gems & jewellery - indextb.com · page 3 project concept classification of economic zones a...

Development of Gems &

Jewellery vertical park at

Surat

Gems &

JewelleryGovernment of Gujarat

Contents

Project Concept 3

Market Potential 4

Growth Drivers 5

Gujarat – Competitive Advantage 6

Project Information 7

- Location/ Size

- Raw Material/ Manpower

- Infrastructure Availability/ Connectivity

- Key Players/Machinery Suppliers

- Potential Collaboration Opportunities

- Key Considerations

Project Financials 14

Approvals & Incentives 15

Project Concept

Classification of Economic Zones

A tract of land

developed and

subdivided into

plots with

provision for

roads, transport

and public

utilities with or

without built-up

(advance)

factories, for the

use of a group of

industrialists.

Industrial

parks

A designated

estate where

trade laws such

as tariffs,

quotas, or duties

differ from the

rest of the

country.

Special

economic

zones

A community of

manufacturing

and service

businesses

seeking

enhanced

environmental

and economic

performance by

collaborating in

management of

environmental

and reuse issues

including energy,

water, and

materials.

Eco-

industrial

parks

An organization

managed by

specialized

professionals,

aimed at

increasing the

wealth of its

community by

promoting the

culture of

innovation and

competitiveness

of its associated

businesses and

knowledge-

based

institutions.

Technology

parks

Urban innovation

ecosystems

designed around

multi-layered

and

multi-

dimensional

models of

innovation

coordinated

under a strong

leadership, for

accelerating the

process of

innovation and

of strengthening

the locations’

competitiveness.

Innovation

districts

► Surat is the largest diamond process cluster in the world and is

called “ A silky city sparkling with Diamonds. Setting up a vertical

park in Surat, Gujarat would level up the progress Gems and

Jewellery Scenario in the world.

► In India there are different kinds of Special Economic Zones

(SEZ) , Industrial Parks, Eco- Industrial parks and other

Vertical Parks, Technology districts and innovation parks which

provide the required infrastructure and amenities .

► An exclusive vertical Gems & Jewellery Park will be developed

in Ichchhapore Park, which was announced in the year 2004

► The announcement for the gems and jewellery park at

Ichhapore, Surat was made in 2004. Approximately 350

jewellery manufacturing and diamond processing companies

invested in plots at the park to set up manufacturing units.

Gems and Jewellery park at Surat: Project Overview

Surat

Source:

Economic zones in the ASEAN (pdf)

http://timesofindia.indiatimes.com/city/surat/GHBs-jewellery-park-begins-ops-with-3-units-at-Ichhapore/articleshow/44395702.cms

http://timesofindia.indiatimes.com/city/surat/Ichhapore-gems-park-shines-after-decade/articleshow/47716254.cms

Market Potential

Market potential for Gujarat

► Gujarat has the highest share (~85%) in the total national jewellery production and accounts for

72% of the world’s share of processed diamonds.

► 90% of the total diamonds in Gujarat are processed by about 10,000 diamond units located in

and around Surat, making it a high potential market for diamond jewellery.

45.6 52.0 59.4 69.0 81.396.0

11.1%14.1% 14.2%

16.2%17.9% 18.0%

0%

5%

10%

15%

20%

0.00

25.00

50.00

75.00

100.00

2014 2015F 2016F 2017F 2018F 2019F

Revenue Growth rate

Jewellery market in India

► The Indian jewellery market is expected to grow at a CAGR of 16.1% between 2014 and 2019.

► The Indian jewellery manufactures and retailers contributed ~7 % towards the GDP of the

country in 2015, creating a value addition of INR1000 billion. They also contribute ~14%

towards exports, second only to textile and apparel sector.

► There are several upcoming parks and special economic zones in Orissa, West Bengal,

Chhattisgarh, Karnataka and Kerala to support the gems and jewellery industry.

India is the third largest country globally in terms of revenue sales for the

gems and jewellery market in 2014.

► In 2014, the global gems and jewellery

market revenue was valued at US$220.1

billion, with India holding 20.8% share in the

global market.

► However, low demand from the overseas

markets led to a decline in exports of gems

and jewellery to ~US$32 billion in 2015-16

from US$36.2 billion in 2014-15.

► The upcoming INR500 million gems and

jewellery park in Mumbai is an attempt by the

government to boost exports of the industry.

