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The Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 6-7 per cent of the country’s GDP. It also employs over 2.5 million workers. One of the fastest growing sectors, it is extremely export oriented and labour intensive.

The Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 6-7 per cent of the country’s GDP. It also employs over 2.5 million workers. One of the fastest growing sectors, it is extremely export oriented and labour intensive.

Based on its potential for growth and value addition, the Government of India has declared the Gems and Jewellery sector as a focus area for export promotion. The Government has recently undertaken various measures to promote investments and to upgrade technology and skills to promote ‘Brand India’ in the international market.

India is the largest player in diamond cutting and polishing and also the largest consumer of gold.

India is deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour. India is the world’s largest cutting and polishing centre for diamonds, with the cutting and polishing industry being well supported by government policies. Moreover, India exports 75 per cent of the world’s polished diamonds, as per statistics from the Gems and Jewellery Export promotion Council (GJEPC). India's Gems and Jewellery sector has been contributing in a big way to the country's foreign exchange earnings (FEEs). The Government of India has viewed the sector as a thrust area for export promotion. The Indian government presently allows 100 per cent Foreign Direct Investment (FDI) in the sector through the automatic route.

Team Leader

Leena Jaisani

Assistant Secretary General



FICCI Gems & Jewellery Business Delegation to Vicenzaoro, Italy


Third Stakeholder's Roundtable on 'Gold Heritage Tourism'


FICCI-World Gold Council Stakeholder's Roundtable on “Gold Heritage Tourism”


FICCI World Gold Council Stakeholder’s Roundtable on Gold Tourism


FICCI Gems & Jewellery business delegation to VICENZAORO DUBAI


FICCI Gems & Jewellery delegation to VICENZAORO WINTER

Press Release

"it will give a kick-start to a large number of stalled projects, thus re-invigorating investment and growth cycle", says FICCI president Jyotsna Suri on Land Ordinance


FICCI Presents the Indian Luxury Expo


Savoir Faire - A Rendezvous with Style and Glamour!


All that glitters is Gold: India Jewellery Review 2013


FICCI-UBM Gems & Jewellery Conclave


Roundtable on Gold and growing CAD: Demystifying the myths and providing solutions


Design Awareness Seminar on Gems & Jewellery


International Conference on Gems and Jewellery


Jan, 2016

FICCI Gems & Jewellery Business Delegation to Vicenzaoro, Italy

Jan 21, 2016, Vicenzaoro, Italy

Dec, 2015

Third Stakeholder's Roundtable on 'Gold Heritage Tourism'

Dec 11, 2015, Mumbai

Oct, 2015

FICCI-World Gold Council Stakeholder's Roundtable on “Gold Heritage Tourism”

Oct 28, 2015, Chennai

Aug, 2015

FICCI World Gold Council Stakeholder’s Roundtable on Gold Tourism

Aug 18, 2015, FICCI, New Delhi

Apr, 2015

FICCI Gems & Jewellery business delegation to VICENZAORO DUBAI

Apr 23, 2015, Dubai

Jan, 2015

FICCI Gems & Jewellery delegation to VICENZAORO WINTER

Jan 23, 2015, Vicenza, Italy

Nov, 2014

FICCI Presents the Indian Luxury Expo

Nov 14, 2014, Chandigarh

May, 2014

Savoir Faire - A Rendezvous with Style and Glamour!

May 30, 2014, Four Seasons, Mumbai

Nov, 2013

FICCI-UBM Gems & Jewellery Conclave

Nov 27, 2013, Bombay Exhibition Centre, Goregaon, Mumbai

Jun, 2013

Roundtable on Gold and growing CAD: Demystifying the myths and providing solutions

Jun 27, 2013, New Delhi

Jun, 2011

Design Awareness Seminar on Gems & Jewellery

Jun 24, 2011, Jaipur

Jan, 2010

International Conference on Gems and Jewellery

Jan 15, 2010, Mumbai


Mr. Sahil Malik

Managing Director
Da Milano/Rosso Brunello
The Tribune |

Hallmarking: The new gold standard

Financial Chronicle |

Single spot price for gold soon

There will soon be a single spot price for gold for the entire country. At present, spot prices differ from metro to metro and lack of transparency in supply-demand results in suppliers levying premiums. A uniform spot price could be a reality as setting up of a spot exchange is a major initiative of the ‘gold policy,’ which is expected to be unveiled by March, said a source privy to the development. The spot exchange will aim at establishing one spot rate, especially with the goods and services tax bringing in a uniform tax structure. Creating a gold board is another big idea of the policy.

Besides pricing standardisation, the spot exchange will increase transparency and improve supply and demand analysis. It will also facilitate banks dealing in the metal to hedge in gold options, the source added.

A panel headed by Ratan P Watal, former finance secretary, is likely to submit its recommendations on gold policy by January 31 and a comprehensive policy is expected by March. Last year, government policy think-tank Niti Aayog had set up a committee to transform gold market under the chairmanship of Watal. The policy document is being put in place by Niti Aayog is consultation with different ministries and industry bodies. “The government has sought recommendations from the industry and the policy is part of the ‘G2B’ (government-to-business) initiative. In order to reduce the impact on current account deficit, historically governments have been trying to reduce gold imports. With this policy, government will try to be proactive in terms of increasing exports, recycling, refining and mining of gold,” said Ajay Mehra, managing director, Mehrasons Jewellers, and co-chair of FICCI’s gold and jewellery committee.

A gold board will be set up to help manage imports, encourage exports and facilitate development of the infrastructure needed to ensure the Indian gold market functions to maximum effect.

“At present, we do not have a single government agency to deal with gold. The board will provide the convenience of a single window for all policy-related matters,” said Mehra.

However, the government may take a little longer to make hallmarking mandatory, as it finds that the infrastructure is not yet ready to take up the huge task.

According to industry sources, the government may also look at lowering the import duty on gold in the coming budget. While the industry has asked to bring down the duty below six per cent, there could be a two per cent reduction in duty. In order to address the issue of import of gold at lower duty under free trade agreement (FTA) from countries like South Korea, the government might take some initiatives to channel the imported gold entirely for re-export purposes.

“We have put forward our recommendations for the budget and the gold policy that will also address issues related to smuggling. The country has seen almost 600 tonnes of gold being smuggled into India in the last three years. Now that the CAD situation has improved, we have asked the government to bring it down below six per cent,” said Nitin Khandelwal, chairman, All Indian Gems and Jewellery Trade Federation.

Business Standard |

Efforts on to revive Gold Monetisation Scheme

All-out efforts are being made to revive the Gold Monetisation scheme, which failed to take off since its launch two years ago.

The aim of this scheme was to mobilise “idle gold” with households, estimated by the World Gold Council at 25,000 tonnes or almost half the value of this country’s gross domestic product. However, the scheme has not even attracted 10 tonnes since the launch in November 2015. Even this has mostly been from temples, not homes.

Suggestions on how to revive it are being discussed by a panel formed by the Niti Aayog. These include involving jewellers as collection centres, addressing of issues that banks have been facing and using domestically available gold for giving metal loans to jewellers for domestic sales.

According to information from the Association of Gold Refineries and Mints say around 10 refineries and 50 gold collection centres (hallmarking centres) are licensed to accept gold under the scheme and consumers keep making inquiries. “However, we are not ready to accept gold as deposits, as the operating banks are not ready at their end to accept these, for a variety of reasons,” said James Jose, the Association’s secretary.

Banks, says an industry official, are not finding it viable to accept gold deposits from investors for less than 500g. Even for bulk deposits, the interest for medium-term and long-term ones is yet to be reimbursed by the government; the latter is yet to even prepare the operative guidelines on this. So, bankers want the government to clarify how it wishes GMS to progress.

