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A
GLOBAL / COUNTRY STUDY AND REPORT
SUBJECT CODE: 2830003
ON
“BELGIUM”
SUBMITTED TO:
GUJARAT TECHNOLOGICAL UNIVERSITY
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ASMINISTRATION
Batch: 2010-12
MBA SEMESTER IV
SWAMI VIVEKANAND MBA COLLEGE
MBA PROGRAM
AFFILIATED TO GUJARAT TECHNOLOGICAL
UNIVERSITY AHMEDABAD
MONTH 04, YEAR 2012
2
TABLE OF CONTENT
Chapter
No.
Sub Ch
No.
Topic Page No.
1 Introduction/Demographic Analysis About The
Country
8
1.1 Overview of Belgium 8
1.2 Demographic Profile 9
1.3 Geography of Belgium
11
2 Major Economic Sectors Analysis In Belgium 13
3 Introduction Of Gems And Jewellery Sector &
Diamond Market Of India And Its Role in
Belgium
17
3.1 Introduction Of Gems And Jewellery Sector in
India
17
3.2 Environment scanning and competitiveness of the
gems and jewellery sector of India
20
3.3 Introduction Of Gems And Jewellery Of Belgium 24
3.4 Role of India in Belgium in Gems and Jewellery
market
26
4 SWOT Analysis 28
4.1 SWOT Analysis of Belgium as a Country 28
4.2 SWOT Analysis of Diamond Industry in line with
Belgium (Co-related with India)*some points
29
5 PESTEL ANALYSIS 31
5.1 Political Factor 31
5.2 Economic Factor 33
5.3 Social Factor 35
5.4 Technological Factor 36
5.5 Ecological Factor 37
5.6 Legal Factor 38
6 Nation Advantage Of Competitive Advantage
(Porter Diamond Model)
40
3
Chapter
No.
Sub Ch
No.
Topic Page No.
7 Belgium Various Export and Import items
and its Partners
42
8 Belgium’s Trade At International Level And
With India And Gujarat
44
8.1 Belgium-International Trade 44
8.2 India-Belgium Relation 46
8.3 Bilateral Trade 46
8.4 Trade and Economic links between India and
Belgium
47
8.5 An Agreements Were Signed Between Belgian
and India
47
8.6 Cultural Cooperation 48
8.7 Indian community in Belgium 48
8.8 India‘s Exports and Imports to EU 49
9 Value Chain Of The Sector 56
9.1 Value Chain – Diamonds 56
9.2 Market structure of the Gems and Jewellery
sector
58
9.3 Major Export Markets 60
9.4 Competitive Markets Overview With India 60
9.5 India is a leading player in the global Gems and
Jewellery market
62
9.6 Competitive Advantage 66
10 Demand Drivers Of The Gems And Jewellery
Sector
68
10.1 Demand drivers of the Jewellery Segment 68
10.2 Demand drivers of Diamond Jewellery 69
10.3 Drivers of competitiveness of the Gems and
Jewellery Sector
70
4
Ch No Sub Ch
No.
Topic Page no.
11 Legal Procedure of Export-Import from
Belgium to India
76
11.1 Diamond Office 76
11.2 Custom duty-V.A.T Expence 78
11.3 Other Expense 79
11.4 Licence 79
11.5 Kimberley Certificate 80
11.6 Stock Declaration 81
11.7 Carnet A.T.A 81
11.8 Import and Export Procedure 82
11.9 Import Procedure 82
11.10 Export Procedure 85
12 Legal Procedure of Export-Import from
India and other Government Initiatives
88
12.1 Regulatory Bodies 88
12.2 Foreign Direct Investment Policy 90
12.3 Kimberley Certificate 90
12.4 Government Initiatives to Boost the Sector 91
12.5 Export Facilitation Measures by the Ministry of
Commerce and Industry
92
12.6 Foreign Trade policy 2009-2014 93
12.7 Special Economic Zones (SEZ) 93
12.8 Diamond, Gem & Jewellery Export Promotion
Schemes Policy
96
12.9 Import- Export Procedure from India to
Belgium
98
13 Opportunities in Belgium 101
13.1 Small in Size, Great in Opportunity 101
13.2 Feasible Opportunity In Belgium 107
5
Chapter
No.
Sub Ch
No.
Topic Page No.
14 Feasibiltiy Study 109
14.1 Marketing Analysis 109
14.2 Technological Analysis 110
14.3 Financial Analysis 111
14.4 Economic Analysis 115
14.5 Ecological Analysis 116
15 Barriers In Diamond Business 118
15.1 Culture & Communication 118
15.2 Risks 118
15.3 Hurdles to Expand Business 120
15.4 Economic, Social and Environmental Issues 121
15.5 The Diamond mining industry faces environmental
challenges
122
15.6 Social Problem and control 123
16 Recommendation 124
17 Conclusion 125
18 Bibliography 129
6
LIST OF TABLES
Sr. No Topic Page No.
2.1 Growth rates of major sectors of Belgium 13
2.2 Output of tertiary sector in 2011 15
3.1 Size of Retail Market India 21
3.2 Share of various segments of the gems and jewellery sector
(export)
21
3.3 Growth rates of various segment of Gems & Jewellery Sector in
India
22
3.4 Segment wise Belgium's exports of Gems and Jewellery during the
period 2006-07 and 2007-08 and 2008-2009
25
6.1 Porter Diamond Model Analysis 41
7.1 Imported Commodities and partners 42
7.2 Principal trading partners (in millions of US dollars) 43
8.1 Belgium Balance of Trade 45
8.2 India‘s Exports to EU 49
8.3 India‘s Imports from EU 50
8.4 Belgium-India total export and import in value for last 5 years: 51
8.5 India‘s Country wise Export 52
8.6 India‘s Country wise Import 53
9.1 India Gems & Jewellery Industry-Highlights 63
12.1 Operational Gem & Jewellery SEZs in India 95
12.2 SEZs Approved under the SEZ Act, 2005 95
12.3 List of Valid in principle Apporvals 95
13.1 Demography of Belgium 102
13.2 Households of Belgium 103
13.3 Life Expectancy in Belgium 103
13.4 Pattern of spending in Belgium 104
7
LIST OF FIGURES
Sr. No Topic Page No.
6.1 Porter Diamond Model 40
8.1 Trade Balance Fluctuations of Belgium since 1990-2011 54
8.2 Monthly Import-Export and Trade Balance 2007-2011 55
9.1 Value Chain of Diamonds and Gold 57
9.2 Gems & Jewellery Clusters in Gujarat 58
9.3 Destination wise exports of gems and jewellery 60
9.4 Share of India‘s Gem & Jewellery Sector 64
9.5 Comparative position of India in Global Gems & Jewellery Sector 65
10.1 Demand drivers for the gems and jewellery sector 68
10.2 Demand drivers for diamond jewellery 69
13.1 Patten of Spending in Belgium 105
13.2 Monthly import and export of textile, clothes and footwear 106
8
CHAPTER 1. INTRODUCTION/DEMOGRAPHIC ANALYSIS
ABOUT THE COUNTRY
1.1 Overview of Belgium
Belgium officially the Kingdom of Belgium, is a federal state in Western Europe. It is a
founding member of the European Union and hosts the EU's headquarters, and those of several
other major international organizations such as NATO. It has a population of about 11 million
people. Belgium is straddling the cultural boundary between Germanic and Latin Europe.
Belgium is home to two main linguistic groups, the Dutch-speakers, mostly Flemish (about
60%), and the French-speakers, mostly Walloons (about 40%), plus a small group of German-
speakers. Belgium's two largest regions are the Dutch-speaking region of Flanders in the north
and the French-speaking southern region of Wallonia. There are more Dutch speaking people in
Belgium than French speaking.
9
Flag of Belgium
The Brussels-Capital Region, officially bilingual, is a mostly French-speaking enclave within
the Flemish Region. A German-speaking Community exists in eastern Wallonia. Belgium‘s
linguistic diversity and related political conflicts are reflected in the political history and a
complex system of government. Belgium is having the Government Federal Parliamentary
Democracy and constitutional monarchy. The Prime minister of Belgium is Yves Leterme.
1.2 Demographic Profile
Total Population: 10,414,336 (July 2009 est.), ranked #78 behind the Portugal (10,707,924) and
Tunisia (10,486,339).
Total Land and Water Area:30,528 sq km, ranked #140 behind the Taiwan (35,980 sq km) and
Moldova (33,851 sq km) .
Age Profile Percentage of people
0-14 years 16.1%
15-64 years 66.3%
65 years and over 17.6%
Median age 41.7
Average life expectancy 79.22 years
Ranked (in Avg. life expectancy) 33rd
in world
10
Male 48%
Female 52%
Ethnic groups Fleming 58%,
Walloon 31%,
Mixed or other 11%
Religions Roman Catholic 75%,
Other(includes Protestant)25%
School life expectancy (primary to tertiary
education)
16 years
Per Capita Gross National Income (at
current prices in US Dollars)
$36,600, ranked #29 in world
Gross Domestic Product Contribution by
Economic Sector and Top Industries:
74.7% Services
24.5% Industry
0.8% Agriculture
Industries: engineering and metal products,
motor vehicle assembly, transportation
equipment, scientific instruments, processed
food and beverages, chemicals, basic metals,
textiles, glass, petroleum
(Source:http:// Belgium\Belgium/demographic - Wikipedia, the free encyclopedia.mht)
11
1.3 Geography of Belgium
Continent Europe
Region Western Europe
Coordinates 50°50′N 4°00′E50.833°N 4°E
Area Ranked139th
33,990 km2(13,120 sq mi)
89%land
11 % water
Borders Total and borders:
1,482 km(859 miles)
France 645 km, Germany 153 km, Luxembourg 150 km and Netherlands
460 km
Highest point Signal de Botrange
694 m (2,277 ft)
Lowest point De Moeren
12
Belgium is a federal state located in Western Europe, bordering the North Sea. Belgium shares
borders with France (620 km), Germany (167 km), Luxembourg (148 km) and the Netherlands
(450 km). Belgium comprises the regions of Flanders, Wallonia and Brussels.
Natural hazards: flooding is a threat in areas of reclaimed coastal land, protected from the sea
by concrete dikes.
Geography - note: crossroads of Western Europe; majority of West European capitals within
1,000 km of Brussels which is the seat of both the EU and NATO.
Longest Distances: 280 km SE-NW/ 222 km NE-SW
Natural resources
Natural resources in Belgium include construction materials, silica sand and carbonates. Belgium
used to have coal mines. As of 2007, the land use was as follows:
Arable land 27.42%
Permanent crops: 0.69%
Other: 71.89%
Environment
Because of its high population density and location in the centre of Western Europe, Belgium
faces serious environmental problems. A 2003 report suggested that the water in Belgium's rivers
was of the lowest quality in Europe, and bottom of the 122 countries studied.
Cities
The main cities in Belgium in terms of population are Brussels, Antwerp, Ghent, Charleroi and
Liège. Other notable cities include Bruges, Namur, Leuven, Mons and Mechelen.
