7. according to industry estimates. (Report on the Indian Gems and Jewellery sector prepared by KPMG for IBEFwww.ibef.org.).

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1 LITERATURE REVIEW Gems and jewellery sector is an integral part of the nation s economy with its huge potential. A report released by the Gem & Jewellery Export Promotion Council and KPMG states that the global Jewellery industry has the potential to grow to USD 280 billion by In India, the gems and jewellery industry has been growing at a good pace and it accounted for 14% of India s total merchandise exports in is also world s largest diamond processing (cutting and polishing) country with an 80 per cent share in world market. The most significant aspect contributing towards the growth of this sector is India s favorable trade policies.(ficci Ladies Organisation Survey 2012). 6. India has established itself as the world s largest manufacturing sector for cut and polished diamonds, contributing nearly 60% of the world s supply in terms of value and 80% in terms of volume. The industry has registered a remarkable growth over the last four decades with exports growing from $28mn in to $42.84bn in In this study the authors have attempted to illustrate the export figures of Gems and Jewellery during the period to The study also highlights the major export destinations of Indian Gems and Jewellery. The information for the research enquiry has been collected from secondary sources. The presentation of the export figures of Gems and Jewellery has been depicted in the form of tables. The present study also provides some perspectives of the industry as evident in India. (Purnashree Das, Saurabhi Borthakur 2013). The Indian gems and jewellery industry has made rapid strides in design, powered by a new generation of young, professionally trained, technology driven designers. Many of India's jewellery manufacturing facilities are equipped with the latest CAD / CAM and other advanced design systems. Technology solutions are also available for production control, supply chain and inventory management in the jewellery industry.

2 The Special Economic Zones and Gems and Jewellery Parks developed in various states offer technology-enabled environments that are conductive to growth and quality production. The gems and jewellery industry in India is a good blend of modern manufacturing and design techniques with the traditional skills of the Indian artisan. The Indian industry is also compliant with international norms such as the Kimberly Process and the Patriot Act. With well-established capabilities across the value chain, India is an attractive potential market in the gems and jewellery sector. (Report on the Indian Gems and Jewellery sector prepared by KPMG for IBEF The future of the industry is quite promising. More and more buyers across the world are turning to India as their preferred source for quality jewellery. The Gems and Jewellery Export Promotion Council (GJEPC) is looking at exploring new markets, such as Latin American countries. The industry also plans to make India a trading centre for cut and polished diamonds, and is closely working with the government of India in this regard. The long term prospects looks good with jewellery exports expected to touch $16 billion in according to industry estimates. (Report on the Indian Gems and Jewellery sector prepared by KPMG for IBEFwww.ibef.org.). India's gems and jewellery exports fell more than 9 percent to $39.03 billion for the 2012/13 year ended on March 31 from the previous year, hurt by weak demand from the developed world, Gems and Jewellery Export Promotion Council said on Tuesday. "The outlook for looks positive with an estimated growth of percent. The U.S. and Japanese jewellery markets will bounce back with an estimated 5 percent growth, while China will remain stable at 10 percent growth," said Vipul Shah, chairman of the council.

3 Shipment of gems and jewellery makes up about 14 percent of India's total exports, and the sector employs about 3.4 million workers, with the Middle East taking most of the market. (Global Gems and Jewellery Market Forecast & Opportunities, 2018). U.S. currently accounts for the largest jewellery market in the world with more than half of its market being dominated by the diamond jewellery segment. Regionally, Asia Pacific holds the world s largest jewellery market and is being driven largely by China and India which are the two largest consumers of gold in the world and also hold majority of the processing and manufacturing industry for jewellery. The global market is now witnessing an improvement in the jewellery sales overall and with the rising disposable incomes and changing lifestyles; the global jewellery market is set to experience a strong growth over the coming years. However, the market is still challenged by the large unorganized markets, particularly in the developing economies. According to Global Gems and Jewellery Market Forecast & Opportunities, 2018 the jewellery market worldwide has grown steadily over the last few years while it slowed down during the global economic recession but is likely to grow at a faster rate compared to the growth rate of past three years. The value of world s jewellery market is expected to grow at the CAGR of over 5% over the next five years. The global market for jewellery is expected to surpass USD 257 Billion revenues by The market is predominantly driven by the Asia Pacific and the Middle Eastern markets, but U.S. continues to remain the dominant player in the industry. (Global Gems and Jewellery Market Forecast & Opportunities, 2018) ( 8. The global economic turmoil erupted from the US Sub-prime mortgage market in August 2007and engulfed almost the entire world economy with its negative repercussions. India also felt tremors of the same due to reversal of capital flows, slowdown in demand -externals well as internal, narrowing profit margins and

