The gems and jewellery industry in India is one of the largest contributors to the global jewellery & diamond market and occupies a very significant position in the Indian economy. Gold plays a major role in the country’s culture and is considered to be a symbol of wealth & status, a store of value and an essential part of many occasions. Gold, rather than being an ornament, is considered as a celebration across the nation; in the North, Baisakhi and Karva Chauth, in the East, Durga Puja, in the West, it is Gudi Pavda and in the South, Akshaya Tritiya. Approximately 50 per cent of the annual gold demand is generated by Indian weddings. The contribution of India to the global jewellery consumption is around 29 per cent. India is also a largest exporter with net exports in 2020 stood at INR 2,537.6 billion. Being the world’s largest center for cut and polished diamonds, India annually processes around 1 billion pieces of diamonds.
The Gems and Jewellery industry contributes around 7% to the country’s overall GDP and employs over 5 million people. The industry was estimated at INR 5.63 trillion in 2020 and expected to reach INR 6.64 trillion by 2023. The demand is growing at a CAGR of 5.60 per cent till 2023.
Historically, the Indian gems and jewellery industry was fragmented, with customers generally purchasing from family jewellers. However, the industry has undergone major structural changes in the last few years with more jewellers moving up the value chain towards a greater emphasis on branded jewellery. Some of the major players in the market includes; Tanishq, Malabar Gold & Diamonds, Joyalukkas, Kalyan Jewellers, Gitanjali and TBZ. However, Jewellery retailing is a highly untapped market in India and there is a substantial scope for new entrants.
Middle class population is the major driver for the Indian economy. According to estimates, around 55% of the population is expected to join the middle class by 2025. As the wealth of the middle class increases they acquire gold for consumption and also as an investment.
In recent times, gemstones such as Diamond, Platinum, Ruby etc are making a significant contribution to the changing fashion trends especially with the elite class and upper middle class society in order to distinguish them from other people.
The rising education level among women has increased the percentage of women workforce in India giving them more financial power in purchasing decisions. Increasing income levels of working couples and lifestyle changes have fueled the demand for gems and jewellery.
Jewellery companies more often introduce unique and distinctive designs to differentiate their brands. Young customers who are generally brand conscious and emerging market consumers for whom established brands inspire trust and a sense of upgraded lifestyle are driving the branded jewellery segment.
Raw materials play a major role in the gems and jewellery market. India imports almost 90% of the raw materials, especially raw diamonds and gold bars. As a result the gems and jewellery industry is vulnerable to any regulations that limit diamond and gold supply.
The gems and jewellery industry in India is highly fragmented and unorganized. The industry is majorly dominated by small jewellery shops that are run by families for years. More customers prefer these shops as price fluctuations make organised jewellers increase the price of finished jewellery.
The purchase of jewellery is an expensive transaction and also considered as a long term investment. Thus, Fair price, Trust & transparency becomes a major buying decision factor. Customer doubts and lack of knowledge on how to value the jewellery add to the buyer’s discomfort.
The outbreak of the coronavirus shook the entire world causing loss of hundreds of lives across the world and crippling the global economy. Indian economy is not an exception to the impacts caused by the virus. Being a high labour and export oriented sector, the gems and jewellery industry in India took a hard hit due to the value chain disruption and high price volatility with the raw materials. According to the Gems and Jewellery Export Promotion Council, the total export of gold jewelleries between April and September 2020 fell by 77% when compared to the corresponding period of the previous year and was valued at INR 104 billion. While, the export of cut & polished diamond export declined by 47% valuing at INR 409.8 billion. Overall the export of gems and jewellery plunged by 74.64% in FY 2020-21.
The development of large retailers/brands will be a major contributor to growth in the gems and jewellery industry in the country. The increasing market penetration of organised players provides a wide variety of products and designs. The covid-19 lockdown has made people use digital platforms to perform most of their activities. It is estimated that manufacturers of stone-studded, imitation and luxury fashion jewelleries’ online sales have increased by fourfold during October to November when compared to pre-pandemic period. However, we estimate that the industry will fully recover by the end of 2021.