Sanjeev Agrawal, chairman of the Gems & Jewellery Committee at business chamber FICCI, said: “Jewellers can be involved in GMS, as they enjoy customers’ confidence; customers might be ready to part with their jewellery as deposits under GMS. Jewellers certified by the Bureau of Indian Standards should be allowed to act as agents of banks to collect deposits under GMS; their acknowledgement could be used by banks for opening and crediting depositors’ account with that much gold.”

Adding: “We propose that jewellers shall be allowed to accept such deposits and gold can be lent back to jewellers as metal loans at pre-approved rates; eligibility criteria could be fixed by the respective banks. This will make the scheme practical for banks to handle, as handling a smaller quantity of gold is routine for jewellers and might not be viable for banks.”

Banks, however, are reluctant to support this. Another suggestion is to allow jewellers to accept gold as deposits and pay interest to depositors, using that gold for jewellery and then return this to depositors on agreed terms, the way they accept cash deposits. Agrawal says around 140 tonnes of gold jewellery are sold annually to jewellers, for encashing or buying new jewellery.

James Jose observes: “The GMS deposit interest rate is over two per cent, which is costlier if the same gold is to be lent back to jewellers. From international sources, such loans are available at 1.5 per cent. To tackle this, metal loans from overseas could be made permissible to only exporters, which might motivate banks to push GMS.”

Another suggestion he has given to the ministry of finance is that, “banks would be motivated to push GMS if they are allowed to lend gold to domestic jewellers for more than one year against collateral. And, metal loans shall be denominated in gold weight and repaid in gold weight.”


WB plans SGST waiver for gems and jewellery sector

The West Bengal (WB) government is planning to exempt the gems and jewellery industry from state goods and services tax (SGST). While an official communication to this effect is yet to be made, DNA Money has learnt that the government is working on it and will make the decision public in the coming months.

Vandana Yadav, MD, West Bengal Industrial Development Corporation Ltd (WBIDC), said there was a waiver under the value-added tax (VAT) era and the government plans to extend the same under the GST regime.

“It's still to be finalised as paperwork is being done. It is already an area of concern and the government is committed to extending the incentives. Whatever amendments are required will be done to make it happen. I will not be able to give a timeline but it will be done in a very short span,” said Yadav, adding that a commitment has been made during a recent meeting with the gems and jewellery industry players in Mumbai.

The WB government already has gems and jewellery policy that's focused on the micro, small and medium enterprises (MSMEs). Under this policy, said Pankaj Parekh, state president – West Bengal, India Bullion And Jewellers Association Ltd, the government has been offering VAT waiver to players involved in the gems and jewellery business. Other fiscal incentives for manufacturers included capital investment subsidy (SME sector), interest and power tariff subsidy and tax refund, among others. WB is also the first state to permit the exporters to procure gold/silver against bank guarantee during VAT regime and a similar arrangement is likely to be introduced in under GST as well.

According to Sanjeev Agarwal, chairman – FICCI Forum on Gems and Jewellery, various state governments would have an MSME policy allowing for a partial refund of VAT. And in the case of WB government, there is a VAT refund of up to 90% depending on the location of the manufacturing unit.

“There is an 80-90% VAT refund for up to eight years or 75% of capital investment, whichever comes earlier. In this context, where there was a VAT refund against the investment amount, the same will get extended in the GST regime. And I am hoping various other state governments will also do the same,” he said.

However, there is a catch. The WB government has put a cap on the refund based on the capital investment for the MSME sector but there is still no policy for the overall gems and jewellery industry yet. Also, the jewellery sector is not capital-intensive but very labour intensive. It's also very working-capital intensive owing to high-cost raw materials like diamonds and precious metals.

“For the overall gems and jewellery sector they will have to adjust the clause on the maximum cap. Principally, various states would have different levels of VAT refund (covering mainly the MSME sector) to sort of incentivise people to set up shop. And if there is a VAT refund already in place, then logically it should get extended in the GST regime as well,” said Agarwal, adding that owing to the non-capital intensive nature of the industry, a large unit may also get categorised under MSME.

Considering the gems and jewellery fraternity will be submitting a draft with inputs from players across the country for a comprehensive policy in the state of West Bengal, the industry is certain that this topic will get addressed as well.

The overall GST on gems and jewellery sector is 3%, to be shared equally between the Centre and state. Agarwal said any person putting up a new manufacturing plant and getting 80-90% SGST refund. Thus, the effective SGST would only be between 0.25% and 0.50%.

On the possibility of pursuing this incentive with other states, Agarwal said, the topic is very recent and West Bengal government has already made a commitment on the same. “(will take it up) Wherever they have a conducive trade policy for the gems and jewellery industry,” he said.

Financial Express |

West Bengal organises meet on gems & jewellery

The West Bengal government is organising the fourth edition of Bengal Global Business Summit (BGBS) next year from January 16-17 in Kolkata. While FICCI is the summit partner, KPMG will be the knowledge partner. As a prelude to the summit, the West Bengal government has organised a roundtable on the gems and jewellery sector in Mumbai on Tuesday. As many as 24 prominent players and associations from the sector participated in the discussion. West Bengal finance minister Amit Mitra, West Bengal additional chief secretary (industry, commerce & enterprises) Rajiva Sinha, and WBIDC MD Vandana Yadav addressed the session.

Gitanjali Group chairman MehulChoksi, FICCI Gems & Jwellery Committee chair and Gitanjali Group CEO Sanjeev Agarwal, SumatichandGouti Jewellers managing director Sumatichand Gouti, Rio Tinto India managing director Vikram Merchant, Indian Bullion and Jewellers Association chairman Mukesh Mehta, Gems & Jewellery Export Promotion Council chairman Praveen Shankar Pandya, Gems & Jewellery Trade Federation CEO Avinash Gupta, IBJA state president Pankaj Parekh, and Calcutta Gems & Jewellers Welfare Association president Ashok Bengani also participated in the session.

Business Standard |

Falling commodity prices take sheen off margins

With prices of most commodities, especially crude oil, metals and iron ore, falling, producing and consuming companies are in a tug of war to maintain margins.
Consuming companies want to lock part of their raw material costs by entering into medium-term supply contracts, which producing companies are resisting as much as they can.

Metal producers have benefited from rising prices over the past year. Even in the January-March period, prices of most metals were strong. However, this week has seen prices falling as global issues resurfaced. The elections in France and a possible exit from the EU, a slowdown in Chinese manufacturing and the impending interest hike in the US have all contributed to the price decline.

While most companies Business Standard spoke to said they could not comment either because they were in the silent period or because it was a sensitive issue, an exclusive with a domestic metal giant said, “Consumers want to lock part of their raw material requirements at current prices as it is still the beginning of the financial year. We are not too keen to enter into such contracts as prices have dropped. While it is difficult to say prices will not fall further, usually in a falling market buyers’ pressure prevails.”

This is the case for most base metal producers.

Gold prices recovered marginally from a two-month low of $1,225.7 an ounce to trade at $1,221.6 on Friday, while silver is trading around a four-month low of $16.3 per ounce in international markets. Copper is trading at $5,560 per tonne on the London Metal Exchange, at a five month low, while zinc at $2,571 a tonne is at a one-month low.

For metal consuming companies, it is a good time to lock in supplies, say analysts.

A senior executive with a consuming company said, “We are talking to our copper suppliers to lock prices. While they assure us of supply, they prefer monthly price revisions based on average prices on the LME.”

Iron ore has lost about 12 per cent this week in Singapore, its sharpest fall since November, on concerns of China's demand for steel. Iron ore, which was $94.8 per tonne on February 21, has declined to $61.7, its lowest since October. Last year, China bought 1 billion tonnes of ore and several mines in Australia, Brazil and other producing countries resumed or increased production, which is exerting pressure now.