(Source:http:// Belgium\Belgium/geography - Wikipedia, the free encyclopedia.mht)
13
CHAPTER 2 MAJOR ECONOMIC SECTORS ANALYSIS IN
BELGIUM
From Belgium‘s different economic sectors we have taken 7 different sectors according to their
emergence and growth at very fast pace:
1. Telecommunication Sector
2. Oil and Natural Gas Sector
3. Food Processing Sector
4. Chemical Sector
5. Personal care (cosmetic segment)
6. Health care segment
7. Gems & Jewellery Sector (Diamond segment)
Table: 2.1 Growth rates of major sectors of Belgium
No Economic sectors Growth rate in %
(Year 2010)
1 Telecommunication 2.2 %
2 Oil & natural gas 2.3 %
3 Food processing 4.6 %
4 Chemical sector 9.2 %
5 Cosmetic sector 8.0 %
6 Health sector 9.6 %
7 Diamond sector 11.6 %
Conclusion:-
From the above table we are conclude that in the year 2010 diamond industry are higher than
other economic sectors in Belgium, so that we can make investment in the diamond industry,
they are profitable for our business.
14
Service sector
The tertiary sector of the economy (also known as the service sector or the service industry)
is one of the three economic sectors, the others being the secondary sector (approximately the
same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as
mining).
The service sector consists of the "soft" parts of the economy, i.e. activities where people
offer their knowledge and time to improve productivity, performance, potential, and
sustainability. The basic characteristic of this sector is the production of services instead of
end products.
The tertiary sector of industry involves the provision of services to other businesses as well
as final consumers. Services may involve the transport, distribution and sale of goods from
producer to a consumer, as may happen in wholesaling and retailing, or may involve the
provision of a service, such as in pest control or entertainment. The goods may be
transformed in the process of providing the service, as happens in the restaurant industry.
However, the focus is on people interacting with people and serving the customer rather than
transforming physical goods.
A service is the non-material equivalent of a good. Service provision is defined as an
economic activity that does not result in ownership, and this is what differentiates it from
providing physical goods. It is claimed to be a process that creates benefits by facilitating a
change in customers, a change in their physical possessions, or a change in their intangible
assets. Service output is a component of the GDP of a nation. The service sector includes (but
is not limited to) farm and factory related activities.
Examples of service sector employment in Belgium includes:
Government
Healthcare/hospitals
Education
Banking/Insurance
Tourism
15
Retail sales
List of countries by service output
Table: 2.2 Output of tertiary sector in 2011
RANK COUNTRY OUTPUT IN
BILLIONS IN
US$
COMPOSITION
OF GDP (%)
% OF
GLOBAL
TERTIARY
SECTOR
- World 43967.335 62.8% 100%
- European
Union
13,128.911 73.1% 29.9%
1 United States 11,554.714 76.7% 26.3%
Remaining
Countries
5,627.819 12.8%
2 Japan 4,368.116 74.6% 9.9%
3 China 3,026.008 43.3% 6.9%
4 Germany 2,576.322 71.0% 5.9%
5 France 2,240.995 79.8% 5.1%
6 United
Kingdom
1,927.720 77.7% 4.4%
7 Brazil 1,694.565 67.3% 3.9%
8 Italy 1,637.120 72.9% 3.7%
9 Canada 1,248.663 71.0% 2.8%
10 Russia 1,110.208 58.9% 2.5%
11 Spain 1,089.364 70.9% 2.5%
12 Australia 1,061.211 70.4% 2.4%
13 India 1,024.920 55.6% 2.3%
14 Mexico 751.426 63.4% 1.7%
15 South Korea 670.376 57.6% 1.5%
16 Netherlands 626.546 73.0% 1.4%
17 Turkey 487.618 63.9% 1.1%
18 Switzerland 474.785 71.3% 1.1%
19 Belgium 411.069 77.7% 0.9%
20 Sweden 407.527 71.3% 0.9%
Thus we can conclude that the Growth rate of Service industry in Belgium was 77.4% of
G.D.P.in 2011 and from the above table we can conclude that in the year 2011 the European
union‘s G.D.P. composition of 73.1% and the global is 29.9%. The united kingdom‘s tertiary
sector‘s composition of G.D.P. is 77.7% and the global G.D.P. are 4.4%, The Belgium‘s
16
composition of service sector in G.D.P. is 77.3%, and global is 0.9%, As compared to United
Kingdom the Belgium tertiary sector growth rate are less. Because of weak export demand, labor
productivity growth decline, lower contributions for investments in Belgium
The diamond segment(Gems & Jewelry) growth is $23 billion and the diamond segment(Gems
& Jewelry) growth rate is 11.6% in the year 2011.Diamond segment(Gems & Jewelry) are higher
than other economic sectors in Belgium, so that we can make investment in the diamond segment
they are profitable for our business.
17
CHAPTER 3 INTRODUCTION OF GEMS AND
JEWELLERY SECTOR AND DIMOND MARKET OF
INDIA AND ITS ROLE IN BELGIUM
As part of our study of Global Country Report, we have taken Belgium to do trade in it, and here
we have analyzed the Gems and Jewellery and Diamond sector of India and Role of India in
Belgium.
'Gems and Jewellery' sector includes following:
Diamonds
Precious / Semiprecious stones or colored gemstones
Gold jewellery Pearls
Non-gold jewellery
Synthetic stones Costume / fashion jewellery.
3.1 INTRODUCTION OF GEMS AND JEWELLERY SECTOR IN INDIA
Indian gems and jewellery products are acknowledged the world over for their exquisite
craftsmanship. Modern state-of the-art machinery and computerized operations have lent a
cutting edge to both the diamond processing and jewellery manufacture. Over one million people
are directly or indirectly employed in this industry.
18
The industry is highly export-import oriented, labour intensive and employment oriented.
Realizing enormous potential of the sector, the Ministry of Commerce, Government of India
declared gem and jewellery as a thrust sector for export promotion.
India is the world's largest manufacturing centre for gems and jewellery and the Industry
contributes over 12% to the total export earnings of the country and employs highly skilled
1.5 million workers. This industry was hit hard by the full demand due to global economic
slowdown in FY 09.
The gems and jewellery industry is a major exchange exchequer as major portion (around 80%)
of its turnover was contributed by exports.
This classified into five main segments:
Cut and polished diamonds, gemstones, gold and jewellery, pearl and synthetic stones, and
others, including precious metal jewellery (other than gold), synthetic stones and costume
fashion jewellery.
i) Gold
India has been the largest consumer of gold jewellery in recent times. The main reason for
demand for gold has been the traditions and cultures in India.
India exported gold mainly in the form of jewellery, valued US $ 4.32 billion (majority of them
are studded with diamonds), which witnessed an increase of 2.2% over the previous year. This
signifies the importance of domestic demand for jewellery and the reliance of imported gold for
jewellery manufacturing.(which indirectly affect the diamond market of India with Belgium)
19
ii) Diamond
India has always excelled in the field of diamond cutting, gem cutting, polishing and processing.
India‘s diamond tradition goes back thousands of years and is one of the oldest in the world.
India imports rough diamonds and process them for value addition and exports.
iii) Precious Stones
India was more an exporter of precious stones than an importer of the same, and the difference
between these two being minimal. During 2007-08, the exports of precious stones were US $
280.8 million, an increase of 6.5% over the previous year, and in the year 2008- 09, exports of
precious stones witnessed a marginal decline of (-)0.1%, over the previous year. Import of
precious stones has grown marginally; during the year 2008-09, imports grew by 4.6% over the
previous year.
iv) Platinum
Platinum is a naturally occurring rare metal which is scantier than gold. UAE was the major
export destination for India‘s export of raw platinum, constituting 49.1% of total exports.
Thailand and Belgium with 69% and 13% share.
v) Silver
During 2007-08, exports of silver (unwrought and semi-manufactured form) witnessed a
negative growth of 35.5%, and silver jewellery witnessed a growth of 19.5%.
According to Gems and Jewellery Export Promotion council (GJEPC) export of cut and
polished diamonds have declined by 8% in value terms to $13024.53 million in FY 09 as against
$14194.13 million in the corresponding previous year. In the volume terms, the Quantity of cut
and polished diamonds have fell by 7% to 402.05 lakh carats in fiscal ended March 09.
20
3.2 ENVIRONMENT SCANNING AND COMPETITIVENESS OF THE
GEMS AND JEWELLERY SECTOR OF INDIA
India in the Global Context
The size of the global Gems and Jewellery industry was estimated at US $ 146 billion at retail
prices in 2005, and is estimated to have recorded US $ 170 billion in sales in 2008. The industry
has grown at an average Compounded Annual Growth Rate (CAGR) of 5.2% since 2000.
India is one of the eight key world markets, the others being the USA, UK, Middle
East, Turkey, Japan, Italy and China. India is the also the largest consumer of gold in the world,
and is estimated to hold nearly 16,000 tons of gold, accounting for nearly 12-15% of the world's
cumulative 'above ground' gold stocks. India is also the largest diamond cutting and polishing
centre in the world.
While a predominant portion of gold jewellery manufactured in India is for domestic
consumption, a significant portion of rough, uncut diamonds processed in the form of
either polished diamonds or finished diamond jewellery is exported.
The manufacturing and processing of Gems and Jewellery is distributed across several countries
in the world (i.e., the African continent dominates the mining space of diamonds whereas
India is the dominant player in diamond processing). Apart from being a major market, India
primarily forms a part of the polishing and jewellery manufacturing part of the industry's
value chain in addition to increasing traction in the organized retail of jewellery.
Industry size and Growth of the Gems and Jewellery Sector
The domestic demand for gold jewellery was estimated at Rs. 550 billion in 2007, accounting for
an estimated 80% of the Indian jewellery market of Rs. 690 billion; the balance comprised of
diamond jewellery (Rs. 115 billion), and other fabricated jewellery (Rs. 25 billion), as seen
below:
21
Table: 3.1 Size of Retail Market India
Table 3.2 share of various segments of the gems and jewellery sector (export)
22
Also, the growth rates of the segments are as below:
Table: 3.3 Growth rates of various segment of Gems & Jewellery Sector in India
OUTLOOK:
The gems and jewellery Industry has been one of the fastest growing industries in India
in the past few years. This industry has been vital for the economy, as it has contributed,
on an average, to about 15.27% of the country‘s total exports in past one decade.
India is one of the largest diamond processors in the world. This industry is engaged in
sourcing, manufacturing and processing which involves cutting, polishing and selling of
precious gemstones as well as diamond and precious metals like gold, silver and
platinum.
The price of one of the main inputs in jewellery — gold — has been consistently
touching all-time highs. The yellow metal‘s spot price in the domestic market hit all time
high of `28,540 per 10 gram on August 22, 2011. In the international market, prices
breached $1,900 (per ounce) level. Investment demand for gold remains strong in the
current environment of market uncertainty, triggered by worries of a double dip recession
in the US and worries of sovereign debt contagion in Europe. Gold has slowly turned into
23
a sophisticated invest-ment instrument, an improvement over its traditional use for
jewellery making in India.
Hence, the retailers have been trying to woo customers through cheaper alternatives,
mainly silver jewellery. Because of this, Indian non-gold jewellery, a chunk of which is
made in silver, is finding its way to export markets. This trend might strengthen in near
future.