24.9%

21.9%

20.8%3.0%

1.6%

27.9%

Global gems and jewellery market revenue share (2014)

US

China

India

UK

Italy

Others

Source: Global gems and jewelry market 2015

Source: Global gems and jewelry market 2015

Source

http://economictimes.indiatimes.com/industry/cons-products/fashion-/-cosmetics-/-jewellery/natural-diamond-traders-up-in-arms-against-lab-

diamond-traders/articleshow/51434200.cms

http://economictimes.indiatimes.com/industry/cons-products/fashion-/-cosmetics-/-jewellery/rs-50-crore-jewellery-park-set-to-come-up-in-mumbai-in-

bid-to-boost-exports/articleshow/52965105.cms

Grown diamonds: unlocking future of diamond industry by 2050 (pdf)

Global gems and jewelry market 2015-2019 (pdf)

Jewelry market in India 2015-2019 (pdf)

Growth Drivers

► Growth in Asian

countries such as

China and India

are expected to

enhance the

market potential

for jewellery

industry.

► It is anticipated

that large

investments of

~US$1 billion in

the upcoming

years would be

made by large

retailers and

brands which

would catalyze

the growth of the

industry, set

higher standards

and create value

across the value

chain.

Growth of

the industry

sector

► India’s economic

condition has

been improving

since the past two

years, driven by

decline in oil

prices and low

inflation and

interest rates.

► Purchasing power

of the people also

witnessed an

increase with the

growth in

economy, growing

at a CAGR of

17% between

2012 and 2015.

As a result,

demand for

jewellery in India

also increased.

► The growth of the

global jewellery

sales is estimated

at a CAGR of

4.6% from

US$185 billion in

2010 to US$230

billion in 2015.

► The industry is

the second

largest contributor

to foreign

exchange, with

~15% share of the

total export

earnings of the

country.

► Diamond jewellery

is anticipated to

drive growth in

markets such as

US, UK, France

and Japan and

gold jewellery is to

be driven by

demand in

traditional

markets such as

India, Turkey and

China.

► The government

of India allows

100% FDI through

automatic route in

the gems and

jewellery industry.

The cumulative

FDI inflows in

diamond and gold

ornaments in the

period April 2000-

December 2015

were US$ 751.37

million, according

to Department of

Industrial Policy

and Promotion.

► Special Economic

Zones, jewellery

parks and the

government’s

‘Make in India’

campaign are

expected to

promote the

industry.

Purchasing

power of

consumers

Demand

in foreign

market

Favorable

government

initiatives

Source:

http://www.financialexpress.com/article/markets/indian-markets/pc-jeweller-may-benefit-from-rapid-branded-jewellery-growth/90618/

https://www.gemkonnect.com/news/us-logs-39b-diamond-jewellery-demand-2015-drives-2016-growth

http://www.financeman.org/fingj06.htm

Gujarat – CompetitiveAdvantageGems and jewellery clusters in Gujarat

► To leverage on the progressive industrial

sector of the state, the government

initiated a “Cluster development” model to

increase efficiency and cost

competitiveness through collaborative

efforts and knowledge sharing.

► Surat is the largest diamond processing

cluster in the world and is called ‘A Silky

City Sparkling with Diamonds’.

Diamond processing

Jewellery

Gold and silver jewellery

Rajkot

Bhavnagar

Valsad

Navsari

Surat

Ahmedabad

Palanpur

► Surat is an important

diamond processing

centre, exporting ~80%

of the production. The

city has more than 3,500

diamond processing

units.

► The easy availability of

processed diamonds

(used as seed for

culturing diamonds)

makes it a natural choice

for manufacturers of

synthetic diamonds.

► Located on the west coast of India, Gujarat is well connected to the major cities of the world by air and sea routes.

► The state has 45 ports, 12 domestic airports and 1 international airport in addition to an extensive rail and road network.

► Gujarat is a power

surplus state that attracts

a high degree of

investment across

industries and is a

preferred investment

destination in India.

► Gujarat contributes 7.2% of the Nation GDP and shows leadership in many areas of manufacturing and infrastructure sectors. Gujarat’s SDP (State Domestic Product) at current price registered a growth of 11% during the year 2014-15.

► The government has set up various SEZs with units catering to designing, cutting and polishing of jewellery to provide special incentives to the highly export-oriented sector.

Hub for diamond

processing

Established

infrastructure

Economic

development

Gujarat fares highly when it comes to setting up a business, allotment of

land and obtaining a construction permit.

Project Information

Site image

Location

► The park at Ichchhapore is at a prime location which is 3 kms from Surat city, with direct

access to NH-6 and ONGC-Magdalla State Highway.

► Surat airport is at a distance of 8 kms and Surat railway station is 18 kms away.

Area

► The park is anticipated to have 369 industrial plots with the size of the plots varying between

500 to 50,000 square yards.