An executive with a steel major said, “The iron ore cost in India has not fallen like in the international market, but imports are still not viable. However, we have faced pressure of high coking coal prices, which we want to pass on.” A year ago, Australian coking coal was below $100 a tonne, it is $211 now. The price was above $300 a month ago, adding to pressures on input costs and margins of steel makers. State-owned iron ore major NMDC has not raised prices after March. “Even for the month of May, we have retained prices as demand is still comfortable. We maintain prices in line with imports,” said an NMDC executive.

The fall in commodities is led by crude oil, which has given up all its gains after a production cut by the Organisation of the Petroleum Exporting Countries in November. In the last two days Brent crude oil prices fell 4.5 per cent to trade at $47.8 a barrel. However, prices saw a marginal increase on strong US jobs data on Friday.

There are expectations that oil producing countries may not honour their agreement. Brent crude oil prices are at their lowest since November and have fallen from a high of $57-58 per barrel. Indian refineries and processors of derivatives are relieved with the fall in crude oil prices. Some private sector refineries are hedging their crude oil requirements. Public sector refineries usually stay away from hedging.

“Private sector refineries are quite active in hedging in overseas over-the-counter derivatives. What we understand is that refineries have increased hedging at lower crude oil prices,” said a commodities market expert. Domestic jewellery manufacturers have a different hedge. “There are facilities like the gold metal loan, which helps manufacturers and retailers completely derisk the gold price,” said Sanjeev Agarwal, chairman, gems and jewellery committee, Federation of Indian Chambers of Commerce and Industry.


The fellowship of the gold ring of trust

All that is gold does not glitter/ Not all who wander are lost/ The old that is strong does not wither/ Deep roots are not reached by the frost.” JRR Tolkien in The Fellowship of the Ring warns against the belief that things are exactly as they seem. The first line is an inversion of the Shakespearean line from The Merchant of Venice, ‘All that glitters is not gold’.

Both, the proposition and its corollary, are apt for the scene on gold hoarding in the country. Neither is everything sparkling beneficial to our economy, nor is the sentiment that everything that is not sparkling, doesn’t enrich us. You’d think otherwise to look at our penchant for the shiny stuff.

The domestic stock of gold is estimated to be 20,000 tonnes in jewellery, bars, and coins, but Finance Minister Arun Jaitley has repeatedly stated the government simply has no clue how much gold is actually held by Indian households. Thankfully, the search and seizure stipulations of 1994 have never actually been implemented. And with the Government clarifying that they will not be, there is no way of knowing. Any data blind spot this large is problematic.

Gold the more so because there is no other unregistered asset class worn on a daily basis. You can’t exactly crack down on people’s necks.

On Thursday, the Government stirred a hornet’s nest by clarifying that it had ‘only’ revised taxation rates from the existing 30 per cent to 60 per cent, plus a surcharge of 25 per cent in addition to cess. The tax discounts inherited assets, and targets the undeclared. How several will prove that inherited stocks weren’t illegally acquired, or that new gold isn’t ancestral, is not clear. It also rests heavily on the discretion of the assessing officer, throwing open a window to corruption.

The problem with gold is there has never been any prior effort to track it. Sentiment is also high around gold, an instrument of transfer of security and liquidity in marriages and inheritances, accessible to the uneducated investor as much as the highly-qualified one.

Gold has faced a tough 2016 so far, and the government has been sending clear messages to move off it through gold stocks, bonds, loans. FICCI had recommended standardisation, a gold board, etc in 2012. With the market in disorder, it is unfair to put the onus of standardisation on the consumer.

Gold is a high instrument of trust. Its prevalence speaks to the lack of faith in the banking system. Hidden in the closets with it, is the nation’s Plan B. While it is imperative to know the true quantum of stocks, it is more imperative to establish systems, both for gold and its replacement, that win the faith of the public.

Business Standard |

US demand revives jewellery units in SEZs/EPZs

A spurt in jewellery demand from America, the world’s largest consumer of luxury ornaments, has revived diamond processing and jewellery manufacturing units in Special Economic Zones (SEZs) and Export Processing Zones (EPZs) in this country.

Jewellery exports from SEZs/EPZs declined sharply in 2014-15, when the government acted to control gold imports, favouring units outside these areas, the Domestic Tariff Area (DTA).

Data compiled by Gems and Jewellery Export Promotion Council (GJEPC) showed export of precious ornaments from SEZs/EPZs declined to $3,660 million during 2014-15 as compared to $4,898 mn the previous year. While gold jewellery exports from the DTA almost doubled to $6,171 mn from $3,470 mn the previous year.

“India’s gems and jewellery sector is highly export-oriented, labour-intensive and a major contributor to employment generation, gross domestic product and foreign exchange earnings. Considering its immense potential and contributions, the Indian government has also declared the sector a thrust area for export promotion. However, in 2013, due to the increasing current account deficit and curbs put on import of gold, the industry was severely affected. These restrictions are leading to a state of panic in the jewellery manufacturing sector,” had said A Didar Singh, secretary general of business chamber FICCI in an AT Kearney report for the year.

The government curbed gold import through an increase in levy to 10% and several other measures, restricting availability for jewellers. Also, as supply from SEZs/EPZs to the DTA was considered an import and thus attracted duty, activity was hit in export- oriented zones.

“Jewellery demand from the United States has revived, resulting in revival of manufacturing units in SEZs/EPZs. Since the US economy has also indicated a recovery after several years of muted growth, jewellery demand in the US is likely to continue growing. Indian exporters have also expanded shipment to other markets, including the Middle East, the Far East and Southeast Asian countries,” said Praveen Shankar Pandya, chairman, GJEPC.

Its data show jewellery export from SEZs jumped 65% to $2,993 mn in April–September from $1,811 mn in the same period last year. Export of gold jewellery from the DTA, however, declined 23% to $1,451 from $1,873 mn in the same period the previous year.

“So long as jewellery demand continues from the US, 42% of the world’s luxury ornaments’ consumption, India’s SEZs/EPZs would continue to grow their business,” said Pandya.

Mehul Choksi, managing director, Gitanjali Gems, says jewellery demand in the US States saw growth of 10-15% this festive season.

live mint |

Ratan Tata-backed Bluestone in talks to raise Rs200 crore

Online jewellery retailer, one of the early start-up bets of Tata group chairman emeritus Ratan Tata, is in advanced talks to raise about Rs.200 crore in a fourth funding round led by venture capital firm Iron Pillar, said two people aware of the development.

Existing investors Accel Partners, Kalaari Capital and IvyCap Ventures will also participate, they added, asking not to be identified.

Iron Pillar, a fund focused on mid-stage technology investments in India, was founded by Anand Prasanna, who was previously with Morgan Creek, a global investment management firm, where he helped manage its Asia portfolio out of Shanghai. Sameer Nath, another founding managing partner, was till recently head of mergers and acquisitions (M&A) at Citi Group Global.

In its debut investment in India in February, Iron Pillar participated in a $200 million funding round in Snapdeal, led by Canada’s Ontario Teachers’ Pension Plan.

The impending investment is also proof of a turnaround at Bluestone, said one of the two people cited in the first instance. “Bluestone has been growing really well. It had a brief period of rough patch last year, mainly because of funding, but came out of it really well.”

This person added that this is also evident in the participation of existing investors in the new round.

Bluestone, owned by Bluestone Jewellery and Lifestyle Pvt. Ltd, was founded in 2011 by Gaurav Singh Kushwaha and Vidya Nataraj. The company strengthened its top deck by hiring former TaxiForSure chief executive Arvind Singhal as chief operating officer in September.

