India Jewelry Market Forecast
The relevance of research
Gold has firmly established itself as one of the most sought-after assets in the eyes of investors, and ranks third on the list of the most consistently bought in the world. However, the least profitable investment in gold is the purchase of jewelry.
Purpose of the study
Analyzing the state of the jewelry market in India, assessing the size of the market, analyzing competitors, as well as determining the factors affecting the jewelry market
Content
Chapter 1. Key Components of the Jewelry Market
1.1. Market size
1.2. Growth rate of the jewelry market
1.3. The ratio of imported and domestic products in the market
1.4. Volume and dynamics of jewelry production
1.5. Import of jewelry. Volume and dynamics
1.6. Export of jewelry. Volume and dynamics
1.7. Share of exports in production
Chapter 2. Economic characteristics of the market
2.1. Jewelry Market Trends
2.2. The main problems of the industry
2.3. Estimation of the number of buyers and their financial capabilities
2.4. Estimated consumption per capita
2.5. Analysis of sectoral indicators of financial and economic activity
2.6. Compact location of industry companies in certain regions
2.7. Life cycle stage of the jewelry market
Chapter 3
3.1. Economic components
3.2. Social Components
3.3. Technological components
3.4. Political Components
3.5. STEP analysis of the jewelry market
Chapter 4. Assessment of the degree of competition
4.1. Scale of competition (local, regional, national, global)
4.2. Number of competitors and relative market shares of the largest competitors
4.3. Competition from substitute products
Chapter 5 Industry Forecasts
5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
5.2. Analysis of the impact on the state aid industry at the current date
5.3. Assessment of the extent of the impact of the crisis on the analyzed market. Barriers existing in the jewelry market
5.4. Prospects and growth drivers for the jewelry market
5.5. Forecast of the development of the jewelry market in the context of the current economic crisis
Chapter 6 Forecasting Methodology
6.1. Methods for forecasting key industry indicators
6.2. Sources of information for forecasting
6.3. Timing of forecasting
Research excerpt
Chapter 1. Key Components of the Jewelry Market
1.1. Market size
At the end of 2021, the volume of the jewelry market amounted to ...
Diagram 1. Revenue structure of jewelry retailers, 2021, %
...
The Moscow region became the leader in jewelry sales among all regions of India ...
1.2. Growth rate of the jewelry market
In 2015–2016 The volume of the jewelry market was decreasing against the backdrop of a decrease in the purchasing power of the population.
Further, against the backdrop of improving macroeconomic indicators and the strengthening of the rupee, the market began to stabilize, the level of negativity in assessing their prospects on the part of consumers decreased.
...
1.3. The ratio of imported and domestic products in the market
The Indian jewelry market is dominated by Indian-made products.
...
1.4. Volume and dynamics of jewelry production
According to Rosstat, the production of jewelry in value terms is oscillatory.
...
Diagram 4. Dynamics of jewelry production volumes in India, 2014–2021, billion Rs.
...
1.5. Import of jewelry. Volume and dynamics
...
In contrast to the dynamics in physical terms, supplies from abroad in 2020 in value terms, on the contrary, decreased - the drop in imports amounted to ...% compared to the same period in 2019, which is associated with a decrease in average import prices for jewelry products amid the devaluation of the rupee.
...
Among the imported products in kind, silver jewelry is in the lead ...
1.6. Export of jewelry. Volume and dynamics
The maximum volume of exports in the period under review falls on 2018 with an indicator of ... tons. For the next two years, deliveries abroad declined.
Diagram 7. Volume and dynamics of jewelry exports, 2014–2021, tons
...
1.7. Share of exports in production
In 2021, the share of exports in the production of jewelry amounted to ...%.
Chapter 2. Economic characteristics of the market
2.1. Jewelry Market Trends
Among the trends in the jewelry market, it should be noted:
- A significant increase in the cost of production of jewelry and, accordingly, an increase in their final cost;
- Reducing the consumption of precious metals and stones by manufacturers for the manufacture of products;
- Growth in the share of online jewelry sales;
- With the development of online commerce, access to a wider range of jewelry for residents of small towns is growing;
- Decreased demand for jewelry in general;
- Temporary cessation of work of some foreign companies.