► The total existing area of the facility is 968,172 square meters, which can be categorized as

follows:

Description Area (square meter)

Saleable Area 503,602.74

Owner’s Plot 118,851.70

Landscape Area & Parking Area 66,367.62

COP & Parking Area 66,237.05

Road 214,707.89

Total 968,172 Source:

http://www.gujarathirabourse.org/details.html

Source:

http://www.sursez.com/about-us.html

“A story of diamonds,” Materials Research Society of India, http://www.mrsi.org.in/, accessed 3 July 2016.

“Synthetic diamonds and its identification,” De Beers Group, https://www.debeersgroup.com, accessed on 5 July, 2016.

http://hubpages.com/style/Categories-and-sub-categories-of-Gemstones-and-Jewellery

► There are ~60,000 jewellery manufacturing

units in India, with heavy dependence on

skilled workers and artisans.

► ~95% of the jewellery artisans hail from Bengal

with more than 0.7 million of them working in

South Gujarat alone.

► There are ~700 jewellery manufacturing units,

mostly located in the walled city areas, that

employ over 0.25 million artisans.

► There are a number of institutions offering

specialized courses in the gems and jewellery

sector across Gujarat.

Gujarat is the hub of skilled artisans for jewellery manufacturing

Surat

Ahmedabad

Gandhinagar

Location of major educational institutions

► Gems and Jewellery industry is highly dependent on imports of raw materials, of which rough

diamonds account for almost 50% of the imports.

► The industry is also highly dependent on import of gold due to its limited production in the

country which has made them extremely vulnerable to any regulations that constrain gold

supply.

High dependence on import of raw materials

Project Information

Components involved in developing a verticalgems and jewellery park

► Vertical Park can be developed in 4

acre of land with a total built up space

of about 2 lac sft

► Infrastructural Facilities:

► Water supply from own bore-

well, underground water

reservoir and water treatment

plant

► Generators for power supply

► Fire detection and fighting

system

► Drainage and sewerage system

► Common Services-canteen, custodial

services, courier services/ freight

handling services, etc.

► Common Facilities-Testing & certification

laboratory and hallmarking facility

► security arrangements

► Identified plots and Standard Design Factory

(SDF) units for gems and jewellery processing/

manufacturing units to be set up by

entrepreneurs

► Training centre: Institute of Jewellery Design

and Technology could include basic and

advanced jewellery design and manufacture

technology, gemology and diamond trading

► Government offices- Development

Commissioner, Customs;

► Required off-site infrastructure

► Exhibition & conference Halls

http://www.mrsi.org.in/

https://www.debeersgroup.com/

Infrastructure Availability

Proposed

► The Mumbai-Ahmedabad bullet train project

will have Surat as one of the stations.

► A joint venture between the Indian Railway

Station Development Corporation, the

Gujarat State Road Transport Corporation

and the Surat Municipal Corporation has led

to the initiation of a Multi Modal

Transportation Hub at Surat railway station.

► In 2016, the Gujarat government assigned

Delhi Metro Rail Corporation as a consultant

for the proposed metro connectivity in Surat.

► Rail connectivity was proposed for Hazira

and Nargol ports in the 2016 rail budget.

Proposed

► The government plans to construct an

INR900 billion tunnel road between Mumbai

and Surat.

► Proposed four-lane highways which are

expected to improve connectivity in Surat

include – Dakor-Savli, Vadodara-Dabhoi &

Surat-Olpad-Bardoli.

Proposed

► In January 2015, Airports Authority of India

gave an in-principle approval for cargo

terminal at Surat airport worth INR70 million.

The terminal is expected to be operational in

2017.

► In February 2016, Surat Airport Action

Committee filed an online petition for an

international airport at Surat.

► The nearest port is Hazira which is 25 km

from Surat, built with a protected harbour

design and additional waterfront for

development of non-LNG cargo handling

terminals.

Proposed

► Letter of intent for development of Nargol

port worth INR40 billion has been handed

over to Cargo Motors Pvt. Ltd.

► Surat domestic airport is well connected to

various parts of the country. The city is

located ~275 kms from the international

airport at Ahmedabad.

► Surat is connected with other districts of the

state such as Rajkot, Vadodara and

Ahmedabad by rail.

► Hazira port in Surat is ~16 kms away from

the Surat railway station. In August 2015,

Container Corporation of India started

operating a regular train service connecting

the port with Pithampur.

► The city is connected to Delhi Mumbai

Industrial Corridor (DMIC) which links

Ahmedabad, Vadodara and Surat.

► Proximity to NH-8 and NH-6 further

enhances connectivity in the city.

