Gems and Jewellery have been a part of the Indian civilization since its recorded history.

It has now grown to become one of the leading export oriented industries in India recording an export turnover of around Rs 91617. 53 Crores during 2008-09, making it a significant foreign exchange earner for the country. By the formation of SEZ in gems and jewellery in India it improved the contribution of industry at 70% of the World gems in terms of quantity and 45% in terms of value.By this the formations rules for setting up an industry have been made easy, government has given many advantages to the companies in SEZ’s. The potential and salient features of gems and jewellery have been drastically increasing in the recent years. The present SEZ’s and upcoming SEZ’s in the gems and jewellery industry the companies advantages from SEZ’s are noted.

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Recommendations which are done by industry to the government for the improvement of the gems and jewellery industries are also mentioned. At last the requirements needed for the setting up a SEZ are also put in this assignment.Introduction: “Special Economic Zones are Specific geographical regions with economic laws that are more liberal than a country’s typical economic laws” –Masami Ishida, ERIA The main objective of SEZ is to “Increase in Exports” of the country in a specific sector (sector specific SEZ) or various sectors (multi product SEZ) by providing State of the Art Infrastructure. This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations.SEZs in India functioned from 1. 11. 2000 to 09. 02.

2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes. Domestic regulations, restrictions and infrastructure inadequacies are sought to be eliminated in the SEZs for creating a hassle free sought to be eliminated in the SEZs for creating a hassle free environment. The SEZ policy in India was come from the EXIM Policy (1997-2002) introduced a new scheme from April 1, 2000 for establishment of the Special Economic Zones (SEZs).The policy was succeeded by SEZ Act 2005 envisaging role for the State Government in creation of SEZ infrastructure role for the State Government in creation of SEZ infrastructure. SALIENT FEATURES OF SEZ ACT 2005: •Simplified procedures for development, operation and maintenance of the SEZs and for setting up units. •Single Window Clearance provided for setting up SEZ, matters related to central and state governments.

•Simplified compliance procedures and documentation with emphasis on self certification.Gems and jewellery industry in India is rising like the morning sun in the sky, with the most glistening shine by being the greatest manufacturing center for gems and jewellery where the domestic market was guessed to be approximately USD16. 1 billion in financial year 2009.

Not only this, in the year 2010 India outshined as the world’s largest trading center of gold with USD16 billion. It fills us with surprise when we come to know that India depletes 20% of the world gold consumption making it the largest consumer of gold in the whole world.To instill confidence in investors and signal the Government’s commitment to a stable SEZ policy regime and with a view to impart stability to the SEZ regime there by generating greater economic activity and employment through the establishment of SEZs, a comprehensive draft SEZ Bill prepared after extensive discussions with the stakeholders. A number of meetings were held in various parts of the country both by the Minister for Commerce and Industry as well as senior officials for this purpose. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005.

The draft SEZ Rules were widely discussed and put on the website of the Department of Commerce offering suggestions/comments. Around 800 suggestions were received on the draft rules. After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. The main objectives of the SEZ Act are: (a) Generation of additional economic activity (b) Promotion of exports of goods and services c) Promotion of investment from domestic and foreign sources (d) Creation of employment opportunities (e) Development of infrastructure facilities India Gems ;amp; Jewellery Industry – Highlights Jewellery market size – US$ 13 billion Diamond jewellery – US$ 1.

2 billion Gold jewellery market growth year on year – 15% Diamond jewellery market growth – 27% POTENTIAL OF GEMS ;amp; JEWELLERY SEZ:The Industry exports is close to USD 28 Billion (March 2010) and recorded a 16. 6% growth (y? o? y) (GJEPC) * The Indian gems and jewellery industry is competitive in the world market due to its low cost of production and availability of skilled labour. * In addition, the industry has a worldwide distribution network, which has been established over a period of time. * India has set up more than 3,000 offices worldwide for promotion and marketing of Indian diamonds.

* According to Bullion Association of India (March 2009), “the share of Branded Jewellery Market in India is growing at a pace of 20-30 percent only. India has the world’s largest cutting and polishing industry, employing around 800,000 people (constituting 94 per cent of global workers) with more than 500 hi-tech laser machines. * The industry is well supported by government policies and the banking sector – around 50 banks provide nearly US$ 3 billion credit to Indian diamond industry.