2.2. The main problems of the industry
To the main problems of the industry in 1 sq. 2022 include:
- Strict state control;
- Disruption of supply chains;
- Rising prices for imported consumables and equipment;
- Raising the cost of raw materials;
- Pause in transactions with European partners;
- Decreased purchasing power of the population.
2.3. Estimation of the number of buyers and their financial capabilities
During 2014–2017 India's population has shown a positive trend.
...
2.4. Estimated consumption per capita
Estimation of per capita consumption of jewelry was made by GidMarket analysts based on the ratio of the market volume to the population of India.
...
Note that every year there is a short-term increase in demand during the New Year holidays, March 8 and February 14. Buyers are increasingly interested not in classics, but in originality, they welcome unusual inserts, including those made from environmentally friendly materials.
2.5. Analysis of sectoral indicators of financial and economic activity
Here are the financial ratios of the jewelry industry according to Rosstat, broken down into:
- jewelry production;
- wholesale trade in jewelry;
- retail trade in jewelry.
Table 1. Jewelery Industry Gross Margin vs. All Industries in India, 2016-2021, %
Profit before tax reflects the share of revenue that remained in the enterprise as profit before tax. The value of this ratio at the end of 2021 in the jewelry manufacturing and wholesale trade industry is below the average Indian values for all industries as a whole.
...
Current liquidity characterizes the extent to which all short-term liabilities of the enterprise are secured by current assets. Shows how many rupees of current assets account for a unit of short-term liabilities.
The estimated indicator of current liquidity of a normally operating solvent legal entity must be at least one, that is, it is necessary that the total value of current assets be greater than the amount of short-term liabilities.
A more stringent liquidity criterion is the absolute liquidity ratio. It shows what part of short-term liabilities can be repaid immediately, if necessary, at the expense of available cash and marketable securities.
...
In general, the analysis of sectoral financial ratios in the jewelry industry shows high gross profit margins, but at the same time, absolute liquidity values indicate that it is difficult for most enterprises to meet their current obligations in a timely manner at the expense of liquid current assets.
In terms of profitability, the retail trade in jewelry shows the highest performance.
2.6. Compact location of industry companies in certain regions
The largest number of jewelry manufacturers are located ...
Diagram 15. Compactness of location of companies in the industry in certain regions, 2021, %
Among retail jewelry stores, the highest concentration, according to 2GIS, is observed ...
2.7. Life cycle stage of the jewelry market
Jewelry has a long life cycle compared to conventional consumer goods. Currently, the market is in a phase of maturity, showing a downward trend.
Consumers are highly sensitive to rising prices in the jewelry market, especially during a period of declining household incomes.
It is necessary to change the direction of the industry, targeting the new generation and raising their awareness of the emotional appeal of jewelry, especially with gemstones.
...
Chapter 3
3.1. Economic components
India GDP
GDP is a macroeconomic indicator that reflects the market value of all final goods and services produced in a year in all sectors of the economy on the territory of the state for consumption, export and accumulation. The dynamics of India's GDP is decisive in the vector of development of the entire economy of the country and determines the key trends in consumer effective demand and economic activity.
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Jewelry and gems as an investment
Gold has firmly established itself as one of the most sought-after assets in the eyes of investors, and ranks third on the list of the most consistently bought in the world. However, the least profitable investment in gold is the purchase of jewelry. The price of jewelry includes the costs of the store, the expensive work of a jewelry master, and the artistic value of the product is also included in the price.
Investing in gemstones, like many other atypical types of investments, is always more of an emotion than a business. Such investments are designed for a long time, as the price of jewelry is steadily rising. Investors usually invest in jewelry and gemstones to protect their funds from depreciation and generate income.
Experts note that colored stones are gaining particular popularity. Over the past decade, the world price per carat of an emerald or ruby has exceeded the value of a carat of colorless diamonds. However, even if colored stones are gaining popularity, it is traditional colorless diamonds that remain the most liquid stone in terms of investment.
The specificity of such markets is their complexity: in order to invest in precious stones, you need to understand them.
3.2. Social Components
The complexity of the interaction of the brand with the buyer
Experts note that the modern elite do not spend money on expensive things to show their status. The theory of the aspiration class has appeared, when the elite does not seek to spend money on something that can somehow outwardly show its status. Members of the elite are more likely to invest in self-development, sports and hobbies, higher education, private schooling for children, the possibility of quality additional education, etc. However, today, when society is suffering from a global recession, to advertise luxury and waste is to cause denial, rejection. Accordingly, brands that continue to broadcast ostentation may lose their customers.