The firm had an annualized revenue run rate of Rs.250 crore in 2015-16, and is expected to grow it to Rs.1,000 crore over two years, Singhal told news agency PTI in a March interview. He added that the company was serving about 5,500-7,000 orders a month, with an average ticket size of about Rs.25,000.

Bluestone raised $5 million in 2012 in a Series A round from Accel Partners and Meena Ganesh, founder of Portea Medical, followed by another $10 million in a Series B round from Kalaari Capital, Accel Partners, Saama Capital and InnoVen Capital, a venture debt firm, in March 2014.

It raised $15.8 million in a Series C round last July, from IvyCap Ventures, Accel Partners, Dragoneer Investment Group, Kalaari Capital and Saama Capital. Early backer Accel has been a consistent investor in the firm at every stage.

Bluestone declined comment.

Iron Pillar, Accel Partners, Kalaari Capital, and Ivy Cap Ventures did not respond to emails seeking comment.

In September 2014, Bluestone became Ratan Tata’s second investment in the e-commerce segment, after online marketplace Snapdeal (Jasper Infotech Pvt. Ltd). Tata has so far invested in at least 30 start-ups in India and elsewhere.

Bluestone’s fund-raise comes barely a month after Titan Co. Ltd acquired a majority stake in its biggest rival, the Tiger Global Management-backed CaratLane (Caratlane Trading Pvt. Ltd).

According to Tracxn, a company which tracks start-ups, India is home to about 93 online jewellery start-ups. Out of them, eight have together raised about $107 million from investors.

Apart from CaratLane and Bluestone, another well-funded start-up is the Jaipur-based, which raised $15 million from Peepul Capital in October. Both Flipkart Ltd and Amazon India (Amazon Seller Services Pvt. Ltd) have launched jewellery as a category on their online marketplaces.

According to industry experts, the online jewellery market will be powered by women aged between 22 and 40. “The initial hesitancy of buying high-value items online has gone away with high-end mobile phones, televisions and furniture being sold online,” said Sreedhar Prasad, partner-e-commerce, KPMG India.

Prasad said there are several reasons why people buy jewellery, from weddings to investments, religious beliefs (buying jewellery on certain days is considered auspicious) to fashion. Most of those buying for the last reason are women aged between 22 and 40 in the 10 largest cities, he added. For them and for those buying jewellery as an investment, convenience and speed matter, Prasad said. “Indian e-tailing market grew not just because of reach and discounts but also the impulsive shopping nature of customers. With a large catalogue and attractive price points, there is a possibility that online jewellers will attract impulsive customers.”

Bluestone’s latest fund-raise comes at a time when there is a slowdown in early-stage deal-making and late-stage deals are particularly difficult to come by.

According to Preqin, a research firm, eight Series B deals were struck between January and March, as against 10 such deals a year ago. Deal value shrunk from $130 million in the December quarter to $34 million in the March quarter. The report further adds $53 million was raised in four Series C deals in the first quarter of 2016 as against $179 million in three deals in the December quarter.

According to a report by consulting firm AT Kearney and the Federation of Indian Chambers of Commerce and Industry, or FICCI, the domestic gems and jewellery market in India was worth Rs.251,000 crore in 2013 and is expected to cross the Rs.500,000 crore=mark by 2018.

Business Standard |

Temple gold tourism to dazzle you

India may see a new kind of tourism where with antique gold jewellery held by temples are displayed for a fee to domestic and foreign tourists.

The World Gold Council (WGC) has engaged the Federation of Indian Chambers of Commerce and Industry (FICCI) to conduct a feasibility study in six months after which a proposal will be forwarded to the relevant ministries.

Some antique jewellery is displayed in a couple of museums in the world. Gold tourism would be a first of its kind, if implemented properly.

Old temples have jewellery of antique value that cannot be monetised, but they can earn fees for viewing. “The objective is to keep jewellery on display for public viewing for a fee. This will increase temples’ earnings,” said Somasundaram PR, managing director, World Gold Council, India.

Estimates suggest temples hold around a fifth of the 25,000 tonnes gold in the country. Some of these temples have been accumulating gold for centuries.

The WGC had in 2014 envisaged a gold tourism circuit for hand-crafted jewellery. However, little progress was made because of lack of guidelines for jewellers and differences over selection of jewellery.

Individual temples can keep ornaments on display under their own surveillance. Security can be controlled by temple trusts.

“The idea is not bad. But infrastructure and security could be big challenges. Some temples can do it,” said Rajesh Mehta, managing director, Rajesh Exports, a jewellery chain.

Business Line |

No golden rule

The escalation of tariff on gold import in the recent past shows the Centre’s commitment towards curbing gold imports, which creates perennial pressure on India’s current account deficit. Will such a policy succeed?

A study for the period April 1996 to March 2014 conducted by us on sensitivity of demand for yellow metal to prices and other factors in India reveals that such tariff increases may have negligible effect.

In 2009-10, the Indian government had increased import duty on all forms of gold imports, but this had minimal impact on buying. In January 2012, import duty on gold was again raised to 2 per cent of value from the earlier flat ₹300/10 gm and subsequently three times in 2013 to 10 per cent.

In 2013, the Reserve Bank of India (RBI) introduced the 80:20 scheme which required gold importers to re-export 20 per cent of the incoming gold and also banned import of gold through star trading houses. But the resultant shortfall in supply had led to a phenomenal rise in the premium on gold in the market and a spike in gold smuggling.

Gold demand in India is, by no means, easy to understand. The massive accumulation of gold for centuries has led to approximately 22,000 tonnes of gold being hoarded by Indian households (FICCI-WGC, 2014). The demand for gold is driven by economic, socio-cultural and psychological factors.

Three forms of consumption

In India almost the entire demand for gold is met by imports. It is imported in three forms, namely powder, semi-manufactured and unwrought forms. Gold jewellery demand is linked to the first two forms whereas the latter represent demand for gold bars. The changing demand pattern is reflected in the spectacular rise in import of gold bars due to its appeal as ‘safe haven’ after mid-2008. On the contrary, jewellery demand dropped in 2008 and 2009 and remained steady afterwards.

There are two important aspects of gold demand which are usually overlooked by policy makers. First, many decisions concerning gold consumption take time to change.

These decisions include long-term commitments such as accumulating wealth for adverse financial situations. Second, there may exist a psychological stock in consumers’ mind. If the stock of gold falls short, s/he would purchase gold. Quite often the policies are based on aggregate gold demand pattern, while different components of gold-demand behave differently.

Our study finds that jewellery demand is more sensitive to price changes than the demand for gold bars. During the study period, the proportion of imports of unwrought form of gold (i.e. bars) had been 82.8 per cent on an average and never fallen below 53.3 per cent, while the other two forms of gold have been 17.2 per cent on an average and never shot up beyond 46.7 per cent.

Therefore the tariff escalation would not reduce import of gold bars substantially, while it could bring down gold jewellery demand more in the long run than in the short run.

In the post-crisis period, gold jewellery demand was subdued following a successive rise in tariff, but the total gold demand remained virtually unaffected due to resilience in demand for bars. Such findings should help policymakers.

live mint |

Niche online retailers turn acquisition targets

Titan Co. Ltd’s move to acquire a majority stake in jewellery start-up CaratLane Trading Pvt. Ltd shows that niche online retailers are becoming attractive acquisition targets for traditional stores that are struggling to adapt to the rise of online shopping.

Titan, the maker of Tanishq jewellery and Titan and Fastrack watches, on Friday said it will buy a majority stake in CaratLane. The investment comes after a string of disappointing quarterly results at Titan. The company is struggling with weak demand for jewellery, which accounts for more than 80% of its business. The deal will also mark the exit of Tiger Global Management, which has so far pumped in more than $50 million in Chennai-based CaratLane since its launch in 2008.