The industry is highly fragmented and mostly unorganised. However, due to the ongoing
retail revolution in the country, this industry is undergoing a transformation and gradually
moving towards being organised. As part of this phenomenon, a number of nation-wide
jew-ellery chains are increasingly making their presence felt.
In recent times, the Government has taken various initiatives to support this sector. For
instance, up to 100% FDI is allowed in the indus-try through automatic route. Also,
special economic zones (SEZs) and jewellery parks have been set up to promote
investments.
After witnessing a significant downturn during 2008-09, this industry is back on the a
recovery path. However, due to export-import de-pendence, it remains susceptible to
external developments, such as fluctuation in international prices, exchange rate volatility
and de-mand scenario in key markets. It can be mentioned here that India has been one of
the largest importers of gemstones, rough diamonds and precious metals over the years
and most of it is used for exports after value addition.
24
3.3 INTRODUCTION OF GEMS AND JEWELLERY OF BELGIUM
Global Exports in Gem and Jewellery Sector:
Global exports of gem and jewellery related products in 2004 registered a steep growth of 28.49
per cent over the previous year when the same touched a figure of US$78,022 million as against
US$60,721 million. India as may be seen turned out to be third largest exporting country after
Belgium and Israel. Belgium continues to be the largest exporting country.
The country during the period registered a growth of 21.55 per cent. The other countries
registering a robust growth during the period include Switzerland (60.97%), China (37.31%),
Canada (34.15%), USA (33.81%), India 25.21%), Hong Kong (21.78%), Israel (21.42%), and
Congo (21.15%).
Belgium has evinced interest in further boosting economic ties with India in sectors like IT,
gems and jewellery, non-conventional energy sources and education.
Belgian Ambassador Jean M. Deboutte in a press meet Friday said that they can strengthen
their economic ties with India by increasing their cooperation in the IT, non-conventional
energy sources and education along with gems and jewellery. Gems and Jewellery Export
Promotion Council (GJEPC) has strongly urged the Union government to introduce
presumptive tax system on the lines of Belgium and Israel, which will make India the world's
leading gems and jewellery hub and to protect its vanguard position as the low-cost labour
intensive global centre for diamond cutting and polishing activities.
In its pre-budget recommendations, GJEPC has stated that India's traditional pre-eminent
position is under threat with the shifting of industries and capital from India to other countries
such as China and Thailand having the ability to offer plentiful and cost effective labour.
25
Table: 3.4 Segment wise Belgium's exports of Gems and Jewellery during the
period 2006-07 and 2007-08 and 2008-2009
(Rs.in crores)
Segment 2006-2007 2007-2008 2008-2009 %Growth
on 08-09
over 07-
08
Cut and
polished
diamond
39554 50074 67543 34.89
Gold
Jewellery
12255 17113 21346 24.74
Rough
diamond
2451 1599 3224 101.63
Coloured
Gems
Stone
818 864 1288 49.07
Non-Gold
Jewellery
457 580 819 41.21
Pearls 19 12 13 8.33
Synthetic
Stones
5 4 4 -
Total 55684 70245 94237 34.15
26
3.4 Role of India in Belgium in Gems and Jewellery market
Forty percent of gems and jewellery in Belgium are imported from India and almost seventy to
eighty percent Indians staying in Belgium are associated with the gems and jewellery trade.
There exists growing trade and investment between the two countries in the face of the global
financial slowdown," an official release quoting Sharma said .Indo-Belgium trade in 2010-11
was USD 14.90 billion. The balance of trade continues to be in favour of Belgium
At present, the trade is dominated by the gems and jewellery sector which accounts for about 61
per cent of the total bilateral commerce. The top sectors of imports from Belgium are pearls,
precious and semi-precious stone, machinery, iron and steel. Diamonds accounts for a large part
of this trade, much of it happens with the city of Antwerp.
India is the 5th largest exporter to Belgium (after USA, China, Japan and Russia) and 2nd
largest
importer of Belgian products in 2010 (after USA).
The growth in exports of gems and jewellery sector has been primarily driven by the Cut &
Polished Diamonds (CPD) segment over the years. CPD exports grew from US$ 7.11 bn in
FY03 to US$ 13.02 bn in FY09. Over the years, the major export markets for the Indian gems
and jewellery sector has been USA, UAE, Hong Kong, Belgium, Israel, Japan Thailand, with US
being the biggest export destination for Indian gems and jewellery. On the import front, Europe
has been the largest importing destination for india followed by Middle East, Oceania and Asia.
The major items of Indian exports to Belgium are - Precious stones; Textiles and garments; Iron
and steel; Chemical products; Mineral products; Organic chemicals; Machinery and Electrical
Equipments etc.
27
The major items of Indian imports from Belgium are- Precious stones; Iron and steel; Machinery
and mechanical appliances; Chemical products; boilers, machinery and mechanical appliances &
parts thereof: Organic chemicals; Plastic and rubber; Plastics and articles thereof; Pharmaceutical
products etc.
Around 2,500 Indian NRIs/PIOs, based in Antwerp mainly from Gujarat are involved in
diamond trade.
28
CHAPTER 4. SWOT ANALYSIS
4.1 SWOT Analysis of Belgium as a Country
Weaknesses
1. Structural Weakness
2. Tax system
3. Budget deficit
4. Low availability of
Natural Resources
5. Dominant power of
Service sector
6. Environmental Issues
Strengths
1. Integrated Economy:-
2. Favorability of
Government:-
3. Developed Infrastructure:-
4. Business Freedom:-
5. Trade Freedom:-
6. Investment Freedom:-
7. Financial Freedom:-
8. Property Rights:-
9. Freedom from corruption
10. Labour Freedom
11. Rank in Health and Primary
Education
12. Better Economy:-
Threats
1. Unstable economy
2. Fiscal threat
3. Anti social activity and
threat from terrorism
4. High tariffs
5. New competitive pressure
6. Claims made by
stakeholders are illegitimate
OPPORTUNITIES
1. Trade from UK
2. Scope in domestic market
3. Job opportunities
4. Scope to develop as being
a member of EU
5. Climate of open trade
29
4.2 Swot Analysis of Diamond Industry in line with Belgium
(Co-related with India)*some points
Weaknesses
1. Licenses:-
2. Lack of Raw Material
Availability:-
Strengths
1. Tradition with having scope to
Develop:-
2. High Innovation in Diamond
Processing in Gujarat with Brand
Advantage:-
3. Historical significance and Home
of the Diamond Industry:-
4. Strong connection between Indian
diamond polishing industry &
Belgium Diamond industry
structure:-
5. Developed Diamond Processing
Industry in Gujarat, getting
trading advantage in Belgium:-
6. Largest Processing capacity
advantageous over higher trading
network:-
7. Developed connecting Network
getting benefit to develop in EU
Countries:-
8. Advantage of largest
manufacturing sector with trading
Advantage:-
9. Getting Advantage of Great
entrepreneurial spirit of Indian
with Great Specialized person in
Belgium:-
10. Lower costs with Competitive
Advantage:-
30
Threats
1.Global competitive threats:-
2. Conflict diamonds:-
3.Effect of global recessionary
trend:-
4. Global economic downturn:-
5. Protected cartel
6. Over dependence on single-
channel supply chain:-
Opportunities
1. Colored diamonds:-
2. Developing Market of India with
having chance to make Growth:-
3. Growth in international market:-
4. Growing Center having
opportunity to get advantage of
leading exporter:-
5. New markets in Europe & Latin
America through establishing
Network in Belgium:-
6. Growing demand in south Asian &
far east countries:-
7. Fancy cut diamonds using
specialized skill of labour:-
8. Roll-over skills and Government
support to develop it:-
9. Network to grow in International
Market:-
10. Employment opportunities with
Government support:-
31
CHAPTER 5 PESTEL ANALYSIS
Belgium is a federal state, consisting of its three language communities that are responsible for
the control of culture and education, and its three regions that are responsible for controlling the
economic development, infrastructure, and environment. In Flanders, the institutions of the
Dutch-speaking community and the Flemish region have merged, leaving the country with six
governments and six parliaments. This complex structure has resulted from the increasing
federalization of the country, which in turn has resulted from the demands.
From the creation of the Belgian state in 1830 and throughout most of the 19th century, two
political parties dominated Belgian politics: the Catholic Party and the Liberal Party. In the late
19th century the Socialist Party arose, representing the emerging industrial working class. These
three groups still dominate Belgian governments, but they have evolved substantially in
character and face new electoral challengers.
5.1 Political parties
The Christian Democratic Parties
After World War II, the Catholic (subsequently Christian Democratic) Party severed its formal
ties with the Church. It became a mass party of the center (more like a political party in the
United States). In 1968, the Christian Democratic Party responded to linguistic tensions in the
country by dividing into two independent parties, now known as the Democratic and Humanist
Center (CDH) in Francophone Wallonia and the Flemish Christian Democrats (CD&V) in
Flanders. The two parties share similar policies, but not on institutional issues. The CD&V is the
country's largest party, while the CDH is among the smaller parties.
32
The Socialist Parties.
The modern Belgian Socialist parties are labor- and city-based parties. Despite the post-World
War II dominance of the Christian Democrats, the Socialists headed several postwar
governments. The Socialists also split along linguistic lines in 1978. The francophone Socialists
dominate the cities and towns of Wallonia's industrial basin. The Flemish Socialists' support is
less concentrated.
The Liberal Parties.
In modern times, the Liberal Parties in Belgium have chiefly appealed to business people,
property owners, shopkeepers, and the self-employed. In American terms, the Liberals' positions
could be considered to reflect a more conservative free market oriented economic ideology. This
non-interventionist ideology is reflected also in the parties' strong support for gay marriage,
homosexual adoption, and euthanasia. The two current Liberal parties were formed in 1971, after
the original all-Belgium Liberal Party split along linguistic lines. They are the Flemish Liberals
and Democrats (Open VLD) in Flanders and the Reform Movement (MR) in Wallonia.
Greens.
The Flemish (Groen!) and Francophone (ECOLO) ecologist parties made their parliamentary
breakthrough in 1981. Following significant gains in the 1999 general elections, the two Green
parties joined a federal coalition cabinet for the first time in their history in Prime Minister
Verhofstadt's first six-party coalition government. The parties experienced significant losses in
the May 2003 election, however, with ECOLO winning only four seats in the Chamber and
AGALEV failing to win any seats. They were thus excluded from the new coalition formed by
returning Liberal Prime Minister Verhofstadt in 2003. Following the election, AGALEV
changed its name to "Groen!." The two parties made a slight recovery in the 2007 general
elections and even better in the 2010 general elections.
33
The Linguistic Parties.
A postwar phenomenon in Belgium was the emergence of linguistic-based parties, which were
formed to defend the cultural, political, and economic interests of one of the linguistic groups or
regions of belgion society.
The far-right Vlaams Belang (Flemish Interest) is the most militant Flemish regional party, with
a separatist, anti-immigration, law and order platform. The Vlaams Belang was formerly called
the Vlaams Blok, until a 2004 high court ruling confirmed a lower court verdict that the Blok
was a "racist" party. Faced with further legal problems, the Blok disbanded and resurrected itself
as the Vlaams Belang, with the same party leaders and basically the same radical party policy.