Decoration should be non-standard in design, life values, personal history can stand behind it. Less and less importance is attached to precious metals, more to the style and popularity of the designer, jewelry becomes a way of conveying a certain statement that contains a certain brand, missions, authoritative personalities who advertise it and spread their personal reputation and their values on it.
Changing consumer trends in the direction of complicating the interaction of the brand with the buyer creates additional difficulties. Negative influence of the factor.
3.3. Technological components
Opportunities to create unique jewelry
...
Obtaining new alloys
In March 2022, the Siberian Federal University (SFU) announced the creation of a hypoallergenic 585-karat gold alloy, which includes silver, palladium, as well as ruthenium and rhodium. Another alloy created at the university on the basis of 925 silver also has hypoallergenic properties.
Both alloys differ from those traditionally used in jewelry by the absence of nickel, which causes allergic reactions. In addition, new decorations are more durable.
The increased strength of the new alloys made it possible to reduce losses due to defects in the manufacture of jewelry. This advantage was appreciated by jewelers in the manufacture of one of the most labor-intensive products in production - jewelry chains that require many complex operations.
The scientists have also developed software for designing semi-finished jewelry manufacturing processes. They calculated the technological modes of rolling and drawing new alloys, which made it possible to obtain jewelry wire with a diameter of up to 0,25 mm, which is used to make chains.
Products from new alloys will have a lower cost, since rare and rather expensive ruthenium and rhodium are added to the alloy in very small quantities. At the same time, consumers will receive more aesthetically attractive and durable products, which, moreover, have hypoallergenic properties.
3.4. Political Components
Retail Going Online
At the end of 2019, the Government of India Decree No. 30.11.2019 dated November 1542, “On Amendments to the Rules for the Sale of Goods by Distance” was issued, which legalized the sale of jewelry on the Internet, subject to mandatory certification of precious stones and the presence of a hallmark on each piece of precious metal .
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Marking
Marking jewelry is the application to a label or tag, and later on the product itself, of a special unique code that is provided by the labeling operator, Goznak.
Jewelry made of platinum, gold and palladium, or their alloys, is subject to marking. For labeling to be required, the minimum sample of the product must be:
- 585 for platinum;
- 333 for gold;
- 500 for palladium.
If the sample is smaller, the product may not be labelled.
Silver jewelry does not need to be physically marked, but must have a label with a unique identification number. This applies to products with a sample of 800 and above.
Marking is generally not subject to coins that have been issued, state awards, museum exhibits and items in state custody.
Mandatory stages of labeling:
- 01.09.2021/ / - the transition of manufacturers and sellers to special accounting and the rejection of the register on paper. Registration of personal names in GIIS DMDC.
- 01.01.2022/ / - accounting of state control documents for the import and export of jewelry in the GIIS DMDC.
- until 15.01.2022/01.01.2022/ - the initial entry into the GIIS DMDC of information about the balance of jewelry according to accounting data as of / / .
- 01.03.2022/ / - all jewelry must have a label with a UIN, a barcode and the address of the website of the Federal Assay Office. Prohibition of circulation without transfer of data on the movement of goods. When transferring data, be sure to specify the UIN.
- 01.03.2023/ / - a ban on the circulation of physically unmarked jewelry made after this period.
- until 01.03.2023/ / - physical re-marking of old stocks of jewelry. A complete ban on the circulation of jewelry without marking.
The Jewelery Marking Act requires that placing a nanotag with a marking code on a piece of jewelry does not interfere with its reading. Therefore, jewelers will have a difficult task: to place not only assay hallmarks, but also a nanomark so that they do not spoil the appearance of the product.
Some companies, according to the head of the Guild of Jewelers, may think about moving into the bijouterie segment, since the purchase of marking equipment may not be affordable for them: “The cost of a test sample of Indian-made equipment reaches 80 thousand Rs., and foreign - 240 thousand Rs. . In addition, it is technically difficult to label the products themselves. This will require additional resources - financial, time and human. If large players can provide them, then for small companies this is a serious burden.”
In general, jewelers are not against the introduction of marking - it should whitewash the jewelry market as much as possible and ensure the traceability of precious metals and stones from extraction to the finished product. Deputy Finance Minister Alexei Moiseev previously reported that unaccounted for gold could be up to 50-60% of the legal market per year.