“The acquisition of a majority stake in online jeweller CaratLane gives Titan a strategic advantage of becoming the leader in online and offline sales,” Titan managing director Bhaskar Bhat said in an email. “The combination of the two provides the best platform for omni-channel play in jewellery. CaratLane adds to Titan’s jewellery customer base as it brings along a younger, modern and tech savvy segment. Moreover gifting of jewellery, which is also increasing, would be facilitated by the well-developed online presence of CaratLane.”

Bhat added that online sales of jewellery may account for 3-4% of Titan’s sales in five years from 0.5% now.

“Tanishq gives us the strategic back-end enabling us to scale at an affordable cost while we offer digital experience and capabilities that they currently were planning to build,” said Mithun Sancheti, co-founder and chief executive at CaratLane.

According to a report by consulting firm AT Kearny and lobby group Federation of Indian Chambers of Commerce and Industry, the domestic gems and jewellery market in India was pegged at Rs.2.51 trillion in 2013, poised to cross the Rs.5 trillion mark by 2018.

Apart from CaratLane, there are a few other well-funded start-ups including BlueStone and BlueStone, which counts Tata group chairman emeritus Ratan Tata as an investor, has so far raised at least $31 million from Accel Partners, Kalaari Capital and Saama Capital, among others. Voylla has raised $15 million from Peepul Capital. Bigger online retailers such as Flipkart-Myntra and Amazon India are also rapidly expanding their jewellery businesses.

“More than competition, Titan’s investment in CaratLane is an endorsement of online jewellery as a category. I believe the market is too big for anyone to eat into each other’s share. Though online jewellery is still mostly around new and sleek designs, I believe a lot of purchase of gold and diamond jewellery will happen online as the market matures,” said Arvind Singhal, chief operating officer at BlueStone.

Titan’s buyout of CaratLane is the latest acquisition of a niche online store by an offline rival. In April, Kishore Biyani-led Future Group said it will buy online furniture store FabFurnish from Germany’s Rocket Internet and Kinnevik. Godrej Nature’s Basket acquired, run by Buy Daily Retail Pvt. Ltd, in February last year for an estimated Rs.30-40 crore. The same month Mahindra Retail bought online baby products store BabyOye, owned by Nest Childcare Services Pvt. Ltd and backed by Tiger Global Management, Helion Venture Partners and Accel Partners.

Other large online stores focused on single product categories include lingerie retailers Zivame and PrettySecrets, furniture retailers Pepperfry and Urban Ladder, and eyewear retailer Lenskart.

Despite setting up teams and talking up the potential of so-called omni-channel retail, offline stores are struggling to adapt to e-commerce.

“If they could do it (strengthening online presence without acquiring), they would have done it by now,” said Pinakiranjan Mishra, national leader for retail and consumer products at consulting firm EY.

“One reason to acquire online assets will be to get the people and the team, as it will be difficult for offline businesses to do online with the existing set of people. (But) probably the biggest driver is the price. If you look at the valuations of online businesses, a lot of money has been poured into them and many are not doing well. Offline retailers are hence being able to pick up these companies at very good valuations,” he added.

Business Standard |

Govt floats idea of setting up gold board

The government has floated the idea of a gold board to ensure coordinated policy action.

The finance ministry held a round of discussions last month with stakeholders and sought their views on a National Gold Board, a body on the lines of the Financial Stability and Development Council. A government official said discussions were on and no decision had been taken yet. Sources said a final decision was likely to be announced in the Budget.

The Financial Stability and Development Council comprises all financial market regulators for coordinated oversight. A similar model is being proposed for gold because bullion-related decisions are taken by the Directorate General of Foreign Trade, the Reserve Bank of India and the customs department. Their lack of coordination was felt a couple of years ago when the government restricted gold imports. Two months after the a gold monetisation scheme was launched, it is yet to take off for the want of several clarifications. According to industry executives, banks, hallmarking centres and gold refiners are set to start signing tripartite agreements. Last month’s meeting called by the finance ministry had two major items on the agenda. The first was creation of the National Gold Board and the second was setting up a gold exchange, which the India Bullion and Jewellers Association and BSE have proposed to do.

The meeting was attended by MMTC, the India Bullion and Jewellers Association, the Gems and Jewellery Federation, the World Gold Council, the Federation of Indian Chambers of Commerce and Industry, and the Indian Institute of Management (Ahmedabad).

FICCI-WGC in their report on a gold policy two years ago had proposed setting up of a gold board or bullion corporation to manage imports, encourage exports and drive development of infrastructure.

Sanjeev Agrawal, a core member of the FICCI gems and jewellery committee and chief executive officer of Gitanjali Export Corporation, said, “The gold board can help streamline implementation of policies and coordination among various decision-making bodies. There is also the need to make gold imports and sale of domestically refined gold transparent.”

He suggested banks importing gold should sell it on the gold exchange and locally refined bullion should also be sold on the bourse within six days of refining.

“This will reduce unwanted imports as idle gold can be lent.”

Business Standard |

Govt wants India gold exchange

India might see its first gold exchange soon. The trading platform would be made available for all types of bullion dealers, jewellers, bullion refineries, individuals, and even temple trusts. This could be seen as a significant move to discover standard gold prices in the country.

The proposal to set up the gold exchange was made by Shaktikanta Das, secretary, department of economic affairs in the finance ministry, on Friday when he interacted with jewellers and stakeholders in the bullion sector during a meeting of jewellers and bullion sector stakeholders. He has asked industry to come out with a concrete proposal for this. In major gold markets like Turkey and China, such gold exchanges have played a major role in developing the bullion sector.

Speaking at the Third India International Bullion Summit here on Tuesday, Das said, “Can we think of a gold exchange where there can be transparent trading? Those who have surplus gold can sell it to those in its requirement. There is a jeweller who needs gold temporarily. So instead of its import, he can purchase it locally.”

While the government has not spelt out its mind on this, experts believe it will most likely be an electronic platform for giving and taking physical delivery, like a spot exchange where agri-commodities are traded but under strict regulations.

The proposal for such an exchange was made by FICCI and World Gold Council in December 2013. The report prepared by them said, “The buying or selling of gold in India takes place through many channels, formal and informal. Prices vary across both channels and regions and arbitrage is high. A dedicated institution like a gold exchange focused on gold trading will create a national pricing structure for gold and create required infrastructure including storage.”

Shanghai Gold Exchange was set up in 2002. It is the world’s largest and the gold market in China is regulated by it. Istanbul Gold Exchange in Turkey has helped improve gold infrastructure significantly there. Turkey has set an example for successful gold monetisation. Somasundaram P R, India managing director, WGC, said, “Discussion in India on how gold can help the economy is healthy and idea of gold exchange should be examined by the sector as it will improve price transparency and improve gold-related infrastructure in India and bring over-the-counter trades on the exchange’s platform.” Mohit Kamboj, president of India Bullion and Jewellers’ Association had preferred setting up a gold bank dedicated to the needs of the bullion sector. But, the government has not favoured this idea. “Gold exchange can be set up by government-owned banks or institutions or the RBI may allow private sector shareholders, subject to regulations which will be prepared. As gold refining is increasing in the country, with 30 per cent of imported gold being refined in India, the government wants to promote export of gold and a gold exchange would be a platform for buying gold which can be exported and it can also declare gold refined in India as good delivery,” said an observer.

The Financial Express |

Investment: Golden voyage

Soon individuals and temple trusts can deposit gold with banks and earn interest in return. The finance ministry’s gold monetisation scheme enables individuals to park a minimum 30 gram of the metal with banks for at least a year and earn tax-free interest.

