How Indian gemstone industry can flourish in United Kingdom?
There has been an increased demand for Indian gemstones globally and this has led to the Indian gemstone suppliers and dealers to export to various countries globally.
The market of Indian gemstone has been well recognised since the ancient days and has been mentioned in many old scriptures about the purity and attractiveness of Indian gemstones, gold and diamond products (Turner, 2016). The main markets of Indian gemstones are Middle East and some European countries with increase demand in American sub-continent (Ibef, 2020).
The Indian gemstones are not only applied for usage in jewellery but also used in manufacturing of luxury items, cutlery, used in many types of machinery and even in medicinal applications (Khalid et al. 2012).
The main purpose of the current study is to explore the flourishment of Indian stone industry in the region of UK, mainly because there has been lack in information of the trade based aspects of gemstones of India in the UK market.
The main issue is that there is no study that shows the export based aspects of Indian gemstone industry to UK market. Plus, a few reports have reported that there has been a lack of demand for gemstones as well as export especially to the UK market.
Therefore, there is no way that it can be established without assessing the feasibility of the Indian gemstone in UK and its trade policies to explore if the same will flourish in the UK market. Again, another problem is that there is lack of secondary information on the quantity of gemstones exported to UK, to explore the trend of the market.
Based on the problem statement, the rationale of the study is to explore the demand of Indian gemstones in different existing markets and the performance of the same in India with respect to sales.
Lack of information on the quantity of gemstones exported to UK will be contemplated by secondary studies and possible interview applications where the market experts will be asked on the ability of the Indian gemstones market to penetrate and row in UK. For these different secondary reports will be used and assessed to address the research questions and meet the main purpose as mentioned in the following segment.
Indian is considered as the second biggest gemstone market in the world, the net export of gems and jewellery in India during the year of 2019 stood around the US $ 27.44 billion(IBEF, 2020). The factor that has been identified behind of growth of the Indian gemstone market within India is mainly because of the rising middle-class family along with the growing purchasing power of the people.
Furthermore, examining the growth of the Indian gemstone market it has been noticed that advancement in investment supported by an increased number of expansion of domestic companies has resulted in the growth of the Indian gemstone industry. The shreds of evidence gathered also indicate that the Indian gemstone market contributes towards 7% in India’s total GDP and 15% towards Indian merchandise exports.
The industry also supports the growth of the Indian economy by employing more than 4.64 million people both directly and indirectly and is also expected to increase the enrolment rate by 8.23 million by the end of 2022(Economic Times, 2020). Different types of gemstones are being found in India out of which some of the honourable mentions are blue sapphire, hessonite, red coral, ruby, and navratna.
Considering the growth potential of the gemstone market, government declared Jewellery and gem sector as the focused area of export promotion. Evaluating the Indian gem market it has also been noticed that India also exports 75% of diamonds which makes it one of the biggest and most attractive markets within the world.
The total market size of the Indian gemstone industry has been measured around the US $ 103.06 billion during the year 2020 and is expected to grow by the US $ 10 billion by the end of the year 2022(The Hindu, 2020).
Currently, the Indian government has also allowed 100% FDI within this sector to grow the market of gemstone within India as well as in foreign markets as well.
The main research objectives of the study are;
- To assess the current export trends of Indian gemstone market/industry
- To explore the trade relationships between India and UK with special context to gemstone and jewelry trade
- To explore the current demand for Indian gemstones by UK market/industry
The research questions are based on the research objectives;
- What are the current export trends of Indian gemstone market/industry?
- What is the degree of trade relationships between India and UK with special context to gemstone and jewelry trade?
- Is there any demand for Indian gemstones by UK market/industry?
Evidence gathered in regards to the Indian gemstone market it has been noticed that it is one of the fastest-growing industry within the country and export all total of 29% of polished gemstones towards global consumption.
According to Statista, (2020)evidences presented shows that industry exports stood around the US $ 25.11 billion, whereas, cut and polished diamond stood around the US $ 16.32 billion, henceforth paying towards 73.42% of total gems and jewellery exports values within the country. In the global platform, India is considered to be the largest exporter of gems and jewelleryand is considered vital towards growing the economy of the country(Ibef, 2020).
Some of the major factors which have pushed the Indian gemstone industry comprised of changing lifestyle of Indian people towards adopting western culture. Consumers in India are demanding new varieties of jewellery and design patterns which are increasing the demand for gemstones within the country.
Based on the shreds of evidence gathered from Gjepc, (2020) it has been noticed that deals of worth ₹8,000 crores were being made at the Indian International jewellery show that was held in August 2018.United States of America, UAE, Hong Kong are some of the major importers of Indian gemstones which account for around 80%.
Evidence presented by Economictimes, (2020) the demand of Indian gemstones in the global market has increased mainly because of the nature of stones and pearls that are sold in form of cut and polished which increases their demand among the customers. Pearls and stones were the main gemstones that were largely exported by the Indian government to the nations which account for around 48% during the financial year 2018.
Indian government has thought to establish a Gems and jewellery manufacturing unit in Maharashtra. To establish the jewellery park investment of ₹ 13,500 crores has been sanctioned along with 500-1000 acres of land has been allocated for the same.
The online sales of gemstones have also been increased in India by 1%-2% annually, considering this growth situation the government of India has also taken up the step of promoting organised online jewellery stores.