* India is therefore a significant player in the world gems and jewellery market both as a source of processed diamonds as well as a large consuming market.The sector is largely unorganised at present with a small but growing organised sector: The Indian gems and jewellery sector is largely unorganised at present. There are over 15000 players across the country in the gold processing industry, of which only about 80 players have a turnover of over US$ 4. 15 million (Rs 200 million). There are about 450,000 goldsmiths spread throughout the country. India was one of the first countries to start making fine jewellery from minerals and metals and even today, most of the jewellery made in India is hand made.

The industry is dominated by family jewellers, who constitute nearly 96 percent of the market. Organised players such as Tata with its Tanishq brand, have, however, been growing steadily carving a 4 per cent market share. As India’s jewellery market matures, it is expected to get more organised and the share of family jewellers is expected to decline. There are more than 6000 players in domestic diamond processing industry. The average gestation period for setting up a diamond cutting and polishing unit is 15 months.

The low gestation period, coupled with low capital cost allows easy entry into the sector. This has led to the industry being largely characterised by a large number of small scale players. However, just as in the case of jewellery, the share of the organised sector has increased significantly in recent years due to an increase in demand for better and finer quality finished goods. Gems and jewellery SEZ in India: Notified Operational Special Economic Zones Hyderabad Gems SEZ Ltd. Ranga Reddy District, Hyderabad, Andhra Pradesh Gems and Jewellery SEZs set up by the Central GovernmentSEEPZ Special Economic Zone Mumbai, Maharashtra Electronics and Gems and Jewellery State Government/Private SEZs notified/approved prior to SEZ Act 2005 Manikanchan SEZ, West Bengal Kolkata, West Bengal Gems and Jewellery Jaipur SEZ Jaipur, Rajasthan Gems and Jewellery Gems and Jewellery SEZ / Jewellery Park in Surat Facilities in SEZ to Gem ;amp; Jewellery Sector: 1.

SEZ units shall be a positive net foreign exchange earner. Net foreign exchange earning shall be calculated cumulatively for a period of 5 years from the commencement of commercial production. 2.Exemption from Customs Duty on import of capital goods, raw materials, consumables, spares etc. 3.

Exemption from Central Excise Duty on procurement of capital goods, raw materials, consumables spares etc. from the domestic market (DTA). 4. Reimbursement of Central Sales Tax paid on domestic purchases.

5. 100% Income Tax exemption on export sales for a block of 5 years and 50% exemption for 2 years thereafter under section 10-A of IT Act. 6. SEZ Units my sell goods, including by-products and services in the DTA in accordance with the Import Policy in force, on payment of applicable duty.Domestic sales by SEZ units will be exempt from SAD. 2. 2. 7 100% foreign direct investment is freely allowed in manufacturing sector in SEZ units.

7. SEZ units may subcontract a part of their production or production process through units in the DTA or through other SEZ/EOU/EPZ/EHTP/STP, with the permission of Customs authorities. 8. Subcontracting by SEZ gems and jewellery units shall be subject to the conditions that, goods, finished or semi-finished, including studded jewellery, containing quantity and purity equal to the gold/silver/platinum so taken out, shall be brought back to the Zone within 30 days.

Wastage loss for subcontracting/ exchange by gem and jewellery units in transactions between SEZ and DTA will be allowed. 9. Gem ;amp; Jewellery units in SEZ can receive precious metal i. e. gold/silver/ platinum prior to exports or post exports equivalent to value of jewellery exported. This means that they can bring export proceeds in kind against the present provision of bringing in cash only. 10.

Restriction of one year period for remittance of export proceeds removed for SEZ units. 11. Netting of export permitted for SEZ units provided it is between same exporter and importer over a period of 12 months.

2. SEZ units permitted to take jobwork abroad and exports goods from there only. 13. The value of capital goods imported by SEZ units will be amortised uniformly over 10 years. 14. SEZ units will be allowed to sell all products including gems and jewellery through exhibitions and duty free shops or shops set up abroad. 15.