► Surat also has very good connectivity with

other cities of the state such as Vadodara

(154 km) and Ahmedabad (265 km).

Surat is well-connected with other districts and cities in Gujarat and India

Source:

http://www.firstpost.com/investing/five-most-promising-indian-tier-ii-cities-you-should-invest-in-2796296.html

http://deshgujarat.com/2015/03/25/clearances-by-july-works-for-nargol-port-to-start-next-yeargog/

http://timesofindia.indiatimes.com/city/surat/Multi-mode-transportation-hub-soon-at-Surat-railway-station/articleshow/52095198.cms

Project Information

Potential collaborations

Company/Institution Description

Gitanjali group

The company plans to have CAD & Rapid Prototyping

facilities for product development in its Hyderabad gems

SEZ. It can look out for potential collaboration opportunities

with companies providing such services to strengthen its

services in this segment.

Indian Diamond Institute

IDI offers various courses in rapid prototyping and jewellery

designing. Companies can collaborate with the institute to

hire students graduating from such courses.

Following are a few potential collaboration opportunities:

Source:

http://www.imaginarium.co.in/verticals-jewelery.php

http://www.clarity3dprinting.com/rapid-prototyping.html

http://kaizer3d.com/contact.html

http://3djewelsindia.com/

http://www.jewelkreator.com/

http://www.tradeindia.com/manufacturers/rapid-prototype-machine.html

http://www.jewellerytoolsstore.com/3d-printer.html

http://www.shreerapid.com/

http://www.gitanjaligroup.com/business/businesses_infra_sezs.html

http://www.diamondinstitute.net/jewellery-diploma.html

Components involved in developing a vertical park

► Vertical Park can be developed on PPP mode in an area of 3 to 5 acre

► The park will be a 3 storied building with a total processing space of 2 lac sft and one Common

Facilities Building (CFB) for setting up supporting facilities for efficient functioning of the units

► Facilities and amenities:

► The buildings would have parking facilities in the basement

► CFB will have space for canteen, restaurant, bank, conference hall, first aid center and

training center

► Infrastructural Facilities:

► Water supply from own bore-well, underground water reservoir and water treatment

plant

► Generators for power supply

► Fire detection and fighting system

► Drainage and sewerage system

Key Considerations

► The jewellery

manufacturing and the

gemstones polishing

industries are heavily

dependent on skills of

their workers for

producing customised

designs rather than using

machines that cater to

the mass market

requirements.

► A consequent challenge

is that of upgrading the

skills of traditional

artisans in a way that

they adopt new

technology and acquire

certifications, while

retaining their traditional

expertise and artistic

appeal.

► Jewellery manufacturers

in India tried to stock up

gold after change in gold

norms. As a result, they

fell short of money for

diamonds which

ultimately affected their

manufacturing

capabilities.

► In October 2015, Bharat

Diamond Bourse banned

trading of synthetic

diamonds on its

premises, which was as a

major roadblock to

diamond jewellery

manufacturers who have

been using synthetic

diamonds.

► The size of imitation

jewellery in India is

~INR120 billion, growing

at a rate of 25% to 30%

annually. The country

also faces strong

competition from China

and Korea who have

already captured 30% of

the Indian imitation

jewellery market.

► India faces stiff

competition from China,

the second largest

diamond processing

centre in the world after

India. Easy adoption of

technology has helped

China to produce

diamonds at a

competitive price..

High dependence on workers

Regulatory hurdles Global competitive environment

Source:

http://www.business-standard.com/article/companies/strike-effect-artisans-shift-to-imitation-jewellery-116041600206_1.html

http://timesofindia.indiatimes.com/city/surat/Jewellers-strike-Over-50k-artisans-move-out-of-city/articleshow/51593046.cms

http://www.businesstoday.in/magazine/features/why-indias-diamond-industry-is-facing-its-worst-crisis-ever/story/226005.html

Skilling Indian Gems & Jewellery Sector (pdf)

Project Outline

► There are ~60,000 jewellery manufacturing

units in India, with heavy dependence on

skilled workers and artisans.

► ~95% of the jewellery artisans hail from Bengal

with more than 0.7 million of them working in

South Gujarat alone.

► There are ~700 jewellery manufacturing units,

mostly located in the walled city areas, that

employ over 0.25 million artisans.

► There are a number of institutions offering

specialized courses in the gems and jewellery

sector across Gujarat.

Gujarat is the hub of skilled artisans for jewellery manufacturing

Surat

Ahmedabad

Gandhinagar

Location of major educational institutions

► Gems and Jewellery industry is highly dependent on imports of raw materials, of which rough

diamonds account for almost 50% of the imports.