The Vlaams Belang was the second most popular party in the 2007 general elections, with 19%
of the Flemish vote. The party‘s support fell to 7.76% in 2010, as voters in Flanders turned to the
more moderate and pragmatic new Flemish allince.
In Brussels and Wallonia, the small far-right Front National (FN) managed to hold on to its only
House seat in the 2007 general elections but lost it in the 2010 general elections.
5.2 Economical factors
Central bank:- National Bank of Belgium . Belgium is part of the Euro system and the
European Central Bank
International Reserves:- US$ 27.225 billion (Source: IMF; Data updated: November 2010)
GDP : US$ 499.397 billion (2010 estimate).
GDP (Purchasing Power Parity):- 405.47 billion of International dollars (2010 estimate)
34
Real GDP growth: GDP (PPP) - share of world total
2005 2% 1980 0.85%
2006 2.7% 1990 0.76%
2007 2.8% 2000 0.66%
2008 0.8% 2010 0.53%
2009 -2.7% 2015** 0.47%
2010 2%
2011* 1.7%
GDP per capita - current price:- US$ 45,367 (2009 estimate)
GDP per capita PPP:- $36,834 International Dollars (2009 estimate)
GDP - composition by sector:- Agriculture: 0.6%
Industry: 22%
Services: 77.4% (2009 estimate)
Gross domestic expenditure on R&D (% of GDP):- 1.92% (2008)
Inflation rate:- Unemployment rate:-
2008 4.5% 2008 7%
2009 0% 2009 8%
2010 2.3% 2010 8.4%
2011* 2.9% 2011* 8.4%
35
5.3 Socio-Cultural Factors
Geographically and culturally, Belgium is at a crossroads of Europe, and during the past 2,000
years has witnessed a constant ebb and flow of different races and cultures. Consequently,
Belgium is one of Europe's true melting pots with Celtic, Roman, Germanic, French, Dutch,
Spanish, and Austrian cultures having made an imprint.
Belgium is divided ethnically into the Dutch-speaking Flemings and French-speaking Walloons,
the 75,000 residents of the eastern German cantons, and the bilingual capital of Brussels. The
population density is the second highest in Europe, after the Netherlands.
The majority of business people speak English and are highly-educated, desiring to be both
straightforward and well-informed. However, efforts to speak a native language (Dutch or
French) are always welcomed.
Belgian culture is more formal than Canadian culture, with Belgians being formal and courteous
in their business transactions. Titles are often used, while addressing business contacts by first
name is not very common unless they are well-known.
Similarly, business attire is formal and handshakes are a common way of greeting. However,
establishing a personal relationship is not a necessary prerequisite for starting business
dealings/relationships. Punctuality and deadlines are expected to be respected.
Evolving consumer demands combined with increasingly powerful retailers are resulting in more
interest in developing long-term partnerships. Due to a competitive marketplace and
sophisticated consumer market, importers are interested in value-added products that have
unique, innovative and healthy attributes.
36
5.4 Technological factors
Product category
Product
Manufacturing: Octopus: pre polishing and polishing equipment
Pendragon : polishing mill
Balancer: to become a perfect equilibrated scaife
EOS: new type of girdling machine
Solid: three dimensional laser
Examination: D-Scope: diamond microscope
G-Scope: gemmological microscope
D-Screen: compact screening device
Merlin: rough scanner and marker
Avalon: smoothness tester
Avalight: smoothness tester on the D-Scope
Source:
http://www.comdiam.com/frame.htm
37
5.5 Ecological factors
Today most modern diamond mines are managed to the ISO 14001 standards of environmental
management, and the major companies have a policy of regularly publishing reports on their
environmental performance. Many of the major diamond mining companies go beyond the ISO
14001 standard and use Environmental Impact Assessments and Social Impact Assessments to
identify the environmental and social impacts of mines as well as to identify gaps at their
operations.
The environmental impact of the land exploration involved in diamond mining is minimized in
several ways:
Vehicle tracks are reused
Minimal amounts of soil are cleared during drilling and sampling
Topsoil from exploration sites is refilled and replace
Energy efficiency and renewable energy programmes are widely used across the diamond mining
industry. Emission levels are monitored through energy and carbon emission assessments.
Mines have reduced their energy use by introducing a range of schemes: installing timers on
boilers, shutting off pressurised fans over weekends, running mud pumps in off-peak periods and
introducing battery-powered vehicles that do not emit harmful gases.
Furthermore, solar panels and energy-saving schemes have reduced the amount of electricity
used at mines.
38
5.6 Legal and government factors
National Government
Belgium is a hereditary constitutional monarchy. The current monarch is King Albert II, who
took the oath of office on August 9, 1993.
As titular head of state, the King plays a largely ceremonial and symbolic role in the nation. His
primary political function is to designate a political leader to attempt to form a new cabinet
following either an election, the resignation of a government, or a parliamentary vote of no
confidence. The King is seen as playing a symbolic unifying role, representing a common
national Belgian identity.
The Belgian Parliament consists of a Senate and a House of Representatives. The House of
Representatives has 150 directly elected members. The Senate has 71 members. The executive
branch of the government consists of ministers and secretaries of state (junior ministers) drawn
from the political parties that form the government coalition. The number of ministers is limited
to 15, and they have no seat in Parliament. The Council of Ministers is chaired by the Prime
Minister and consists of the ministerial heads of the executive departments.
The allocation of powers between the Parliament and the Council of Ministers is somewhat
similar to the United States--the Parliament enacts legislation and appropriates funds--but the
Belgian Parliament does not have the same degree of independent power that the U.S. Congress
has. Members of political parties represented in the government are expected to support all bills
presented by the Cabinet. The House of Representatives is the "political" body that votes on
motions of confidence and budgets. The Senate deals with long-term issues and votes on an
equal footing with the Chamber on a limited range of matters, including constitutional reform
bills and international treaties.
39
5.7 Government
Type: Parliamentary democracy under a constitutional monarch.
Independence: 1830.
Constitution: 1994 (revised).
Branches: Executive--King (head of state), Prime Minister (head of government),
Council of Ministers (cabinet).
Legislative--bicameral parliament (Senate and House of Representatives).
Major political parties: Christian Democratic, Liberal, Socialist, Green, Flemish
Nationalists, Vlaams Belang (Flemish extreme right).
Political subdivisions: Ten provinces, three regions, three communities, 589
municipalities.
40
CHAPTER 6 NATION ADVANTAGE OF COMPETITIVE
ADVANTAGE (PORTER DIAMOND MODEL)
Figure: 6.1 Porter Diamond Model
41
Table: 6.1 Porter Diamond Model Analysis
Sr.
No
Component Favorable/
Unfavorable
Description
1 Factor Conditions Favorable Labors, Resource and Material
availability
2 Demand Conditions Favorable Rising demand for polished, rough
diamonds from developed as well
as developing countries.
3 Related and Supporting
Industries
Favorable Gem quality diamonds are usually
distributed to one of the main
diamond cutting and trading
centers in Antwerp, Mumbai, Tel
Aviv, New York, China, Thailand
or Johannesburg.
4 Firm Strategy, Structure, and
Rivalry
Favorable Associations are formed of
diamond traders
5 Government's Role Favorable Government‘s main focus is on
diamond segment as Antwerp is the
only trading hub for diamonds.
6 Chances
Unfavorable Less chances has happened in past
regarding any natural calamities.
Only Diamond conflict has arise
the certain issues for diamond
traders.
42
CHAPTER 7 Belgium Various Export and Import items and its
Partners
Table 7.1 Imported Commodities and partners
Main Exports:
Machinery and equipment, chemicals, finished diamonds, metals and metal products,
Foodstuffs
Main Imports:
Raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals,
Foodstuffs, transportation equipment, oil products.
The various imported
commodities are:
The various Belgium
import partners are:
Raw materials Netherlands
Machinery
& equipment
Germany
Chemicals France
Raw diamonds UK
Pharmaceuticals US
Foodstuffs China
Transportation
equipment
Oil product
43
Table: 7.2 Principal trading partners (in millions of US dollars) were as follows:
Source: - Foreign trade - Belgium - export
As raw materials and natural resources are not sufficient, the balance of trade is usually towards
imports and thus there is always some trade deficit in Belgium.
According to the 2009 estimates, Belgium had an export volume of $296.1 billion and ranked
13th
in the world. This, however, showed a tremendous drop from the 2008 figures, which shone
bright at $371.5 billion.
COUNTRY EXPORTS IMPORTS BALANCE
France 32,487 21,659 10,828
Germany 30,964 28,136 2,828
Netherlands 23,146 29,893 -6,747
United Kingdom 18,400 14,563 3,837
United States 10,953 12,893 -1,940
Italy 10,184 6,746 3,438
Spain 6,683 3,109 3,529
Luxembourg 3,720 977 2,743
India 3,193 1,593 1,600
Israel 3,497 1,487 2,010
44
CHAPTER 8 BELGIUM’S TRADE AT INTERNATIONAL
LEVEL AND WITH INDIA AND GUJARAT
8.1 Belgium - International trade
Belgium's economy is dependent on international trade. From year-to-year, foreign trade
accounts for approximately 70 percent of the nation's economy. This makes Belgium particularly
sensitive to disruptions in global trade. Recessions or other economic problems around the world
often cause reciprocal problems in Belgium's economy. Fortunately, the kingdom has a variety of
trade partners so that problems in one export market are mitigated by export diversity. For
instance, since companies were able to shift exports to other markets, Asia's economic problems
in the late 1990s had little significant impact on Belgium.
The nation's main trade partners are in the EU. In fact, in 1998 some 76 percent of Belgium's
exports went to nations in the EU. In that year, the main export market for Belgian goods was
Germany (19 percent), followed closely by France (18 percent), the Netherlands (12 percent),
and the United Kingdom (10 percent). Most of Belgium's imports also came from the EU that
provided (71 percent) of the kingdom's imported products. Germany was the main exporter to
Belgium and provided (18 percent) of goods, while the Netherlands provided (17 percent),
France (14 percent), and the United Kingdom (9 percent). Total foreign investment in Belgium is
$68.1 billion. The Netherlands is the principal source of foreign investment (21.9 percent),
followed by Germany (17.1 percent), France (16 percent), and the United States (11 percent).
The United States is a major trading partner of Belgium. The kingdom is the ninth largest trading
partner of the United States. In 1999, the United States exported $11.3 billion to Belgium. About
half of Belgium's imports from the United States are processed and re-exported to other markets.
The kingdom is home to 1,300 U.S. companies. American investment in Belgium totals $18.9
billion. The majority of this investment is concentrated manufacturing ($8.969 billion), services
($5.262 billion), and wholesaling ($2.716 billion). Belgium also has significant investments in
45
the United States that total $6.7 billion. The majority of these investments are in manufacturing
($2.6 billion), petroleum ($1.265 billion), and retail ($882 million).
Goods and products from EU nations enter Belgium without any tariffs or duties. However,
goods from nations outside of the EU face import duties and a value-added tax (VAT).
Depending on the product, these taxes amount to an average of 5-6 percent of the total value of
the product. Consequently, many goods from outside of the EU face a price disadvantage.