SEZ Units will have access to International Finance at International Rates through Off-shore Banking Units (OBU) to be set up within the SEZ. PROGRESS OF INDIA IN FIELD OF GEMS ;amp; JEWELLERY EXPORT INDUSTRY IN PAST YEAR:Gems and jewellery industry is often referred as the diamond industry as nearly 80 percent of the entire turnover of this industry is contributed by diamonds. According to Gems and Jewellery Export Promotion council i.

e. GJEPC the export of cut and polished diamonds have gone down by 8 percent which is near about $13024. 53 million in financial year 09-10 as against $14194. End of March 09 again faced a fall in the quantity of cut and polished diamond by 7 percent to 402. 05 lakh carats. In the financial year 2010, the industry was hit hard because of the increasing demand from the export-oriented countries.Now the industry with its apex body is striving hard to improve on its lost competitiveness and is seeking for some measures with the help of the government to overcome this melt down and fall in prices.

In order to come out of this problem the industry looked at the immediate necessity of increasing the flow into the industry by continuing the present credit limits to the exporters with a good past record and improving the credit facilities as well. The United Arab Emirates (UAE) was the largest importer of gems and jewellery from India in 2008-09, with a share of 31 per cent.This was followed by Hong Kong with 25 per cent and the US with 20 per cent. The gem and jewellery sector accounted for 13 per cent of India’s total merchandise exports. The export industry mainly comprises of small-to-large units based in various special economic zones (SEZs) supplying primarily diamond-studded jewellery. ITEMS | April’09 -January’10 (Provisional) | April ’08-January’09 (Same ports as current year) | % Growth / decline over previous Year | | Rs.

In Crores | US $ in Million | Rs. In Crores | US $ in Million | Rs. | US $ | Cut ;amp; Pol Diamonds * | 65693. 04 | 13789.

9 | 55453. 91 | 12458. 65 | 18. 46 | 10. 69 | (Quantity in Lakh Carats) | 460.

19 | | 384. 16 | | 19. 79 | | | | | | | | | Gold Jewellery-D. T.

A | 7958. 04 | 1668. 83 | 7919. 18 | 1812. 35 | 0. 49 | -7. 92 | SEZ / EPZ | 28512. 77 | 5977.

65 | 25623. 59 | 5596. 84 | 11.

28 | 6. 80 | Total | 36470. 81 | 7646.

48 | 33542. 77 | 7409. 19 | 8. 73 | 3. 20 | | | | | | | | Coloured Gemstones | 1159. 82 | 243. 31 | 1012.

16 | 225. 18 | 14. 59 | 8. 05 | Others | 1305.

19 | 274. 81 | 972. 28 | 215. 66 | 34. 24 | 27. 43 | Net Exports | 104628. 86 | 21954. 59 | 90981.

12 | 20308. 68 | 15. 00 | 8. 0 | | | | | | | | Exports of Rough Diamonds | 2789.

66 | 584. 21 | 2998. 12 | 673. 17 | -6. 95 | -13. 22 | (Quantity in Lakh Carats) | 182. 99 |   | 269. 99 |   | -32.

22 |   | Total Exports | 107418. 52 | 22538. 80 | 93979. 24 | 20981. 85 | 14.

30 | 7. 42 | Impact of ‘US’ crises on gems and jewellery sector: Though in the beginning Indian official denied the impact of US meltdown affecting the Indian economy but later the government had to acknowledge the fact that US financial crisis have some impact on the Indian economy and gems and jewellery sector is one of them to have impact.The gems and jewellery sector in India has laid off approximately 100,000 skilled and unskilled labourers because of poor demand from the much dependent US market. US is passing through economic slowdown which has impacted India’s diamond jewellery sector badly. India’s jewellery sales, constituting over 35 per cent of annual revenue, to the US declined over 20 per cent on the occasion of Christmas and New Year. Last financial year, India exported in excess of $21 billion dollar.Moreover, the domestic demand has also declined by over 20 per cent which is evident from piling up inventories currently running for 12 months from the normal level of 3-4 months. Which means the industry will continue to sell if it does not produce anything for 12 months.

Recommendations by gems and jewellery industries to government towards ‘SEZ’: * Industry representatives also appealed to the Government to incentivise units in SEZs and EOUs. “Certain schedules proposed in the Direct Taxes Codes like search and seizure provisions, tax on gross assets are highly penalising to the industry which is already reeling under the effects of global recession,” Mr. Vasant Mehta, Chairman, Gems and Jewellery Export Promotion Council (GJEPC), said. * Observing that the proposed provision of search and seizure has the potential of abuse owing to the unique characteristics of stock-in-trade, he said it will also lead to loss of exports and defaults in commitments to deadlines. “Most of the stock is purchased on bank loans.