Customers can open a gold savings account with a bank and earn interest on gold assets like bullion or jewellery. Banks will melt the gold and get a value from BIS-approved hallmarking centres. Both principal and interest payment to customers will be valued in gold and the interest on the gold deposits will be decided by the bank. Depositor’s preference to either redeem the interest in gold or cash will have to be stated at the time of deposit.

The purity of the gold will be tested at the hallmarking centres in the country. An XRF machine-test will be conducted to value the amount of pure gold. If a customer does not agree to the machine test, he can take back the jewellery. After the consent of the customer is taken, the ornament shall be sent for melting and the net weight will be calculated. If the customer is not satisfied with the value after the fire assay test, he can take back the melted gold in the form of gold bars after paying a nominal fee to the centre. If the customer agrees to deposit the gold, he will be given a certificate by the collection centre certifying the amount and purity of the deposited gold.

The tenure of the deposit will be minimum one year and can be extended for multiple years. Like a fixed deposit, breaking the lock-in period will be allowed. The scheme will have tax exemption from capital gains, wealth tax and income tax. Initially, the scheme will be launched in selected cities and extended to other cities later.

Experts say the move will attract a part of the 75-tonne scrap gold that comes into the market from household every year. The finance minister in the Budget speech had said the stock of gold in India was estimated at over 20,000 tonne, but these were neither traded nor monetised. For the government, the scheme will curb rising gold imports.
Higher gold imports — $56.5 and $53.8 billion in FY12 and FY13, respectively — resulted in a record current account deficit of 4.2% and 4.8% of the GDP in these two years. India is one of the largest consumers of gold and imports as much as 800-900 tonne every year.

The scheme’s success will depend on the attractiveness of rates offered by banks. A similar scheme introduced 16 years ago failed as it could mobilise only 15 tonne gold. The minimum deposit was 500 gram and offered a mere 0.75% on a three-year deposit. Retail investors will also need a guarantee that the tax officer will not come calling on the depositor. For banks, the attractiveness of the new scheme will depend on whether the deposit will count towards cash reserve ratio and statutory liquidity ratio requirements. If they are allowed to do so, it could enable banks to release funds for lending in the economy.

Analysts say while the minimum quantity of gold to be deposited, set at 30 gram, is better than the 500 gram offered earlier, it could have been set at 10 gram to lure people to try the scheme and gradually increase the minimum quantity over years as people become more comfortable with the process. Fire assaying charges should be uniform across the country and the charges must be told upfront. Also, the depositor should have the flexibility to decide on maturity depending on his needs at that point of redemption.

While gold has always been an integral part of the economy and is considered a hedge against inflation, sentimental attachment to gold does not mean household will refuse to explore the potential for monetisation of gold assets. A FICCI-World Gold Council study shows consumers are willing to consider interest-bearing gold-based investment products, even if the gold received at the end of the tenure is different from what they had deposited. Nearly two-thirds respondents said they would be happy to receive different gold from their initial deposit, while 62% said they would prefer cash or Indian branded gold coins at the maturity. Only 8% said they would prefer to have their original gold returned to them.

In the same survey, over a third of respondents said they are willing to deposit 25-30% of gold they have, while 3% would deposit between 75% and 100%. The survey found that respondents would prefer medium-term investment products that accept either fixed or ad-hoc payments and can be redeemed as cash. Analysts say interest rates of 4-5% will pull investors into the gold monetisation scheme. If the scheme works, it could increase the recycling of domestic gold, monetise some physical savings of households and reduce dependence on gold imports.

Business Line |

Federation for gems & jewellery may become apex trade body, influence policy-making

All India Gems and Jewellery Trade Federation (GJF), a national body to promote gems and jewellery trade, expects to become a ‘Council’ with a senior government official heading the organisation.

“The Union Commerce Ministry has forwarded a recommendation to the Finance Ministry for converting the federation into an apex trade body with government representatives, which will give the trade a shot in the arm,” according to N Ananthapadmanabhan, Regional Chairman of GJF, and Managing Director of jewellery retail chain NAC Jewellers. He said once the Federation becomes a Council, the trade body will have a reasonable influence in policy-making. The Indian jewellery business accounts for 6 to 7 per cent of the country’s GDP, and 14 per cent of its over all export.

Primary agenda

According to him, GJF’s primary agenda is to get the customs duty on gold import reduced to 2 per cent or less from the current 10 per cent.

“We have put that on top of our budget wish list, as 10 per cent duty is taking its toll on the domestic trade, besides indirectly encouraging gold smuggling into the country,” he said.

The Federation of Indian Chambers of Commerce and Industry (FICCI) says, in a press release, the key demands of the industry include reinstatement of Gold Metal Loan facility for long-term thereby bringing the interest costs to the level that were prevalent prior to 2013; customs duty to be reduced to less than 2 per cent level to completely eliminate smuggling; to set-up world class ‘shared’ jewellery manufacturing hubs on PPP basis with the best equipment being made available to the karigars & MSME units on rental basis

“The biggest challenge the industry faces is the withdrawal of the Gold Metal Loan facility (GML), in May 2013”, says Mehul Choksi, Chairman of the FICCI GJC Committee in the release. “This move has virtually crippled the industry, leading to huge losses and making Indian exports un-competitive in the global market. This can be easily resolved if the GML facility is reinstated wherein bullion can be borrowed at highly competitive interest rates lower than the US$ denominated rates, in the international markets for tenor of one year and above”, he added.

Priority sector

Among its other suggestions were US dollar denominated loans for exports by the gems and jewellery sector considered as ‘priority sector’ lending; and buyer credit period to be enhanced from 90 to 365 days to allow the diamond sector to increase its export of polished diamonds and get a better price realisation.

Financial Chronicle |

Indians not averse to monetising gold holdings

The affinity Indians have towards gold is well-known. While they buy gold both as investment or adornment, very few are willing to part with it even in bad times. The country holds 22,000 tonnes of above-the-ground gold stocks and buys around 850 tonnes every year, but sells very less of its holdings. The efforts to monetise the gold stocks in the past did not see much success because of the sentimental attachment to the metal. However, a new survey by World Gold Council (WGC) and Federation of Indian Chambers of Commerce and Industry (FICCI) shows that Indians too are willing to monetise gold provided they are right products in the market.

The survey, which took a sample size of 5,000 respondents across India, showed that consumers are willing to consider interest-bearing gold-based investment products, even if the gold they receive at the end of the tenure is different from what they deposited. More than 49 per cent of respondents said they would be willing to deposit their gold coins and bullion to earn interest.

Moreover, 72 per cent said they were happy to receive different gold from their initial deposit, while 62 per cent said they would prefer cash or India branded gold coins at maturity. Only eight per cent said they would prefer to have their original gold returned to them.

More than a third of respondents would be willing to deposit 25-50 per cent of gold in their possession while three per cent would deposit between 75 per cent and 100 per cent of their gold.

“Demand for gold in India is interwoven with culture, tradition, the desire for beauty and financial protection. It would be futile to control gold demand knowing how much the passion for gold drives savings itself. We believe the solution to meeting India’s enduring appetite for gold lies not in restricting the import of gold, but in making better use of the gold that is already in the country, making it a productive fungible asset class like any other financial savings,” Somasundaram PR, managing director, India, World Gold Council, said.

“The need of the hour is to re-engage all stakeholders to develop a coherent long-term ‘India gold policy’ that results in a robust infrastructure for gold, drives standardisation and transparency, encourages gold-based investment products and supports the economic priorities of the country. With India at the centre of the global gold eco-system, it is imperative that we find ways of mobilising and monetising the 22,000 tonnes of gold in Indian households to fund economic growth,” he said.