Table 8.1 Belgium‘s Balance of Trade:
Source: www.tradingeconomics.com
46
Belgium reported a trade surplus equivalent to 1101 Million EUR in September of 2011. Foreign
trade accounts for approximately 70 percent of the Belgium's economy. About 80% of Belgium's
trade is with fellow EU member states. The major export commodity in Belgium is the
automobile, medicament mixtures put in dosage, not mounted or set diamonds. Belgium imports
mainly machinery and equipment, chemicals, diamonds, pharmaceuticals, foodstuffs,
transportation equipment and oil products. This page includes: Belgium Balance of Trade chart,
historical data and news.
8.2 India-Belgium Relations
Diplomatic relations between India and Belgium were established in 1948 and our bilateral
relations are cordial and friendly. In recent times, Belgium has acknowledged the growing
importance of Asia and has emphasized the value of strengthening economic relations with India.
8.3 Bilateral Trade
Belgium is the third largest trading partner of India in the European Union with annual bilateral
trade turnover amounting Euro 7.1 billion in 2009. India is the13th largest exporter to Belgium
and 9th largest importer of Belgian products. The major items of Indian exports to Belgium are-
Natural/cultured pearls, Precious stones and metals; Textiles and articles; Base metals; Iron and
steel; Chemical products; Articles of apparel and clothing accessories; Articles of apparel and
clothing accessories; Mineral products; Organic chemicals; Machinery and Electrical
Equipments etc. The major items of Indian imports from Belgium are- Natural/cultured pearls;
Precious stones and metals; Base metals; Iron and steel; Machinery and mechanical appliances;
Chemical products; boilers, machinery and mechanical appliances & parts thereof: Organic
chemicals; Plastic and rubber; Plastics and articles thereof; Pharmaceutical products etc.
The bilateral trade between India and Belgium between 2004 and 2009 has increased by 11%
growing from 6.4 billion euro in 2004 to 7.1 billion euro in 2009. Indian exports to Belgium
increased by 18%, from 2.2 billion Euro in 2004 to 2.6 billion Euro in 2009. Indian imports from
47
Belgium on the other hand increased by 7% during the same period, growing from 4.2 billion
Euro in 2004 to 4.5 billion Euro in 2009.
8.4 Trade and Economic links between India and Belgium
Belgium is currently India‘s third most important trading partner within the European Union
(EU), preceded only by Germany and the United Kingdom (UK). Total bilateral import and
export exceeded Euro 8.7 billion in 2008. There are close to 150 Belgian enterprises formally
established in India and several of the most distinguished, international Indian companies are
active in Belgium. These include Tata Consultancy Services (TCS), HCL, NIIT, Jet Airways,
Jubilant Organosys, Crompton Greaves and Raymond, among others.
Bilateral economic relations are framed by several agreements between India and Belgium.
These include a double taxation treaty, a bilateral investment treaty, a cooperation agreement in
the area of science and technology and various transport agreements. A bilateral social security
agreement between Belgium and India entered into force on September 1, 2009. Belgium is the
first nation to have entered into such an agreement with India.
8.5 An Agreements Were Signed Between Belgian and India
―The Indo-Belgian signing ceremonies hold special significance in light of the rapid economic
development in India. It clearly indicates the interest and commitment of Belgian companies to
work in partnership with their Indian counterparts across diverse sectors to further collaboration,
learning and growth‖, said Deputy Prime Minister, Minister of Foreign Affairs and Foreign
Trade of Belgium, Steven Vanackere.
The agreements signed as on (22th Nov, 2011) includes:
Tractebel Engineering with GAIL India
Eurostation and Immo Star Ltd with RITES
Dredging International (International Seaports Dredging Ltd) with Kakinada Seaports Ltd
Sarens with Larsen and Toubro Ltd.
48
Soudal with McCoy Silicones
ZingaMetall and John Galt with Vestas Hose Division Pvt. Ltd.
Belgium Luxembourg Business Association (BLBA), established in New Delhi with
Belgo-Indian Chamber of Commerce industry (BCCI) with its base in Brussels
AWEX will sign a letter of Intent with New Ventures India and one with the Foundation
of Innovation and Technology Transfer of the Indian Institute of Technology (IIT)
Port of Antwerp and Port of Mumbai.
8.6 Cultural Cooperation
India has a Cultural Agreement with Belgium. Cultural exchange and cooperation takes place on
a regular basis between the two countries. Belgium has not forgotten the sacrifices made by
thousands of Indian soldiers in Flanders during World War I. To commemorate their memory,
an Indian Memorial Pillar has been installed along side the Menin Gate in Ieper, where
ceremonies are organized along side the main Armistice Day celebrations on November 10/11
every year.
The Indian Council for Cultural Relations (ICCR) in association with the Centre for Fine Arts
(BOZAR) organized an India Festival from October 2006- January 2007. The festival included,
inter alia, art, theatre, musical and dance performances, fashion shows and a food festival.
8.7 Indian community in Belgium
According to the information received from the local Government the total number of Indians
upto 2006 were around 16,132 out of which 10,000 Indian nationals have obtained Belgian
citizenship and remaining 6000 are involved in various economic activities. Around 2,500
Indian NRIs/PIOs, based in Antwerp mainly from Gujarat are involved in diamond trade. Their
contribution to the trade and commerce of Belgium is widely acknowledged by the Belgian
leadership. The proposal for dual nationality for Belgian PIOs/NRIs has been agreed to by
49
GOI. There are around 500-1000 Indian students pursuing studies in educational institutions of
Belgium.
8.8 India’s Exports and Imports to EU
TABLE 8.2 India‘s Exports to EU
Source: Computed from the data from ‘ India’s Exports by countries –Commodities; DGFT, Government of India, Ministry of Commerce, Various Issues from 2001 to 2005
50
Table 8.3 India‘s Imports from EU
Source: Computed from the data from ‘ India’s import by countries –Commodities ;DGFT, Government of India, Ministry of
Commerce, Various Issues from 2001 to 2005
51
Table: 8.4 Belgium-India total export and import in value for last 5 years:
S.No. \Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
1. EXPORT 3,478.18 4,207.08 4,480.32 3,759.26 6,296.21
2. %Growth 20.96 6.49 -16.09 67.49
3. India's Total Export 126,414.05 163,132.18 185,295.36 178,751.43 251,135.89
4. %Growth 29.05 13.59 -3.53 40.49
5. %Share 2.75 2.58 2.42 2.10 2.51
6. IMPORT 4,146.19 4,349.93 5,776.77 6,019.20 8,609.82
7. %Growth 4.91 32.80 4.20 43.04
8. India's Total Import 185,735.24 251,654.01 303,696.31 288,372.88 369,769.13
9. %Growth 35.49 20.68 -5.05 28.23
10. %Share 2.23 1.73 1.90 2.09 2.33
11. TOTAL TRADE 7,624.36 8,557.01 10,257.09 9,778.46 14,906.02
12. %Growth 12.23 19.87 -4.67 52.44
13. India's Total Trade 312,149.29 414,786.19 488,991.67 467,124.31 620,905.02
14. %Growth 32.88 17.89 -4.47 32.92
15. %Share 2.44 2.06 2.10 2.09 2.40
16. TRADE
BALANCE
17. India's Trade
Balance
-59,321.19 -88,521.83 -118,400.95 -109,621.45 -118,633.24
54
Figure: 8.1 Trade Balance Fluctuations of Belgium since 1990-2011
Source: TULLI customs
Interpretation:
Both Exports and imports have fluctuating trend over 20 years. At initial years exports
and imports having balance,then Exports was higher than imports at 1992 to 2010 then
Exports of the Europen union has been declined so trade balance shows negative 4 billion
dollar.
55
Figure: 8.2 Monthly Import-Export and Trade Balance 2007-2011
Interpretation:
As compare to 2007, in 2011 export has been declined, approximately 10% has
been declined so trade balance in also declining and show negative trade balance.
Duration of 2008-2010 both Imports and Exports declining so trade balance have not
much impact.
56
CHAPTER 9 VALUE CHAIN OF THE SECTOR
9.1 Value Chain - Diamonds
Diamonds pass through a series of processes before they are finally sold in the retail market. The
value chain of diamonds begins with exploration of diamonds from mines and is followed by
processing, manufacturing, whole selling and retailing.
Mining
There are very few commercially-viable diamond mines operating in the world currently.
Diamonds are sourced through three ways, open pit mining, underground mining and extraction
from alluvial deposits. The rough diamonds that are sought from mining are then sorted in
different categories according to the quality, shape, colour, and size. The diamonds that are not
good in quality are used for industrial purposes and the good quality diamonds are sent for
further processing.
Processing
Processing is the next and the most important step as the greatest value addition takes place at
this stage. Diamonds are sorted, graded, and valued at this step and then sent for further
processing. Not all countries that produce diamonds also process it. The sorted and graded
diamonds are sent to the cutting and polishing centres such as Antwerp (particularly high-value
diamonds), Tel Aviv, Israel (for medium-value diamonds), India (for low value diamonds),
China, Johannesburg, New York and Thailand. These processed diamonds are then exported or
sold in domestic markets as finished diamonds or as diamond-studded jewellery.
Manufacturing and Retailing
Once the diamonds are processed, they are then sold to manufacturers directly or through
registered diamond exchanges. Much of the value addition is done at this stage, as the diamonds
are converted into jewellery. Jewellery making has high margins and therefore, many cutting and
polishing centres across the globe are aiming to move up the value chain to gain maximum
57
revenue. The jewellery that is manufactured from the diamonds is sold either through a
wholesaler or directly in the retail market, domestically or internationally.
India is not a major miner of precious metals and stones such as diamonds but it is the largest
processor of diamonds in the world owing to its skilled labour and low cost of processing.
Figure: 9.1 Value Chain of Diamonds and Gold
Value Chain – Gold
South Africa is the largest producer of gold in the world. Gold mining, the process of mining
gold out of the earth, is done through the following methods: hard rock mining, gold ore
processing, placer mining and by-product gold mining. The gold that is extracted from mines is
in impure form, and it is obtained in its purest form through a series of chemical processes called
refining. The gold that is refined is converted into cast bars/gold bars through fabrication. The
58
fabricated gold is then used for either making jewellery or for making coins, industrial products
and dental products — jewellery fabrication garners the highest share among the value chain
activities. The gold jewellery is then sold in the retail outlets in domestic as well as international
markets.
9.2 MARKET STRUCTURE OF THE GEMS AND JEWELLERY SECTOR
Major Production Clusters
The centre of the trade in India's Gems and Jewellery industry is Mumbai. Most imports of gold
and rough diamond arrives in Mumbai. However, most of the processing of diamonds takes place
in the neighboring state of Gujarat. The Gems and Jewellery clusters in Gujarat are as
shown in the following figure.
Figure 9.2 Gems & Jewellery Clusters in Gujarat
Gujarat alone accounts for an estimated 80% of the diamonds processed in India. Of this, 90%
are processed by diamond units located in and around Surat alone. The rest of the
59
diamond units are located in Ahmedabad, Palanpur, Khambhat, Rajkot, Bhavnagar, Valsad and
Navsari.