4 shrinking growth in all the sectors of our economy. Overall annual economic growth rate receded along with fall in merchandise exports, but Indian Gems & Jewellery industry kept scintillating even in this global meltdown. The present paper makes an attempt to analyze Gems & Jewellery industry during pre-recession and post-recession period by studying the performance of five organizations with respect to assessing the impact of recession on their sales, expenses and profitability. The reasons for their sustenance have been explored and certain effective measures to enhance their potential and competitiveness have also been suggested. (Anju Batra Dr. N.K. Gupta) (Scintillating Gems And Jewellery Under Global Meltdown- A Study On Indian Gems And Jewellery Industry2011). The industry, however, is characterized by a significantly large informal sector, with micro and small enterprises pursuing highly labour-intensive operations. While the industry has been highly working capital and raw material dependent, gold price volatility and export fluctuations deeply affect business. The informal nature of the production and labour process, thus, cares least for labour, environmental and social standards. The concern for standards for raw material (gold is purchased from counties like Switzerland, South Africa, Australia, and UAE, and rough diamonds are sourced from Belgium, UK, Israel and UAE) remaining strong as much for finished products sold worldwide, the lead-firms have been most unconcerned about standards applicable to labour and environment in the Indian context. In fact, while the national government has moved ahead with its own hallmarking; for gold and diamond jewellery, precious little has happened to address the informality that plagues the sector. The paper enquires into the double standards in an otherwise standard-driven globally linked industry. ( Indian government has been taking initiative in the development of this industry. At present, the Indian government allows 100% foreign direct investment (FDI) in gems

5 and jewellery through the automatic route. Following measures were taken by the government in the Union 9. Budget : Customs Duty on Gold and Silver Customs duty on serially numbered gold bars (other than tola bars) and gold coins to be increased from Rs 100 per 10 gram to Rs 200 per 10 gram. Customs duty on other forms of gold to be increased from Rs 250 per 10 gram to Rs 500 per 10 gram. Central Excise Duty: Excise duty on branded articles of jewellery to be reduced from 2% to nil. ( Export Facilitation Measures by the Ministry of Commerce and Industry: In February 2009, the gems and jewellery sector got a special boost from the Ministry of Commerce with the following announcements: Gems and jewellery, diamonds and precious metals were given a special boost by the Ministry of Commerce and Industry, the Export Promotion Council for Gems and Jewellery and Star Trading Houses (in the gems and jewellery sector). Besides, the Diamond India Ltd, MSTC Ltd and STCL Ltd were added under the list of nominated agencies notified under Para 4 A.4 of foreign trade policy for the import of precious metals. Foreign Trade Policy : Foreign Trade Policy has identified the gems and jewellery sector as a thrust area with prospects for export expansion and employment generation. ( Kishore Sharma (1960) Factors determining India's export performance, says Export growth in India has been much faster than GDP growth over the past few decades. Several factors appear to have contributed to this phenomenon including foreign direct investment (FDI).However, despite increasing inflows of FDI especially in recent years there has not been any attempt to assess its contribution to India's export performance one of the channels through which FDI influences growth. Using annual data for this paper investigates the determinants of India's export performance in a

6 simultaneous equation framework. Results suggest that the real appreciation of the rupee adversely affects India's export performance. Export supply is positively related to the domestic relative price of exports while the higher domestic demand reduces export supply. Foreign investment appears to have statistically no significant impact on export performance although its coefficient has a positive sign. (Kishore sharma (1960). Rashmi Bang (1997) The Export-diversifying Impact of Japanese and US Foreign Direct Investments in the Indian Manufacturing Sector, explains the export-diversifying impact of 10. foreign direct investment (FDI) in a developing country. FDI may lead to export diversification in the host country if it positively affects the export intensity of industries that have a low share in world exports. Indirectly, FDI may encourage export diversification through spillover effects: that is, the presence of FDI in an industry may increase the export intensity of domestic firms. The empirical results for the Indian economy in the post-liberalization period show that FDI from the US has led to diversification of India's exports, both directly and indirectly. However, Japanese FDI has had no significant impact on India's exports. (Rashmi Bang (1997). India s five year foreign trade policy ( ) has provided favorable for boosting export of different types of goods like leather products, gems and jewellery, horticulture products etc. Government has planned to establish diamond bourses to make a India diamond international trading hub. Duty drawback will be allowed on export of gold jewellery to promote export of gems and jewellery. Inspite of economic slowdown on account of world recession, India s export has not been badly affected as compared to western countries of the world. Looking at present scenario potential for India s export trade is wide but at the same time plenty of challenges are ahead to