We suggest these stocks be inventorised and not seized, as proposed by the Government,” he said. * A delegation of gems and jewellery trade bodies has sent a representation on the issue to the Finance Minister, Mr. Pranab Mukherjee, and has also approached the Commerce Ministry with its recommendations. * On the issue of taxes, the gems and jewellery industry also suggested that no tax should be levied based on value of assets of the company.It also sought credit of tax paid on value of assets to be available for setting-off tax payable in subsequent years. * Its other recommendations included continuation of the tax incentives in SEZ and EOUs and also providing objective parameters to enable rule based determinations of residential status of foreign companies. benefits to sez by state government: Exemption from electricity duty or taxes Allow generation, transmission and distribution of power within a SEZ Exemption from State and local taxes, levies and dutiesProviding water, electricity and such other services Delegation of power to the Development Commissioner inclusive of power with respect to work men employed by the developer Declaration of the SEZ as a Public Utility Service Providing single point clearance system to the developer and Unit under the State Acts and Rules Upcoming gems and jewellery SEZ: The Gitanjali group will develop an exclusive special economic zone (SEZ) for gems and jewellery on a 200-acre plot at Kancha Imarat Gems and jewellery SEZ in GurgaonAerens Gold Souk Group plans to set up a special economic zone (SEZ) for jewellery and gems in Gurgaon Gems and jewellery SEZ in Kolkata. Gems and jewellery parks in Surat and Bhavnagar Chhattisgarh: India’s 21st century city .

.. a five-star hotel, an IT SEZ, a gems and jewellery SEZ Anil Dhirubai Ambani Group India’s is also want to setup gem ;amp; jewellery SEZ at Butibori Nagpur. REQUIREMENTS FOR establishment of a gems and jewellery sez’s: * Minimum area of land 10 hectares for gems and jewellery SEZ * Fifty thousand square meters minimum buildup area Provide also that at least fifty percent of the area shall be earmarked for developing processing area. * Facilities such as Free Trade ;amp; Warehousing Zones, International Financial Services Centre may be approved for establishment within the Processing Area * For facilities for exclusive use of the Units such as canteens, public telephone booths, first aid centres, creches, etc * Minimum Processing Area Required of 50% (40000 Sq mtr for BT ;amp; 50000 Sq mtr for G;amp;J) * Investment should be more than Rs. 50 crores or * Net worth* of Rs.

50 Crores conclusion: India is the country which large producer and consumer of gems and jewellery but it is largely equipped with family owned business. So after the setup of SEZ’s in gems and jewellery sector the Indian gems and jewellery market was boosted to large extent by mass production and exporting the items to different countries. Even India is having a value of 16. 26% of world share in exports of gems and jewellery market with 29 billion$.The raw material used for manufacturing gems and jewellery is imported from other countries, therefore the country should take necessary polices to improve imports of raw material which helps in the improvement of Gems and Jewellery industry. references: 1.

From the book ‘’SOCIAL, POLITICAL, ECONOMIC;amp; environmental concerns of SEZ in india’’ written by –p arunachalam 2. Article from Business Standard newspaper Wednesday, Oct 13, 2010 topic Gems, jewellery exporters urge relaxation in SEZs written by Namrata Acharya / Kolkata June 02, 2009. 3.Article from Economic Section British High Commission, New Delhi 11 May 2006 4.

Article from ‘US Financial Crisis: Causes and its impact on India’ Written by Debabrata Sutradhar 5. OUTLOOK FOR INDIAN GEMS AND JEWELLEY SECTOR: 2009 Prepared by Nusrat Ahmad ASSOCHAM Research Bureau Article from The financial express newspaper Posted: Monday, Aug 08, 2007 India Brand Equity Foundation (IBEF) Report on Gems ;amp; Jewellery, Gems ;amp; Jewellery Export Promotion Council (GJEPC) Report on “The Global Gems ;amp; Jewellery Industry, Vision 2015:Transforming for Growth” Industries Commissionerate / iNDEXTbReports of Special Economic Zones (Amendment) Rules, 2006, w. e. f. 3-02-2009 Reports prepared by IL;amp;FS Infrastructure Development Corporation Ltd.

Reports from Government of India Ministry of Commerce and Industry Department of Commerce (SEZ Section) Data from some of the official sites like:http://www. sezindia. org/sez/index.

htm http://www. sezindiainvest.



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