The diamond processing industry has spread from Gujarat to other states. Many diamond
processing units have been set up in Mumbai in Maharashtra. There are also jewellery units in
Trishur in Kerala, Coimbatore in Tamil Nadu, Jaipur in Rajasthan, and Goa. Mumbai
continues to be the main diamond trading centre of India accounting for the dispatch of 93%
of diamond exports.
Major Players
A brief profile of major players in the Indian Gems and Jewellery Industry is as below:
• Rajesh Exports Limited
• Gitanjali Group
• Su-Raj Diamonds & Jewellery Ltd.
• Suashish Diamonds Ltd.
• Shrenuj & Co. Ltd.
• Tanishq
• Hindustan Diamond Co. Pvt. Ltd.
• Vaibhav Gems Ltd
60
9.3 Major Export Markets
Figure 9.3 Destination wise exports of gems and jewellery
The destination-wise share of exports of gold jewellery from India is as below. The total
value of exports of gold jewellery was $28.25 billion in the year 2011. Exports to USA
and UAE alone account for about 58% of the exports of gold jewellery from India.
9.4 COMPETITIVE MARKETS OVERVIEW WITH INDIA
The gems and jewellery sector can be categorised into the following sub-sectors based
on characteristics, processing techniques, preciousness in terms of price range and
marketability.
• Gemstones -Diamonds and colored stones (precious, semi-precious and synthetic)
• Jewellery- Plain Gold, Studded, Silver, Costume
• Pearls - The global market for gems and jewellery today is pegged at US$ 85 billion
with key markets having registered an average compounded annual growth rate (CAGR)
of 5-10 per cent in the last decade.
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The global market for Gold is estimated at 3300 tones. South Africa is the world's largest
producer of gold, followed by U.S.A and Australia. Together, these countries account for
45 per cent of the world's total gold production. India is the largest consumer of gold,
followed by the U.S.A.
In the production of Silver, the Americas have near monopoly - Mexico, Peru and the
United States are the top three silver producing countries. Platinum is an extremely rare
precious metal. More than 90 per cent of all platinum supplies come from South Africa
and Russia. With increased economic development, the demand for the metal has grown
at a faster pace than it is being mined. The United States is the world's leading
consumer of platinum overall, while China has emerged as the leading consumer of
platinum jewellery.
Jewellery manufacturing is traditionally dominated by players from 3-4 countries.
1. United States
• While a growing number of American manufacturers export their goods around the
world, the sheer size of the domestic market keeps a large portion of the goods at home.
2. Italy
• World‘s largest producer of fine jewellery, with about 8,200 factories annually
Producing an estimated US$ 6.4 billion worth.
• Italy‘s strength lies in plain gold jewellery.
3. Thailand
• Major global supplier of quality jewellery over the last two decades.
4. Hong Kong/China
• Produces a substantial portion of the world jewellery market·
• Thailand‘s strength is in gemstone jewellery
• China and Hong Kong are strong in both gold and studded jewellery
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Over the years, global markets have been impacted by several developments like falling
trade barriers, increasing competition, changing customer preferences and developments in
technology in several areas. The global jewellery industry is being transformed by a few
key trends such as:
• Increasing competition among top producing countries.
• Emergence of different materials - different alloys within gold, as well as
Non-gold jewellery.
• Emergence of new manufacturing techniques.
• Requirement of stricter quality norms and hallmarking.
In this context, India is fast emerging as a leading destination for jewellery
manufacturing in the world. The following sections discuss India's gems and jewellery
sector in detail with a specific focus on the following areas:
• Significance of India within the global gems and jewellery sector
• The structure and current scenario of the sector in India
• India's competitive advantages in the sector
• Future outlook
9.5 India is a leading player in the global gems and jewellery market
The gems and jewellery industry occupies an important position in the Indian economy.
It is a leading foreign exchange earner and also one of the fastest growing industries in
the country.
The two major segments of the sector in India are gold jewellery and diamonds. Gold
jewellery forms around 80 per cent of the Indian jewellery market, with the balance
comprising fabricated studded jewellery that includes diamond studded as well as
gemstone studded jewellery. A predominant portion of gold jewellery manufactured in
India is consumed in the domestic market. In diamonds, however, a major portion of
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rough, uncut diamonds processed in India is exported, either in the form of polished
diamonds or finished diamond jewellery.
Besides being the largest consumer of gold, India is also the leading diamond- cutting
nation in the world.
Table 9.1 India Gems & Jewellery Industry-Highlights
India Gems & 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%
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.
The Indian diamond industry has acquired leadership position in cutting and polishing of
rough diamonds. 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 expected to have its diamond bourse functioning at Mumbai in 2006.
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.
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The sector is largely unorganised at present with a small but growing organised sector:
The Indian gems and jewellery sector is largely unorganized 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 handmade.
Figure 9.4 Share of India‘s Gem & Jewellery Sector
The industry is dominated by family jewelers, who constitute nearly 96 per cent of the
market. Organized 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 organized and the share of family jewelers 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.
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This has led to the industry being largely characterized by a large number of small scale
players. However, just as in the case of jewellery, the share of the organized sector has
increased significantly in recent years due to an increase in demand for better and finer
quality finished goods.
Figure 9.5 Comparative position of India in Global Gems & Jewellery Sector
The gold jewellery market is growing at 15 per cent per annum and the diamond
jewellery market, at 27 per cent per annum.
The emergence of branded jewellery is a new trend that is shaping the Indian jewellery
market Branded jewellery is a relatively new concept in the sector, and has positioned
itself on the quality, reliability and wear ability factors. The branded jewellery market in
India is estimated at US$ 111.6 million per annum. Trends also show that traditional
handcrafted jewellery is slowly giving way to machine-made jewellery.
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9.6 Competitive Advantage
India
India boasts of around 450,000 goldsmiths, 100,000 gold jewelers, 6,000 diamond
processing players and 8,000 diamond jewelers
Low-cost destination
Largest consumer of gold in the world – around 20 percent of the global consumption
Largest diamond cutting and polishing centre in the world - nearly 9 out of 10 diamonds
sold worldwide are cut and polished in India Dedicated SEZ‘s for Gems and Jewellery
sector.
Government Incentives
Rough colored precious gems stones are exempt from customs duty
Duty-free import of consumables for metals other than gold and platinum, up to 2 percent
of freight on board value of exports
Import of gold of 18 carat and above under the replenishment scheme
No import duty on polished diamonds
Export of colored gemstones on a consignment basis has been allowed
Interest subvention of 2 percent on pre-shipment credit extended to March 2010
Excise duty on branded jewellery to be reduced from 2 percent to Nil Customs duty on
unworked Corals to be reduced from 5 percent to Nil
EU
Proximity to Western Markets
Design and technological expertise, for instance, Italy is known for its strength in design
and use of advanced equipments and machineries
Antwerp in Belgium is known as the trading hub for diamonds.
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Government Incentives
The European Union has reduced tariffs on gems and jewellery originating from India
under its Generalised System of Preferences (GSP), which has been extended for the
period from January 5 1, 2009 until the end of 2011
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CHAPTER 10 DEMAND DRIVERS OF THE GEMS AND
JEWELLERY SECTOR
10.1 Demand drivers of the Jewellery Segment
The demand drivers for the jewellery fabrication segment are as below:
Figure 10.1: Demand drivers for the gems and jewellery sector
Continuous traditional demand: Jewellery is an important constituent of the Indian culture.
Traditionally in India, the demand for gold and diamond jewellery is driven by festivals and
weddings and there is remarkable historical and religious significance too. India is also the
largest consumer of gold in the world. In marriages, gold jewellery is the gift preferred by the
near relatives of the bride and the groom. Gold jewellery is very popular among farmers, with an
upsurge in gold sales after a good agricultural season. Buying of gold is an important part of
every stage of an Indian citizen's life. Given the Indian culture, this stream of demand is thus
continuous and is only expected to rise going ahead.
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Important savings and investment vehicle: Apart from its religious and social significance,
gold is valued as an important savings and investment vehicle in India, and is the
second preferred investment behind bank deposits. This can also be attributed to the fact that
gold is highly portable, holds its value well in times of uncertainty and can be easily converted to
cash either through sale or for guarantying loans. Further, the emergence of use of jewellery as a
fashion statement as well as for daily use and gifting has fuelled demand growth in the Gems and
Jewellery sector. Apart from this, the increasing share of diamond jewellery is explained below.
10.2. Demand drivers of Diamond Jewellery
The demand drivers for the diamond processing and jewellery sector are as below:
Figure 10.2 Demand drivers for diamond jewellery
Increasing acceptability of diamond jewellery in the domestic market:
Traditionally, jewellery in India has mainly been gold jewellery. Diamond jewellery is lesser
accepted in India due to factors such as myths associated with diamonds being unlucky in
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certain instances and the higher cost of diamonds. This is now changing with an increased
acceptance of diamond jewellery in the domestic market.
Diamond as a fashion statement for the affluent: Diamond jewellery is increasingly serving as
a fashion statement for the affluent to differentiate themselves from others wearing
traditional jewellery/gold jewellery.
Increasing affordability: Employment of women in the workforce has been increasing due to
the changing mindsets and increasing education levels among women. This has resulted in
women having more impact on the purchase decisions; and women having also started
purchasing jewellery for themselves as against earlier trends of jewellery purchase being
primarily a family decision. Increased disposable income for working couples and lifestyle
changes have aided this.
Exports as a driver: As seen earlier, exports have been growing year-on-year and the 5 year
CAGR (2002-03 to 2007-08) is about 13%. India currently produces around 95% of the world's
cut and polished diamond pieces. By carat weight, India is estimated to process 80% of world
rough production by volume and 58% by value. India is also now increasing its presence in the
larger diamonds space. Value addition from processing to jewellery: Though India
processes a large number of diamonds, most of them are re-exported after polishing. There
exists scope to increase value addition through setting into jewellery (jewellery fabrication).
10.3 Drivers of competitiveness of the Gems and Jewellery Sector
Industry standards, certification, and hallmarking: By and large, the Gems and Jewellery
industry in India has been indifferent to the adoption and establishment of formal or informal
industry standards. However, as the industry has grown and more and more businesses have
started transacting on a global basis, a need has arisen for establishing standards. However, in
India, one of the largest markets for precious jewellery, quality standards are conspicuous by
their absence. Hallmarking is restricted to a minor portion of sales, with the bulk of the
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consumers unaware of the exact cartage of the jewellery they buy. It is expected that the
industry will see an increasing level of adoption of hallmarking in gold and certification in
gemstones and this is critical to its competitiveness.
Processing of larger size diamonds: The Indian Gems and Jeweler industry has been built on
polishing lower size and quality stones. Looking forward, since India already enjoys
domination in the world CPD market in general, and for smaller-sized diamonds in particular, the
scope for significant increase in market share and growth in the traditional small-size
diamond exports is limited. Industry leaders are now seeking further growth through
processing of larger size stones, and manufacture of diamond jewellery. Indian industry can now
increasingly process the full range of sizes and qualities of stones utilizing not only a cheap
and abundant workforce, but also advanced technologies. Future growth is likely to be largely
driven by the cutting and polishing of medium and large stones (currently dominated by
Belgium and Israel), with consequently higher unit realizations. The Indian Gems and
Jewellery GJ industry is already reporting increased growth in the larger-size segment. Export
data from the GJEPC also reports a gradual shift in Indian exports to higher value segments,
reflected in higher per carat realizations. Larger-sizes command higher per carat realizations and
profits.