Thus, the impact of mandatory labeling on the jewelry market is multifaceted.
Cancellation of special tax regimes
On March 9, 2022, Vladimir Putin signed a law that amended the Tax Code. Along with the abolition of VAT on the purchase of gold bars for individuals, an amendment was included in the law on the abolition of special tax regimes for the jewelry business. All market players, including niche brands, small workshops and retail outlets, are required to switch to the general taxation system from January 1, 2023.
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3.5. STEP analysis of the jewelry market
According to the results of the STEP-analysis, macro-environment factors have a negative impact on the development of the jewelry market.
Among the significant negative factors are the decline in real incomes of the population, the unstable economic situation, the instability of exchange rates, the abolition of special tax regimes, labeling, the weakening of the investment attractiveness of jewelry, the complication of brand interaction with the buyer, the population decline, and the forecasted reduction in GDP.
Table 4. STEP analysis of factors influencing the jewelry market
Chapter 4. Assessment of the degree of competition
4.1. Scale of competition (local, regional, national, global)
The jewelry market is one of the most intense national and global competition.
The products of Indian jewelers are in demand both in the domestic and foreign markets. The largest amount of jewelry in kind to global markets is supplied by Indian operators ...
Chart 19. Shipment of jewelry abroad by region, 2021, %
A negative factor in the production and marketing is the high share of the shadow turnover. The black market continues to hold, according to experts, up to ...% of the Indian jewelry market.
At the same time, the market for Indian premium jewelry is poorly developed, although in terms of design and workmanship, products manufactured by Indian craftsmen are in no way inferior to well-known foreign brands, wealthy buyers prefer to purchase imported jewelry, for example, Tiffany, Cartier, etc. Prices for branded jewelry in domestic boutiques are tens of percent higher than in foreign ones, so Indian buyers also buy branded products abroad.
Indian large manufacturers prefer to sell jewelry in their own networks, small ones - in ordinary jewelry stores. Jewelry stores selling Indian factory goods also sell mainly in the economy class segment, with a low chance of attracting higher segment buyers. The purchase of exclusive Indian-made jewelry most often occurs from jewelry designers well-known in a certain circle.
In retail at the national and regional levels, it is chain players that dominate, which worsens the development opportunities for individual operators.
4.2. Number of competitors and relative market shares of the largest competitors
The largest competitors in the jewelry market are both domestic operators and representatives of foreign companies.
...
From the point of view of competitive concentration, the market is classified as low-concentrated (Herfindahl-Hirschman index (HHI < 1000). Mergers and acquisitions are allowed without hindrance.
4.3. Competition from substitute products
A substitute product for jewelry is costume jewelry.
Financial crises make costume jewelry even more in demand as an adornment. Costume jewelry makes it possible to save money, although the premium segment of jewelry is quite comparable in price to jewelry, and also makes it possible to have a truly exclusive piece of jewelry, which is achieved by jewelers due to the high price, but here - thanks to the development of handmade production.
The jewelry market in India is far from saturated, especially when it comes to products of medium and high price categories. There is a trend of gradual saturation of the market with cheap Chinese and South Korean non-jewellery. At the same time, the consumer is making more and more demands on the quality of jewelry.
Chapter 5 Industry Forecasts
5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
An economic crisis is a profound disruption of normal economic activity, which is accompanied by the destruction of habitual economic ties, a decrease in business activity, the inability to repay debts and the accumulation of debt obligations. This is a phenomenon of a market economy, repeating with a certain frequency, and depending on the scale, it can either concern a particular state or be of global importance. The crisis is accompanied by a sharp decline in production, bankruptcy of enterprises, a fall in the gross national product, a large-scale increase in unemployment, and often a depreciation of the national currency.
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5.2. Analysis of the impact on the state aid industry at the current date
Since the introduction of restrictive measures in India related to the spread of a new coronavirus infection, the state has been providing the necessary support measures to business representatives who have encountered objective difficulties. Some of them are systemic and apply to all organizations and individual entrepreneurs, while others are intended only for companies and businessmen working in certain sectors of the economy.