While ranking the assets the respondents would liquidate in a crisis, bank deposits came first. However, most respondents cited gold jewellery, which is one of the largest stores of wealth, as their second choice for liquidation. Many respondents said large items of jewellery would be sold first, because most ancestral jewellery is old-fashioned and can no longer be worn. This suggests that attachment to such pieces may not be as sticky as is widely believed.

However, the large stocks of Indian gold are still not monetised. There are two products that currently help monetisation of gold to some extent – gold loans and gold deposit schemes. Gold savings account is a potential product that has been successful in many other economies.

Using gold as collateral for loans is an age-old product in India. Loans, which were mainly offered by pawnbrokers and informal agents, is gradually getting organised with non-banking financial companies and banks getting into gold loans. Gold loans have helped customers use their gold assets for economic growth like purchasing agricultural equipment and household goods, setting up new businesses or spending for education. The organised gold loan industry is valued at more than Rs 1 lakh crore.

Gold deposit scheme (GDS) was introduced in 1999. The scheme allowed partial withdrawal of deposited gold and premature payment was allowed in the form of gold or cash and cash loan against the deposited gold. It also offered exemption from wealth tax and capital gains tax.

In 2013, the Reserve Bank of India allowed banks to launch the scheme without prior approval from it. Mutual funds also were allowed to participate. But the response to the scheme has been far from desirable. According to some estimates, the scheme was able to collect only 15 tonnes of gold.

First of all, very few banks offer the scheme and those who offer have set the minimum quantum for deposit at anywhere between 500 gm to one kg of gold, making the scheme more suitable for temples and institutions than individuals. The product is also not widely marketed. Banks also do not have the facility to quickly assay the purity of the gold.

WGC finds gold savings accounts more suitable for the Indian market. The product encourages consumers to move away from purchasing physical gold and instead saving the same amount in a bank account. This helps the money become part of the financial system. For this, Indian banks should be allowed to use gold as part of their liquidity reserves. This would incentivise them to introduce gold-based savings products.

Under the savings account, the bank should credit equivalent grams of gold against the cash in the account. There should be flexibility in terms of frequency and amount of cash deposits. The savings could be withdrawn as gold or cash at any point of time.

Apart from savings account, the government and the RBI can also look at different products to monetise gold. Simple bank savings products could allow customers to convert physical gold into a gold account, withdrawing either cash or gold in return.

There should also be investment products that would allow customers to convert physical gold into a bank account and take a position on the gold price. Customers with restricted income, such as retirees, can pay interest on loans as gold coins. Education loans can be offered against gold and house owners can provide gold instead of rupees as mortgage equity.

“Through this report we have re-examined many assumptions around gold and have also suggested ways of monetising this asset. We hope that this report will form the basis for formulating a comprehensive public policy on gold,” A Didar Singh, secretary general of FICCI, said.

All Indian Gems and Jewellery Trade Federation too has been making recommendations to the government seeking efforts to monetise gold stocks. “We have suggested that certain licenced jewellers be allowed to attract gold from consumers and deposit the same with scheduled banks. This will be easier to unlock the gold stocks rather than setting up a bullion corporation of getting banks to do this. They do not have the infrastructure of jewellers,” said Bachhraj Bamalwa, former chairman of the federation.

As per the Rashtra Suvarna Nivesh Scheme, proposed by GJF, gold deposits from individuals and institutions will be collected through the jewellery outlets. The industry body will be responsible for refining the gold and handing it over to banks as bars. GJF has tied up with Nova Scotia Bank, a major supplier of gold to the industry, for this purpose. The bank in turn will supply this gold to the jewellers and bullion traders.

The scheme has proposed to offer 2.5 to three per cent interest on the deposits, which is slightly higher than the interest offered by the banks. Moreover, the interest income from the deposits will be exempted from income tax, capital gains tax and wealth tax. At the end of the tenure the depositor will receive gold in the form of coin or bar.

“As far a customer is concerned, he would prefer to deposit jewellery with his trusted jeweller than a bank. We had also proposed that the transaction would happen through demat account and RBI would be able to monitor and control the scheme. This will also give adequate protection to the consumer,” said Haresh Soni, chairman of GJF.

There is, however, an element of risk in terms of the quality of gold, which will be returned to the customer when the deposit period is over or when a depositor wants a premature withdrawal from the scheme. The gold coin or bar returned may be certified but there is very little that customers can do to verify the authenticity of the certification. Although it is an unlikely event, but geopolitical crises in economies or currencies can make government agencies defer the redemptions or premature withdrawals from the gold monetisation schemes. |

Gems and jewellery sector shocked with interim Budget

The All India Gems and Jewellery Trade Federation (GJF), the national trade federation for the promotion and growth of trade in Gems and Jewellery (G&J) Industry across India, has expressed deep disappointment and shock at the Interim Budget proposals that are anti jewellery sector, depriving livelihood of millions of people engaged in the sector.

“It is anti-people budget impacting over three crores people as the Finance Minister ignores the plight of jewellery artisans and craftsmen”, said Mr. Haresh Soni, Chairman, GJF. “The entire Gems & Jewellery Industry is deeply disappointed and shocked at the insensitive treatment meted out to it by the Government. The Government seems to be inconsiderate to the plight of lakhs of families of goldsmiths and craftsmen, who are suffering due to lack of job work and thereby threatening their livelihood. The Government is also turning a blind eye to the increasing instances of gold smuggling that is not only creating a parallel economy but also threatening the security of the country due to rise in anti-social activities”, Mr Soni said. Even Gjf suggestions to control CAD thrown out of window as it demanded that the 80:20 must be withdrawn and duty must be brought down to 2%. Governmeant now should roll back the restricted policy as the Current Account Deficit has reduced substantially. Such policy reversal would also curve the growing black marketing activities in the trade.”

GJF has reiterated that the Government’s recent policies such as 80:20 scheme has resulted in high premium and monopolized business environment, destroying the organized G&J industry as well as lead to unemployment and starvation amongst the workforce.

GJF feels that the G&J industry is being discriminated against because excise duty relief has been granted to luxury items such as large/ mid-sized cars & SUVs under the pretext that the automobile industry is registering negative growth but the same was not extended to the G&J industry. The domestic gems and jewellery industry, which employs 40 lakh people, had a market size of Rs. 251,000 crore in 2013, with a potential to grow to Rs. 500,000-530,000 crore by 2018 (FICCI-AT Kearney Report 2013). But its growth has been curbed after the ‘Gold Control Raj’ was imposed in the country in August 2013 and after the Government sought to restrict gold imports under 80:20 scheme.

Reiterating that gold cannot be considered as the only factor responsible for the growing current account deficit, GJF said that the Government should recognize people’s sentiments to consider gold jewellery as the best social security and also preserve the centuries old jewellery design legacy of India. If India’s artisans, craftsmen and goldsmiths don’t survive, then the country’s centuries old heritage of jewellery making will die a natural death and will be lost forever!

“We urge the Government to keep import duties on gold low to eliminate smuggling; and immediately remove the 80:20 Rule while allowing consignment gold imports to ensure fair open market controlled business. We urge the Government to keep import duties on ready finished imports moderately high to protect Indian industry, still not banning imports. Competition from overseas is important for keeping domestic jewellary manufacturing industry competitive in design and quality.” Mr Soni said.

GJF also expressed disappointment that while the Union Finance Minister spoke about the fall in manufacturing investment worrying and attracting capital investment, the manufacturing facilities in the G&J industry were lying unutilized due to Government policies. The Indian G&J sector has not attracted any national or international investment in jewellery manufacturing and the technology has not been upgraded to keep pace with global tools & techniques.

On one hand, the Government was encouraging the National Skills Development programme and sector mentor counsel by labor employment department, but on the other hand, its policies resulted in driving lakhs of jobless artisans and craftsmen towards suicide. The Government was promoting entrepreneurship but discouraging it in the G&J sector, as per the GJF. The Government seems to be controlling fiscal deficit at the cost of sacrificing the indigenous G&J industry.