Availability of labour at competitive wages: Labour is a critical component in the value chain
of the Gems and Jewellery sector. Labour in India, as compared to other countries, is cheap, and
India thus stands at an advantage over its global competitors in this industry. Availability of
skilled manpower is a key strength that has enabled growth in India's Gems and Jewellery sector.
India has a large pool of skilled artisans with vast traditional knowledge and expertise in
jewellery making. It also has the largest resource pool in diamond cutting and processing. India
also has a good blend of technically trained designers who are well-versed in latest 2D and 3D
design software. India also has one of the lowest costs in diamond cutting.
Government Support: The Indian Government has supported the Indian Gems and Jewellery
sector with policies such as waiver of customs duties on the import of rough diamonds,
permission for personal carriage of jewellery through Hyderabad and Jaipur Airport as well, in
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addition to Delhi, Mumbai, Kolkatta, Chenai and Bangalore, establishment of Gems and
Jewellery SEZs, etc. This continued support is critical to the competitiveness of this industry.
10.4 Key Success Factors and Risk Factors of the Gems and Jewellery sector
Key Success Factors
Movement from unbranded to branded jewellery and increase in fashion dictated buying:
Over 90% of the jewellery sold in India, is mainly sold by traditional '"family jewellers'" and the
unorganized sector contributes to about 96% of the total jewellery sales in the country. Thus,
currently the Indian market remains highly fragmented. This scenario is seen to be
changing, though slowly, with the entry of players such as Tanishq and Gitanjali, and
the trend of supermarkets like Lifestyle and Shoppers Stop having jewellery outlets.
Hallmarking and Certification: Increasing consumer awareness and need for certification by
BIS and hallmarking have served as a means for firms to differentiate themselves in the
market.
Increased use of technology: The Gems and Jewellery business had traditionally involved a
large content of manual labour. Though this still remains the case, a greater use of technology is
seen in this industry. For example, factories have started using more machine-made
designs, laser soldering is replacing manual soldering, investments in modern manufacturing and
quality systems is increasing, etc.
Transformation from family owned businesses to professionally managed businesses:
Traditionally in India, the majority of India's diamond workforce is employed by small units that
process diamonds on a job-lot basis. At the low-end, family units processes diamonds make
jewellery. Even at the retail end of the value chain, people in India generally buy
jewellery from their 'family jewellers'. This structure makes it less possible to bring in
professionalism into the industry, which will be key going ahead given the threats from other
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diamond processing/jewellery making nations. Thus for firms in the Indian Gems and
Jewellery sector to prosper, a transformation from family owned businesses to professionally
managed businesses is critical.
Key Risk Factors
Limited Standardization: In India, jewellery consumption is primarily of gold. The bulk of the
Indian jewellery buying is still rooted in tradition, and jewellery is sold in traditional
designs. Gold jewellery is also bought as an investment. In the present system of selling gold
jewelerry in India, the purity may or may not be standard and the buyer can lose - cheating on
caratage (and purity) is widespread.
Possible Long-Term Threat from China: Although India currently enjoys dominance in the
world's cut and polished diamonds market, China may emerge as a viable rival, if not in the near
term, certainly in the longer term. An increasing number of diamond processors from
Israel and Belgium, and even India, are setting up facilities in China, for reasons like
the cheap and disciplined labor force, significant increase in potential consumers in the
high- income segment within the country and the steadily improving quality of
Chinese workmanship. Technology is another area where the Indian industry faces a long-term
threat from China.
Threat from Polishing in Producing Nations: The preference for polishing diamonds in the
producing countries has been seen to be growing. There has been increased political pressure by
major diamond producing countries in Africa to gain further economic benefits from
diamond production through jobs creation in a domestic cutting and polishing industry.
Polished trading through the manufacturing and trading centers made considerable gains from
2009 as sellers capitalized on growth in consumer markets. Trade in India exceeded even 2008
levels, while the strong increase in imports to Belgium and Israel indicate that growth in those
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centers may have been stimulated by strong inter-dealer trading, or that dealers in those mar- kets
were hoarding stock to sell at a later date in anticipation of higher prices (Figure 4).
Polished trading was largely influenced by tough price points throughout the year. Manufacture-
in margins were persistently tight due to high rough prices, while polished buyers
resisted higher seller asking prices.
Figure 10.3 Polished Diamond Trade at the Manufacturing centers
3. Rough Market
a. Demand Factors
Demand for rough by far outpaced growth seen in the rest of the diamond pipeline, as did the
recovery in rough prices.
The rebound was influenced by a number of factors, including: Strong growth of consumer
markets in China and India and signs of recovery in the U.S. The cautious production ramp-up
by De Beers which kept supply levels below demand and resulted in shortages in the rough
and polished markets by year-end.
Strong demand in India as Surat-based manufacturer's ability to buy rough was helped by the
easier credit terms allowed by the Indian banks compared with their Belgian and Israeli
counterparts.
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Indian manufacturers were intent to keep their factories running at full capacity, even if short-
term demand had not filtered through at the same level along the pipeline. Price speculation as
traders expected both rough and polished prices to rise further.
These trends resulted in high increases in rough trading as India, the largest and most influential
manufacturing center, grew its imports to exceed 2008 levels. Belgium's rough exports were
larger than its imports indicating Antwerp's growing strength as a trading, rather than
manufacturing, center. Similarly Israel's rough exports grew at a higher pace than its imports.
Figure 10.4 Rough Diamond Trade at the Manufacturing Center
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CHAPTER 11 LEGAL PROCEDURE OF EXPORT-IMPORT
FROM BELGIUM TO INDIA
11.1 Diamond Office
Diamond Office was established with a view to fulfilling all the necessary formalities on behalf
of the Belgian diamond dealers to import and/or export diamonds in Belgium. At first, this
organisation worked independently, later it became a department of the HRD, the Diamond High
Council.
Diamond Office, situated in the heart of the Antwerp diamond centre, consists of three depart-
ments:
- Import department: here, all formalities for the import of diamonds in Belgium are fulfilled in
co-operation with the Belgian customs authorities.
- Export department: here, all formalities for the export of diamonds in Belgium are fulfilled in
co-operation with the Belgian customs authorities.
- Expertise department: here, all parcels of diamonds (import and export) are checked by sworn
experts under supervision of an officer of the Federal Public Service Economy,
Economic Potential, Licensing Service (FPS Economy).
Who can import and/or export diamonds in Belgium?
Only registered diamond traders can import or export diamonds in Belgium. The
registration must be effected at the FPS Economy.
Diamond dealers residing on Belgian territory have to submit the following documents to
register:
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1 Upon registration as a self-employed person:
a) A copy of the identity card;
b) Proof of the company registration number issued by the Crossroads Bank for Companies;
c) The profession card, issued by the FPS Economy, if the self-employed person is a foreign
national.
2 Upon the registration of a company:
a) A copy of the identity card of all business managers;
b) Proof of the company registration number issued by the Crossroads Bank for Companies;
registration will not be allowed if the company has not been registered with the Crossroads Bank
beforehand;
c) A copy of the notarial instrument of establishment and/or extract from the Belgian Official
Gazette;
d) The profession card, issued by the FPS Economy, if the business manager is a foreign
national;
e) If the company exercises the mandate of director, business manager or member of the
management committee at another company, the permanent representative must present a copy
of his identity card and appointment;
f) If none of the business managers of the Belgian company is in possession of a permanent place
of residence in Belgium, they grants powers to an authorized person residing in Belgium and
representing the business manager(s). The latter must present a copy of his identity card and
appointment, signed by both parties.
Each diamond dealer residing in the territory of the European Union and who wants to export or
import diamonds through Belgium from or to the European Union, also has the obligation to
register at the FPS Economy, for which he has to submit evidence that he has fulfilled all
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formalities, established by the European member state in which he is residing, to exercise the
profession of diamond dealer.
A foreigner or a foreign company residing outside the EU, cannot import or export diamonds in
Belgium in his own name: the foreigner or foreign company has to contact a Belgian company,
registered with FPS Economy, which will execute all formalities for the import and/or export of
the diamonds.
11.2 Customs Duties - V.A.T. - Expenses
Customs Duties and VAT
Export: In Belgium the export of diamonds is exempt from taxes: no duties or VAT have to be
paid.
The importer must pay 21% V.A.T., calculated on the ―customs value‖, i.e. the amount
mentioned on the invoice (freight and insurance included) converted into EURO‘s (at the rate
imposed by the Ministry of Finance).
However, Belgium has a unique system of V.A.T.-exemption when importing diamonds. A
diamond dealer can benefit of VAT-exemption, both for imports and for transactions on the local
market, on condition that he/she fully complies with all stipulations of Article 42 & 4 of the
VAT-Legislation. For practical purposes, he/she has to sign a declaration to the HRD – Diamond
Office declaring whether or not he/she wishes to work under the VAT-exemption.
The diamond importer does not have to pay the amount of the V.A.T. in cash at the precise
moment of import. In case of goods coming from outside the E.U., Diamond Office will advance
this amount to the Customs and will send an invoice to the diamond dealer at the end of the
month.
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Concerning the imports of E.U.-goods, Diamond Office does not intervene: the importer himself
will inform the V.A.T.-administration by means of his bookkeeping. From January 1st 1993, the
V.A.T.-administrations inside the European Union execute a double check on the movement of
goods: therefore it is obligatory to mention the V.A.T.-number of both the importer and the
exporter on the commercial invoice.
11.3 Other expenses
1. The diamond dealer will also be charged with the expenses for the administration and the
expertise of his goods at Diamond Office: 0.035 % of the value of the goods and only half for
return shipments. There is a discount of 10 % on shipments presented before 10 a.m.
2. On the import of rough diamonds (valued at more than 7,44 EURO/ct, return shipments
excluded) coming from outside the E.U., from countries listed based on international treaties, the
importer also has to pay "Social Fund", i.e. 1/3 % of the value of the goods. This contribution is
collected by the Internal Compensation Fund.
Non-Belgian diamond traders have to pay locally all the expenses in cash.
11.4 Licenses
For the import of diamonds coming from non-E.U. countries, a license is required. In most cases,
Diamond Office disposes of "general" import licenses, i.e. overall licenses that can be used by all
registered Belgian diamond dealers.
It can however occur that the Belgian company itself will have to apply for a personal import
license, available from the FPS Economy.
For the export of diamonds to non-E.U. countries a license is equally necessary. Diamond Office
also holds "general" licenses covering most exports.
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No license is required if the diamond trader voluntarily declares his intra-community trade. In
this case a Statistical Declaration needs to be fulfilled
11.5 Kimberley Certificate
Rough diamonds can be imported and exported only when accompanied by a Kimberley Process
(KP) Certificate and traded between KP participants. In the EU 3 authorities (based in Antwerp,
London and Idar-Oberstein) are entitled to verify the trade in rough diamonds imported or
exported in the EU.