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According to the Jewelers Guild of India Association, a combination of negative factors affecting the state of the market creates a risk of a complete shutdown of the industry, which employs about 150 thousand people. According to experts, the maximum possible leveling of negative factors requires a radical liberalization of the circulation of precious metals and precious stones (PMGK) with the release of participants from the execution of excessive mandatory requirements and excess non-production costs.
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5.3. Assessment of the extent of the impact of the crisis on the analyzed market. Barriers existing in the jewelry market
The impact of the Ukrainian crisis on the jewelry industry is assessed extremely negatively. Among the main consequences noted by market participants in March 2022:
- Refusals to cooperate with Indian companies.
- Problems with the purchase of consumables.
- currency component.
- Falling demand.
The main barriers hindering the development of the industry include:
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5.4. Prospects and growth drivers for the jewelry market
Perspectives:
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5.5. Forecast of the development of the jewelry market in the context of the current economic crisis
Forecasting the dynamics of the volume of the jewelry market is based on the forecast indicators of the development of the Indian economy, barriers and growth drivers that exist in the market.
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Chapter 6 Forecasting Methodology
6.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and forecast general economic situation.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
6.2. Sources of information for forecasting
- Industry volume over the past 8–9 years
- Industry dynamics in 2008–2009, in 2014–2021*
- Dynamics of macroeconomic indicators over the past 9–10 years
- Current public assistance plans
- Databases of the State Statistics Committee of India
- Indian Revenue Service databases
- India Customs databases
- Open sources (websites, portals)
- Issuer reporting
- Company websites
- Media Archives
- Regional and federal media
- Insider sources
- Specialized analytical portals
* Until October 2022, financial indicators for the main market operators and industry coefficients for 2021 are GidMarket forecast based on the dynamics for 2017-2020, except for cases when the operator discloses data on the results of financial 2021 publicly.
6.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2022-2026)
Diagrams
Diagram 1. Revenue structure of jewelry retailers, 2021, %
Diagram 2. Dynamics of the jewelry market volume, 2014–2021, billion Rs.
Diagram 3. The ratio of imported and domestic products in the jewelry market, 2014–2021, %
Diagram 4. Dynamics of jewelry production volumes in India, 2014–2021, billion Rs.
Diagram 5. Volume and dynamics of jewelry imports, 2014–2021, tons
Diagram 6. Volume and dynamics of jewelry imports, 2014–2021, thousand US dollars
Diagram 7. Volume and dynamics of jewelry exports, 2014–2021, tons
Diagram 8. Volume and dynamics of jewelry exports, 2014–2021, thousand US dollars
Chart 9. Share of exports in production, 2014–2021, %
Diagram 10. Population dynamics in India, as of 01 Jan. 2013–2022, million people
Chart 11. Dynamics of real incomes of the population of India, 2013–2021, %
Diagram 12. Consumption in the jewelry market per capita, 2014–2021, Rs./person
Chart 13. Profitability before tax (profit of the reporting period) in the jewelry industry in comparison with all sectors of the Indian economy, 2016-2021, %
Diagram 14. Current liquidity (total coverage) for the jewelry industry for 2016–2021, times
Diagram 15. Compactness of location of companies in the industry in certain regions, 2021, %
Diagram 16. Stage of the life cycle of the jewelry market
Chart 17. Dynamics of India's GDP, 2014–2021, % to the previous year
Chart 18. Monthly dynamics of the US dollar against the rupee, 2017-Mar. 2022, Rs. for 1 US dollar
Chart 19. Shipment of jewelry abroad by region, 2021, %
Diagram 20. Shares of the largest competitors in the jewelry market in 2021, %
Diagram 21. Forecast of the volume of the jewelry market in 2022–2026, billion Rs.
Tables
Table 1. Jewelery Industry Gross Margin vs. All Industries in India, 2016-2021, %
Table 2. Absolute liquidity of the jewelry industry compared to all sectors of the Indian economy, 2016-2021, times
Table 3. Expert forecasts for the decline in real GDP in India in 2022
Table 4. STEP analysis of factors influencing the jewelry market
Table 5. Main companies participating in the jewelry market in 2021
Table 6. Assessment of the impact of recent crises on the industry
Table 7. Analysis of the impact of the state assistance proposed as of August 02.04.2022, in connection with the spread of coronavirus infection
Table 8. Analysis of the impact of the state aid proposed as of August 02.04.2022, under sanctions
Table 9. Forecast indicators of the development of the Indian economy
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