7 become one of the major global player in the international trade. (Dr. Roshankumar M. Bhigania 2012). Gems and jewellery is one of the India s leading foreign exchange earning sector. Its contribution to India s total merchandise export accounts to 16.7%. this sector has consistently shown satisfactory performance expect in the year where the growth stand as at 25.57% which is all most half of the preceding year which stood at 50.96%. Still India exports 95% of the world diamonds and can establish itself as a giant global exporter in the world market, if government reduce the custom duty s and liberalize export procedures. Beside this government has to play an important role in education domestic exporter about export procedures and encouraging them to export their products in global market. (Chanchala Jain (2012). Foreign trade policy framed by the government of India with respect to export and import has its own pro s and con s. India s international trade has witnessed problems in the area of export as well as import in different dimensions such as domestic problems, financial problems, management problems and problems related to government services. Exporter as 11. well as importer have faced problems in this regards with different magnitude for instance exporters of gems and jewellery have face maximum problem in the dimension of management related issues and minimum problems in the dimensions of financial issues. Similarly importers of gems, jewellery and precious stones have faced maximum problems in the dimensions of government and management services and minimum problems in the dimensions of domestic services (issues). By and large FTP adopted by India has been successful in boosting the export but at the same time created problems for importer. Government of India can double its exports in international market and can increase international competitiveness of Indian exporters by liberalizing lengthy complicated and time consuming EXIM procedures and making it

8 more simplified and export friendly through extensive use of automation and information technology. (Shinde Govind P. (2012). India is one of the major and global player in the export of gems and jewellery market. Segments of gems and jewellery, diamonds, precious stones and platinum is undergoing tremendous transformation on account of rise in cost of raw material, squeezing of profit margin economic slowdown, technological up-gradation, hall marking of jewellery, improvement in labour skills and change in designs and concepts. It has created a long lasting impact on Indian gems and jewellery industries in dual aspect, favorably as well as unfavorably. India can strengthen its future prospect in this segment if it can successfully cope with application of fast changing advance technology, challenges of raw material sourcing, innovation in product development and designs, technological infusion at processing state and so on. ( Dr. P.P. Chandra Bose (2011). Study reveals Banjarese culture has influenced the Islamic entrepreneurship to a great extent especially in the area of gem and jewellery related to small and medium enterprise (SME s). strong belief in banjarese culture will not directly improve the performance of Islamic entrepreneurship but it has indirect impact on its entrepreneurship strategy. (Hastin Umi Anisah (2008). Development of Special Economic Zones and electronic processing zones has played an important role in boosting of India s export trade with reference to five main such as gems and jewellery, chemicals and pharmaceuticals, trading and services, computer / electronic software and electronic hardware. SEZ s EPZ s have produced a remarkable results in terms 12. of export on account of abundant fiscal and non fiscal incentives offered by government. But India s export future prospect can depend upon only on this product and it has ability to withstand futuristic market risk is a big challenge and question

9 mark. So SEZ s and EPZ s has to go a long way to produce extra ordinary export performance. (Pramod P. Lonarkar (2012). Even though Thailand is the third largest exporting country in the sector of fine gold jewellery, but in recent times one cannot over look the fact country is losing its market share steadily year after year on account of rise in labour cost, decline in competitive advantage, unstable political conditions, old and outdated designs, language barriers and networking problems. But still Thailand can regain its lost status and performance by understanding customer preferences, introducing product innovations, product development, brand building, undertaking more risk and developing synergistic relationship through inter and intra industrial linkages. ( Kittichok Nithisathian, John Walsh (2011). Gold which is termed as the yellow metal is red hot now and the entire world wants to be the part of the gold rush as the prices of the metal is galloping and sky rocketing, its demand in India has increased as an average rate of 13% p.a. It is a major vehicle for savings and investments in rural as well as urban parts of India among lower and middle income group gold will continue to be the major area of savings and investments for Indians in near feature with reference to the tends of rise in its price. (Anil Suresh (2011). Odisha in present times is gaining momentum as a leading producers of gem stones in India. Apart from gem stones it also haves rich deposits of precious and semi-precious stones including platinum. If government of Odisha provides proper infrastructure in exploring of gem stones and platinum as well as in-part technical education through IIT and frame a course module for industrial training in the area of polishing of precious stones and gems as well as designing of white gold jewellery. State can generate employment to an considerable extent as well as can break the monopoly of few domestic states within the country related to production and export of gems, precious and semi-precious stones and platinum (white / white metal). Odisha as a state in production of gem stone has bright feature if proper steps are taken up in future by the

10 state by the government of India. (Dr. Biswajit Das, Dr. S. P. Rath, Prof. Satish Jayaram and Prof. Rakesh Katyayani (2012). 13. The export of gem and jewellery has shown steady growth in the month of June 2012 which registered a growth of 7.5% which amounts to $4.2 billion on yearly basis which is comparatively then previous year which was $3.9 billion. There is no dough that India s export on terns of gems and jewellery is rising but demand is still sluggish in European market. As India s major export is to Europe. US, UAE and Hongkong. So it is a area of great concern for India s export prospects. (Press Trust of India, New Delhi, July 26 th, 2012).