Low-cost loans are also being offered to SMEs and business organisations to grow the business of gemstones in both India and the global business platform. The positive export rate of gemstone within India contributes towards the development of economy and business opportunities.
Indian trade relations with the UK
As opined by Ukibc, (2020) India is one of the fastest-growing nations in the world but the factors contributing to the young age population, increasing GDP and growing investment of foreign multinationals within the country. The UK and India share a bilateral trade relationship in goods and services, beside FDI investment has also been exchanged within the country to improve the relationship in form of both direct and indirect trade relationships within the countries.
The evidences gathered points out that UK’s exports of goods have been accelerated by £ 2.15 billion by the end of financial year 2017. Under the bilateral trade relationship in between UK and India both the countries exchange precious gemstones, jewellery, metals, nuclear reactors, boiler and machinery.
Identifying the amount of export and import within the country in the past ten years it has been noticed that the trade has grown by significant number from £ 284 million to £ 854 million(Gov, 2020). On the other hand, it has also been noticed that India exports services from UK that includes of travel services, transport services and telecommunication services.
Treaty of bilateral service trade has been signed in between the two countries which makes it easier for both the nation to exchange services in between them. The total UK export of top services has showed record growth from the year 2016 which has increased by £ 123.2 billion to £ 142.7 billion with an increase of 15.8%(Phdcci, 2020).
Joint trade agreement has been signed in between India and UK under which precious products and services such as gemstones falls, under this agreement both the country trade precious stones and ornaments from one country to another. Future trade are also been discussed in between the countries so as to grow the business and develop a formidable ally.
The treaties signed in between the two countries also eyes towards growing the future business opportunities that includes of investing towards development of technology and communication in order to build and strengthen the communication in between the nation so as to improve the relationship. India accounts towards 20% of world’s generic medicines and supply them throughout more than 150 countries.
The healthcare sector in India generates £ 325 million and is growing by 5.5% annually. Under the bilateral treaty the government of UK has promised to import pharmaceutical products from India as it reduces the cost of drugs and medicines by 30%(Mckinsey, 2020).
The trade relationship opens up door of opportunities for both of the nations to develop. The bilateral treaty that are being signed in between India and UK aim towards improving the trade relationship in between the countries in order to improve the relationship in near future.
As opined by Ibisworld, (2020)evaluating the gemstones market in UK it has been noticed that it maintains robust sales reaching to £ 5.7 billion during the year 2018 which has increased by 2.9% from the last year.
The market is expected to further grow by 3.5% and is expected to generate £ 5.9 billion by the end of 2020. The factors to be considered as the major indicator for the rise of gemstone industry within the UK includes of increasing the purchasing capability of people due to rise in the disposable income of UK by £ 29,400 annually(Euromonitor, 2020).
The demand for gemstones jewellery in UK has remained robust due to increase in the demand from local as well as foreign customers, the sourcing of resources has also been easier as a result of which it is becoming easier for the organisation to procure their resources and manufacture their own products as lower cost and sell it on a competitive pricing among the customers.
Beside, young age customers has increased the demand of bespoke jewellery pieces as well as demi-fine category that has also pushed up the demand of gemstone demand in the UK(Professionaljeweller, 2020).
The multicultural aspect of the UK has also led to growth of gemstones within the society, as because trade fashion shows are being hosted, promotional campaigns and ads are being runner in order to promote the gemstone products among the customers. Not only high street organisations are having increased in demand but also small street shopping complex are also having the growth due to increase in demand and popularity among the customers.
Exhibitions, shows and gallery arts are being displayed and promoted within the country which is increasing the purchase behaviour among the customers resulting into growth of gemstone market within the UK.
The research paradigm that will be followed in the current study will be ontological and not epistemological (Collins, 2018). This is because the main purpose of the research is to explore a new theory or form a new theory based on the existing principles and realities but is not common to knowledge.
This means, it is understandable that that there is a small gemstone market in UK but it is unknown if the penetration and florishment in the same is possible by the Indian industry.
The main research design of the current study is based on qualitative research whereby the paradigm of ontology is used (Collins, 2018). This is because the research aims to gather new information from a new reality because there is no existing information of the same.
Therefore, the best method is to gather information from the source and the perceptions of the industry experts in the feasibility and ability of Indian gemstone to flourish will he explored. In this regard, the study will use both primary and secondary information using the qualitative methods to explore the ability of Indian gemstone to flourish in UK.
The study will use two main data sources, they are primary and secondary. In case of primary source, the researcher will use interview methods to collect primary data using Indian gemstone marketers or experts in India. The secondary data source will be mainly trade based websites, database, trade policies, Government websites, industry reports and others.
The secondary data will help to explore the objectives of India’s trade trend of gemstones globally as well as the performance of the industry. The primary sources will help explore the demand and supply aspects of Indian gemstones in UK market.
The data analysis for primary data will be based on thematic assessments, whereby the data collected using open ended questionnaires either by face to face interview or telephonic will be transcribed and then codes will be formed (Castleberry and Nolen, 2018).
After the formation of codes the analysis and findings will be presented in the form of themes. On the other hand, the secondary data will be used in both the formation of literature review as well as supporting the statements from the interviews for validity and reliability.
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