Business Standard |

Gold jewellery exports to halve on choked supply of inputs

Gold jewellery exports are set to halve this financial year on shortage of the metal.

After a steep fall in the first half of the financial year, the decline was arrested in October on expectations of robust sales in the US, the world’s largest consumer of ornaments with a 38 per cent global market share. Hopes were pinned on Christmas, New Year, Mother’s Day and a recovery in the US economy. The ensuing US festive season (one-and-a-half months) is significant for jewellers across the world as it accounts for 40 per cent of sales.

Shipments’ value in the first seven months of the financial year recorded a decline of 50.8 per cent to Rs 23,545.6 crore compared to Rs 47,867.3 crore a year ago.

In dollar terms, however, the decline was sharper by 54.7 per cent to $3,951.4 million between April-October 2013 as compared to $8,727.46 million a year ago.

“Exports may decline 50 per cent this year. The falling trend will continue. With inadequate recovery from domestic sources through melting of used jewellery, jewellers are suffering a shortage of at least 50 per cent of the raw material,” said Mehul Choksi, chairman and managing director, Gitanjali Group, on the sidelines of the FICCI-UBM Gems & Jewellery Conclave, an event coinciding with the Mumbai Jewellery & Gem Fair, Wednesday to Friday.

The government has restricted import of gold to control the burgeoning the current account gap by introducing a 20:80 formula, under which a minimum 20 per cent gold arrived should be mandatorily supplied to exporters. The government also raised import duty on the metal to 10 per cent. Despite all these, consumers’ appetite has not waned.

“There is a genuine concern for exporters. Unless the current account gap slips to 3.6-3.8 per cent, easing of gold import rules looks impossible. Meanwhile, the government can explore processes to make gold available for exporters,” said Naina Lal Kidwai, president, FICCI.

In the meantime, Dubai, a major trading centre, has achieved $39 billion of gold trading this year, similar to the figure for the full year of 2011. China has emerged as a large manufacturing centre, a status India was enjoying.

“So, China may gulp us if gold is adequately not supplied,” said Choksi. Meanwhile, the Gem & Jewellery Export Promotion Council is in talks with the ministry of economic affairs for replenishment of 300 kg of gold with tax benefits for exporters who executed orders between July 22 and September 27, the period which saw extremely low import.

“Exporters honoured their commitments to keep future business afloat by paying a high import duty. Hence, they be rewarded through at least replenishing the quantity,” said Vice-Chairman Pankaj Parekh.

Business Standard |

Domestic jewellery industry to double in five years : Report

The domestic gems and jewellery industry is likely to double in the next five years on growing demand of bullion for investment and ornaments for household consumption and gifting purposes. A study titled “All that glitters is gold : India Jewellery Review 2013” conducted by the global consultancy firm A T Kearney, forecasts India’s gems and jewellery market to achieve the size of Rs 500,000 – 530,000 crore by 2018 from the level of 251,000 crore in 2013. Industry body FICCI associated with its publication.

In 2012-13, the industry drove jewellery exporters to the tune of Rs 227,000 crore, outperforming textiles and apparels by a huge margin of 25%. The industry also drove value addition of more than Rs 99,000 crore which is comparable to several large industries such as apparel manufacturing.

The investment demand in the form of bars and coins could potentially reach Rs 180,000 – 190,000 crore by 2018 from the level of Rs 85,000 crore in 2011-12. This assumes that the current macroeconomic environment and industry ecosystem persists. The future growth in the domestic gems and jewellery market is thus expected to be impacted by the low-growth outlook for the Indian economy. It also assumes that the current import restrictions will be removed and there will not be any limiting effect of raw material supply, the study finds.

The industry plays a significant role in the economy through its contribution to employment generation, exports and value additions. However, it caters to two very distinct demand – consumption and investment – with very different needs and challenges.

Some of these challenges including high import dependence and limited domestic recycling, limited financing options for the industry and over regulated consumption industry and under regulated investment industry etc can impact the industry’s performance and contribution to the economy if they are not addressed, it added.

Business Standard |

Domestic jewellery industry to double in five years : Report

The domestic gems and jewellery industry is likely to double in the next five years on growing demand of bullion for investment and ornaments for household consumption and gifting purposes. A study titled “All that glitters is gold : India Jewellery Review 2013” conducted by the global consultancy firm A T Kearney, forecasts India’s gems and jewellery market to achieve the size of Rs 500,000 – 530,000 crore by 2018 from the level of 251,000 crore in 2013. Industry body FICCI associated with its publication.

In 2012-13, the industry drove jewellery exporters to the tune of Rs 227,000 crore, outperforming textiles and apparels by a huge margin of 25%. The industry also drove value addition of more than Rs 99,000 crore which is comparable to several large industries such as apparel manufacturing.

The investment demand in the form of bars and coins could potentially reach Rs 180,000 – 190,000 crore by 2018 from the level of Rs 85,000 crore in 2011-12. This assumes that the current macroeconomic environment and industry ecosystem persists. The future growth in the domestic gems and jewellery market is thus expected to be impacted by the low-growth outlook for the Indian economy. It also assumes that the current import restrictions will be removed and there will not be any limiting effect of raw material supply, the study finds.

The industry plays a significant role in the economy through its contribution to employment generation, exports and value additions. However, it caters to two very distinct demand – consumption and investment – with very different needs and challenges.

Some of these challenges including high import dependence and limited domestic recycling, limited financing options for the industry and over regulated consumption industry and under regulated investment industry etc can impact the industry’s performance and contribution to the economy if they are not addressed, it added.

The Economic Times |

Gold jewellery exports likely to dip by 50% in FY14: Industry

Gold jewellery exports may decline by about 50 per cent in this financial year from last year after government restrictions reduced the availability of raw material, Gitanjali Gems Chairman and Managing Director Mehul Choksi said today.

Gold jewellery exports were Rs 1,293 crore in 2012-13, according to the Gems and Jewellery Export Promotion Council.

"There are less stocks available in the market and the premium is as high as 8-10 per cent in the domestic market. This will give rise to smuggling. Very little gold is available for exports," Choksi said.

"Exports have declined by 55 per cent since the last seven months. We are expecting an overall about 50 per cent decline in gold jewellery exports this financial year," Choksi told reporters on the sidelines of the Mumbai Jewellery and Gems Fair 2013 organised by UBM India and FICCI.

He said if raw material availability remains low, it will give rise to smuggling. During the festive season, industry's sales fell about 50 per cent from the previous year period.

"There is a need for conducive government policies for the sector to perform well. If the gems and jewellery sector grows to its full potential, it can easily employ another 1 million people," he added.

The sector currently employs about 2.5 million people. Choksi said Indian demand for gold jewellery is shifting to the Middle East due to competitive prices.

"Middle East countries are taking advantage of the India situation as Indians are going to those countries to buy gold jewellery," he added.

Gitanjali Export Corporation CEO Sanjeev Agarwal said local gold prices are high, even as prices overseas drop. In Dubai, gold is 21 per cent cheaper than in India, making the city an attractive destination to buy the metal, he added.

"There are reports that about half tonne of gold is coming into India from Dubai. The Middle Eastern region, along with China and Thailand, are also emerging as alternative manufacturing bases. Many big players have already shifted their bases to these locations to feed the export market," he said.

All India Gems and Jewellery Trade Federation (GJF) Chairman Haresh Soni said NRIs are also buying from outside India.

"The domestic market is affected by the lower availability of stocks. Even NRI demand is getting diverted to other countries like the neighbouring countries and Dubai," he added.

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