► The industry is also highly dependent on import of gold due to its limited production in the

country which has made them extremely vulnerable to any regulations that constrain gold

supply.

High dependence on import of raw materials

Gems and Jewellery industry value chain

MiningGemstone

processing

Jewellery

retailingJewellery

manufacturing

Diamond,

gemstone, gold,

platinum

Cutting

and

polishing

Design and

fabrication

Studded

jewellery

MiningGemstone

processing

Jewellery

retailingJewellery

manufacturing

Expanded diamond value chain

Source

A story of diamonds (pdf)

Synthetic diamonds and its identification (pdf)

Project Financials

Project structure & implementation models

Land cost

► The average allotment price of Gujarat Industrial Development Corporation estates in Surat is

INR2,319 per square meter with effect from 1 April 2016.

► In Surat district, Katodara is the most expensive area, priced at INR5,130 per square meter and

Doswada is the least expensive at INR80 per square meter.

Labour cost

► The labour cost per carat in Gujarat is ~INR600, the lowest among the major diamond trading

centers across the world.

► Gems & jewellery vertical parks are usually funded through a PPP model. However, private

players involved in construction of these kind of specialized buildings would be eligible to

develop this kind of vertical gems and jewellery park.

Sources:

Destination Gujarat (pdf)

GIDC allotment price 2016-17 (pdf)

http://www.gitanjaligroup.com/business/businesses_infra_sezs.html

Cost for setting up typical gems & jewellery unit in vertical park

Components Number

Building with 2 lac sft of processing space

Basement parking facilities 2

3-storied Common Facilities Building (CFB) 1

Area of each floor of CFB (sq ft) 7000

Components Amount (INR Crore)

Cost of building (Base Rate of INR4200 per sq ft) 84

Cost of building 2 basement parking facilities 0.1

Cost of building 2 CFBs (Base rate of INR 4,500 per sq ft) 9.45

Total cost of developing vertical Jewellery Park 93.55

Approvals & Incentives

Exemption from obtaining No Objection Certificate from the Gujarat Pollution Control Board for

establishing a gems and jewellery industry and for conversion of land to 'non agricultural' use.

Maximum interest subsidy at the rate of 3% per annum, limited to maximum of INR1.5 million per

annum available to modern jewellery units for a maximum of 5 years.

Assistance of viability gap funding of 20% of the total project cost to private developer intending to

develop Jewellery park on PPP basis.

Support and assistance for establishing skill development centres, Hallmark Certification centres

and diamond testing centres.

Sources :

http://gpcb.gov.in/industries-exempted.htm

http://ic.gujarat.gov.in/?page_id=329

Location

Identification

Approvals//filing with the competent

authority for setting up the project

Registration of business

organization

(30-60 days)

Land

Apply to GIDC

for industrial

estates

Apply to district

collectorate for

government land

Private land

permissions from

district collectorate

Apply to SEZ or

industrial parks

developer for land

Apply to forest

and environment

department for

forest land

In case land falls under Urban Development Authority (UDA)

limits, apply to UDA for zoning/zone change certification and

apply to District Collectorate for NA permission

(30

-60

da

ys)

Apply for water to relevant authorities (20-30 days)

Apply for power to relevant authorities (20-30 days)

Construction permission from UDA

Apply for factory license from the department of

Labour & Industrial Health and safety

Apply for consolidated consent and authorization

from GPCB

(GWIL/ SSNL/ CGWA/ Local governing body)

Note:

GIDC – Gujarat Industrial Development Corporation

SEZ – Special Economic Zone

GPCB – Gujarat Pollution Control Board

GWIL – Gujarat Water Infrastructure Limited

SSNL – Sardar Sarovar Narmada Nigam

Approvals required

Incentives from Government of Gujarat for Jewellery Manufacturers

– Government Resolution No. GEM/2008/1685/CH

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.

It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

Gujarat Industrial Development Corporation

www.gidc.gov.in/

www.ic.gujarat.gov.in

Office of Industries Commissioner

Industries & Mines Department

www.imd-gujarat.gov.in

Industrial Extension Bureau

www.indextb.com

Office of The Industries Commissionerate

Block No. 1, 2nd Floor, Udyog Bhavan,

Gandhinagar 382 010. Gujarat. INDIA

Ph.: 23252683/23252617 • Email ID:

[email protected]

http://www.gidc.gov.in/

http://www.ic.gujarat.gov.in/

http://www.imd-gujarat.gov.in/

http://www.indextb.com/

mailto:[email protected]

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