respondents earned exports in the higher income level of above 80%.

A second inning based on total income revealed that 20% of the companies between र 500 mn - र 1,000 mn and above र 2,500 mn income bracket had exports ranging between 60-80% in FY14. Majority of the companies contributing exports felt in the lower income bracket of upto र 250 mn except 40% of the respondent contributed exports in the range of 60-80%

Majority of companies which are aware about Focus Market Scheme would like to see it continued
The government bought about various policy initiatives in the form of special bonus benefit scheme, special focus market scheme, focus product scheme, market linked focus products scheme and various Free Trade Agreements (FTAs) so that exports can gain further traction in the coming years.

The major purpose for focus market scheme was to offset high freight cost and other externalities to select international markets with a view to enhance export competitiveness in these countries. Despite these benefits offered by the government, nearly 80% of the gems and jewellery companies were unaware of the Focus Market Scheme while the balance 20% of the respondents availed of this scheme.

Moreover, out of the 20% of the respondents who availed of the focus market scheme, 77% of the respondents felt that the focus market scheme should continue and will availed benefits offered in the New Foreign Trade Policy. Furthermore, the study also revealed that nearly 20% of the respondents exported various products to focus market countries.

Around 43% of respondents stated trade exhibitions as the topmost marketing channel to promote business
Around 43% of the surveyed companies across all income brackets adopted the trade exhibition strategy, making it the top marketing strategy to promote business as they allow face-to-face communication and offer opportunities for networking and discovering more about customers and their needs. It further helps to meet the people that matter to the business in one place, including existing customers, new prospects, suppliers, advisers, investors and key figures in the gems and jewellery industry.

Furthermore, several companies were dependent on the sales representatives/agent as it helped reached across geographies, with around 22% survey respondents using this medium for business promotion. Similarly, around 11% survey respondents preferred the mode of printing publications. However, professional websites emerged as the least popular marketing choice used by the companies operating in the gems and jewellery industry.

Both domestic and international trade exhibitions materialize as the most useful marketing strategy for gems and jewellery companies
Trade fairs, conferences, business events, and exhibitions are more than just a marketing tool as the entire marketplace is at the fingertips. As a reliable media for exchange of information, exhibitions are being globally recognized as the apt medium for doing business today. The platform is ideal for exhibitors to nurture the trust and confidence across the supply chain.

According to the survey, more than 40% of the respondent felt that trade exhibitions are a very powerful source for showcasing their business. However, 11% and 22% respondent felt that domestic trade exhibitions and international trade exhibitions are of very minimal use to their business.

Inspite of many companies benefitting from trade exhibitions which provide networking platform to both international and domestic participants, nearly 57% of the respondents felt that the more effort needs to be compounded by the government to harness the benefits in future as India is seen as a prime destination for the gems and jewellery industry. The balance 44% felt that the government has contributed to trade exhibitions with some of the major players ITPO, CII, GJF, GJEPC, GJTCI, ASSOCHAM, etc. already existing.

Volatility in currency prices emerged as the top barrier for businessmen operating in the current scenario
The gems and jewellery sector is affected by the rupee/dollar exchange rate because it is export-oriented. Any volatility in the exchange rates affects the margins of the players. Around 25% of the respondent felt that managing currency fluctuation was the biggest obstacle faced in the current economic scenario. About more than 60% of the respondents with income less than र 250 mn ranked currency fluctuation while 18% in the income bracket of र 250 mn - र 500 mn considered weak demand in global markets to be the major challenge affecting their business.

Further, 7% of the respondent in the higher income bracket of above र 2,500 mn considered lack of skilled manpower and cost availability of export credit as the next major hindrance in their business. Moreover, about 11% of the respondent with income bracket of र 100 mn - र 250 mn and 7% of the respondent between र 50 mn - र 100 mn accounted lack of proper export promotional measures as the other important challenges faced by the gems and jewellery companies.

Two-third of the companies felt that India can emerge as the global outsourcing hub
India has many natural advantages to emerge as Gems & Jewellery hub of the world. The country has the largest and the best artisan force for designing and crafting the jewellery in the world. India has shifted its trade focus from domestic economy to global markets through liberalized trade policies & lower tariffs. These measures have improved India’s export market over the past 15 years, particularly for diamonds and jewellery with considerable scope in terms of capacity building at the domestic front, and the quality management.

The same was revealed by nearly 68% of the respondent who believed India could be the next outsourcing hub for the gems and jewellery sector.

In the coming years, 51% of the respondents felt that an entrepreneur can expect annual returns upto 10%
The survey tried to understand the return on investment an entrepreneur can expect in the current economic scenario. ROI is used in several different ways to gauge profitability of a business. For instance, a company can measure the performance of their pricing policies, inventory investment, and capital equipment investment among others. Around 51% of the respondents felt that in the current economic scenario entrepreneur would earn ROI upto 10% p.a. Further, nearly 38% of the respondents believed that an entrepreneur could expect ROI of 10-20% p.a. over the next two years.

Availability of skilled craftsmen and infrastructure development emerged as the major drivers for export growth
The Indian gems and jewellery industry is competitive in the world market due to its low cost of production and availability of skilled workforce. The major strengths lie in the beautiful handcrafted articles which are complex and comparable to world-class designs and the Indian craftsmen who have achieved fineness in this art. Furthermore, India also has the largest resource pool in diamond cutting and process which requires immense skill, which the Indian artisans seem to have developed over the years. This has helped India score over its peers.

Availability of skilled manpower is a key strength that has enabled growth in India’s gem and jewellery sector. The same was revealed by nearly 21% of the respondents’ who considered availability of talented craftsmen as the topmost export growth driver for the gems and jewellery sector. Development of infrastructure such as roads, railways, airports, emerged as the second best option for exports. Advanced technology was considered as the least growth driver for exports.