India Aims to Boost Bilateral Trade with CIS

Using a two-pronged strategy of boosting direct exports of loose diamonds and colored gemstones, and entering into partnerships with local companies for different joint ventures, the Indian gem and jewelry industry hopes to supply nearly 10 percent of the estimated Rs 6-7 billion ($130 – 151 million) CIS jewelry market within the next two to three years.

This projection is based on the interaction that an eight member delegation of The Gem & Jewellery Export Promotion Council (GJEPC) had with representatives of the local trade and governments during a 16 day visit to the region from August 20 to September 4, 2006.

The delegation of loose diamond, jewelry, colored gemstone, and silver traders is the first such Indian delegation to visit Ukraine, Kazakhstan, Azerbaijan, Georgia, and Armenia. These countries are viewed as having a good potential to emerge as important consumer markets with strong increases in GDP, besides being possible sources of raw materials and potential manufacturing partners.

The GJEPC believes that there are many opportunities for interaction between the gems and jewelry industries of the CIS countries and India. “Due to its strategic location and relatively free economy, Georgia can be ideal as a transit manufacturing hub for our jewelry manufacturers to market Indian goods in CIS countries,” says Sanjay Kothari, Convener-PMBD, GJEPC, and head of the delegation.

Kothari pointed out that the current tariffs for direct imports of finished jewelry are very high, between 8-20 percent, but these are waived in case of imports from within the region. Therefore, he says, there is a potential for assembly plants that finish partly manufactured jewelry items from India, and distributes them in the local markets.

Another opportunity exists in Armenia with its developed diamond polishing plants. Due to changes in marketing arrangements with Russia, these plants are suffering from a shortage of rough diamonds. This shortage is opening up opportunities for Indian diamond traders. Similarly, Indian companies can enter into partnerships with existing jewelry manufacturing plants in countries like Ukraine. While other opportunities exist in modernizing and developing gold, silver, and colored gemstones mining in countries such as Kazakhstan.

While the GJEPC says it will work towards strengthening ties at the industry association level, and facilitate steps for a reduction in duties through interaction at government levels, it is leaving it up to individual companies to explore joint venture and take advantage of these opportunities.

Some of the key initiatives that the GJEPC has already decided on include setting up a CIS desk at its Mumbai headquarters , appointing trade coordinators or marketing representatives in different countries, showcasing Indian jewelry at two key exhibitions – ’Jeweller Expo Ukraine 2007‘ to be held November 22-25, 2007 and ’ARU-2007’ to be held April 19-21, 2007 in Almaty City, Kazakhstan, sending teams of designers to learn the trends in these markets and holding an India show in Georgia early next year.

The recent visit is part of the long term measures being explored by the Indian industry to enter newer markets. Currently the U.S., which accounts for nearly 35 percent of India’s gem and jewelry exports, is India’s single most important market. However, the current slowdown in U.S. demand and expected changes in the preferential tariff structure could impact volumes.

Besides the CIS, the GJEPC and the government have also identified Latin America and Africa as other potential new markets.