In Belgium the FPS Economy verifies the import and issues the KP Certificates for export at
Diamond Office.
Diamond traders based in a member state were there is no authority, have to submit their rough
shipments to an authority in another member state where the verification shall be completed. If
the diamond trader chooses Belgium for the verification, he needs to be registered at the FPS
Economy and have the rough diamond shipment submitted to Diamond Office, just like a
Belgian diamond trader.
For export of rough diamonds the diamond trader has to provide ―conclusive evidence‖ to prove
that the rough diamonds he possesses were lawfully obtained (by purchase invoice, KP
certificate).
If a diamond trader is a member of a diamond organisation recognized by the EC, he only has to
submit the conclusive evidence when requested.
The diamond trader will always receive an authenticated forgery-resistant copy of the KP
Certificate, that has to be kept together with a copy of the invoice. He also has to keep a register
of all diamonds coming in or going out.
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11.6 Stock declaration
All diamond dealers and manufacturers have the obligation to fill in an annual stock declaration,
that has to be sent to the FPS Economy, Italiëlei 124 pb 71 - 2000 Antwerp.
Starting from the declaration of 2004 a new form has to be used. This form exists in an
electronic version (may be requested by e-mail: [email protected])
11.7 Carnet A.T.A.
The Carnet A.T.A. (Admission Temporaire - Temporary Admission) is a customs document
issued by the Chamber of Commerce that attests that goods will only be exported temporary
(samples, for exhibitions and fairs, ...). Goods imported or exported in countries where the
Carnet is acknowledged by the authorities are exempt from all taxes. In Belgium the Carnet
A.T.A. is officially acknowledged: it permits the Belgian diamond dealers to travel around in
countries outside the European Union with their goods without paying taxes. Goods covered by
the Carnet A.T.A. are not considered as merchandise. For this reason, all goods having been
exported have to be re-imported. Only in exceptional cases, part of the diamonds can be sold
abroad.
Foreign diamond dealers can also temporary import diamonds into Belgium on a Carnet A.T.A.
without paying any taxes. But again the foreign diamond dealer has to present the goods at
Diamond Office where the import will be registered on the name of a Belgian dealer. In case the
foreign dealer wants to sell some of his goods, he has to declare the sold goods as a definitive
import at Diamond Office on the name of the Belgian buyer.
Note: From January 1st 1993, the Carnet A.T.A. is no longer used for temporary export and/or
import between E.U.-countries as from that date on the borders between these countries were
opened, resulting in free trade within the E.U..
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11.8 Import and Export Procedures
Extra-community shipments: COMPULSORY check by the FPS Economy at Diamond Office
For every extra-community import or export of diamonds a declaration regarding the value, the
weight, the characteristics and the documented source of origin of the diamonds to be imported
or exported has to be made to the FPS Economy at Diamond Office. Here also a physical check
takes place by sworn experts under supervision of the FPS Economy.
Intra-community shipments: VOLUNTARY subjection to check by the FPS Economy at
Diamond office possible. The declaration of intra-community shipments to the FPS Economy at
Diamond Office is no longer compulsory according to the Royal Decree of 30 April 2004.
However, the new legal regulation foresees the possibility of a voluntary declaration to the FPS
Economy at Diamond Office if the diamond dealer requests it. The diamond dealer is free to
choose whether he wants to have the intra-community shipments declared and physically
checked or not.
11.9 Import Procedure
In general Import Procedure
Each parcel of diamonds sent to Belgium has to be addressed as follows:
Name of the registered Belgian diamond company
C/O Diamond Office
Hoveniersstraat 22
2018 Antwerpen 1
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As soon as the parcel arrives at Diamond Office, the diamond dealer will be notified. The
dealer comes to Diamond Office where he submits a correct invoice to the import department,
stating: the name and complete address of the seller and the buyer, a complete detailed description
of the goods (quantity, unit price, total amount, possible other expenses). If necessary, he has to
present his personal license. In case of a return shipment, he also has to present his export
document.
When the documents are ready, the diamond dealer has to go to the expertise room. There the
sealed parcel will be opened to check whether the contents are conforming to the invoice. The
goods will be verified by one of the sworn in experts under supervision of the FPS Economy.
If the contents of the parcel correspond with the goods on the invoice, the dealer can leave
taking his goods with him after he has signed a receipt.
There are three possible ways for parcels of diamonds to enter Belgium: via a transport
contractor/courier service, by means of personal transport or by post.
Transport contract
Diamonds sent from abroad via the services of a transport contractor usually arrive at the
national airport in Zaventem, or possibly at the Antwerp airport (Deurne). At the request of the
diamond dealer to whom they are addressed, one of the several Belgian transport firms who
specialize in the declaration and transport of diamonds, will declare the goods at the customs
department in the airport, after which the sealed parcels of diamonds are brought to Diamond
Office. These transports occur at least once daily.
At the customs department in Diamond Office, the sealed parcels are locked away in a safe -
under supervision of the customs officers - until the Belgian dealer comes to Diamond Office
with his invoice to collect his goods.
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E.U.-parcels do not have to be declared at the customs but are also brought to Diamond Office
where they are stored in another safe until the diamond dealer comes to pick up his goods.
As soon as a parcel has arrived at Diamond Office, Diamond Office or the transport firm will
notify the diamond dealer. All he has to do is to present himself with the required invoice at
Diamond Office, where the staff of Diamond Office will complete all the necessary documents
to declare the goods in his name. For E.U.-goods the staff of Diamond office will complete other
documents (for statistical reasons and for the V.A.T.-administration)
Personal carriage
A diamond dealer who personally brings his goods to Belgium from abroad, has to declare his
goods to the Customs as soon as he enters the territory of the European Union: in the airport -
when he arrives by plane - or at the border - if he enters the country by car or by train.
In case of airfreight, the diamond dealer has to leave his goods in the hands of the Customs at
the airport (for which he will receive a receipt).
He has two possibilities to get his goods transported to Diamond Office. The first procedure is
that he personally picks up his parcel as soon as he has made an electronic declaration in
N.C.T.S. and is in the possession of a bank guarantee (i.e. a guarantee covering the V.A.T. that
has to be paid eventually at Diamond Office) and a written permission of Diamond Office. The
second possibility is that the dealer gives his receipt and an invoice to one of the specialized
transport companies who will then do all the necessary to bring the goods to Diamond Office:
making the electronic declaration and guaranteeing the V.A.T.
A dealer arriving by car at the border of the E.U. also needs to make an electronic declaration
in N.C.T.S. and a bank guarantee to bring his goods to Diamond Office. He can - if he wishes -
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call on a forwarding agent at the border who will stand surety in case he does not have a bank
guarantee.
Once the parcel arrives at Diamond Office, the same procedure takes place as described
above: on the basis of the invoice the necessary documents are prepared and the diamond dealer
passes the expertise.
Note: There are no customs formalities to be fulfilled at the border for trade between two
countries of the European Union. If the diamond dealer has chosen for the voluntary declaration
of intra-community shipments, then he still has to come to the Diamond Office for registration of
his goods.
Post Parcels
Parcels of diamonds sent from abroad by post should be addressed as mentioned above (1.1).
The parcels will then arrive at a special post office situated inside the building of Diamond
Office. The staff of Diamond Office or the post will advise the dealer of the arrival of his goods.
As soon as the dealer comes to Diamond Office with his invoice, all the necessary formalities
will be fulfilled to declare or to register his merchandise.
11.10 Export Procedure
A diamond dealer, who wants to export his goods, has to come to Diamond office. Besides his
merchandise he should also be in the possession of following documents: a few copies of his
commercial invoice, a Statistical Return (if the diamonds are sent to another E.U.-country) or an
application form to make use of the "general" licenses (in case the diamonds are sent to a country
outside the E.U.) and additional shipping documents if the goods are sent through the post or a
transport company.
86
A diamond dealer, who does not have the above-mentioned documents, can always appeal to a
special service inside Diamond Office where these documents can be prepared for him.
With his documents and his merchandise, the diamond dealer first goes to the expertise room
where - under supervision of the FPS Economy - one of the sworn in experts checks the contents
of the parcel. After the experts have approved the documents and the parcel is sealed, the
diamond dealer has to go to the export department.
At the export department, the customs declaration is made up, as well as a Kimberley Certificate
(in case of rough diamonds) validated by the FPS Economy. In special cases (when there is no
"general" license) the diamond dealer will have to present an export license on his own name.
Goods leaving for another E.U.-country are registered here for statistical reasons only. How the
procedure continues depends on the way the diamond dealer is going to send his merchandise
abroad: as personal carriage, by post or by a transport company.
Personal Transport
When leaving the export department for a country outside the E.U., the diamond dealer receives
a copy of the customs document. The dealer has to show this document and the sealed parcel to
the Customs at the border or in the airport when leaving the E.U.
When leaving the European Union by car or by train, the diamond dealer also needs a bank
guarantee (as guarantee for the V.A.T. in the countries he passes), which he has to show the
Customs at Diamond Office first.
Post Parcels
A diamond dealer, who wants to send his parcel abroad by post, leaves it at the export
department where it will be stored in a special safe.
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Several times a day, the staff of Diamond Office brings these parcels to the post office in the
same building from where they will be sent to the consignee.
Shipping companies
When the export customs document is validated, the dealer receives a copy of the document. He
leaves the parcel, accompanied by copy of the customs document and the shipping documents at
Diamond Office where it will be stored in a special safe.
At least once a day several specialized shipping companies come to Diamond Office to pick up
the goods, which are destined for them.
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CHAPTER 12 LEGAL PROCEDURE OF EXPORT-IMPORT
FROM INDIA AND OTHER GOVERNMENT INITIATIVES
Introduction
The gems and jewellery sector is a major foreign exchange earner. Due to its importance in
India‘s foreign trade, the government has taken many initiatives to boost the sector. The
government, for instance, has declared this sector as a thrust area for exports. During the global
economic meltdown especially the government has dealt out many initiatives for the badly-
affected sector. This chapter focuses on the various policies and measures that were taken by the
government for the gems and jewellery sector.
12.1 Regulating Bodies
Gems & Jewellery Export Promotion Council (GJEPC):
Established in 1966, the GJEPC is the apex body of the Indian gems and jewellery industry, and
has around 6,500 members across India. The primary goal of the Council is to introduce the
Indian gems and jewellery to the international market and to promote their exports. The Council
provides market information to its members regarding foreign trade inquiries, trade and tariff
regulations, rates of import duties, and information about jewellery fairs and exhibitions. The
roles played by the GJPEC are broadly highlighted below:
Trade Facilitator
The Council promotes the Indian gems and jewellery industry in the international market. It
organises international jewellery shows, hosts trade delegations, and undertakes image-building
exercises through advertisements, publications and audio-visual means.
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Advisory Role
The Council also aids better interaction and understanding between traders and government. The
Council takes up relevant issues with the government and agencies connected with exports. It
also submits documents for consideration and inclusion in the Exim Policy
Nodal Agency for Kimberley Process Certification Scheme
GJEPC works closely with the Indian government and the traders to implement and oversee the
Kimberley Process Certification Scheme; in fact, the Council has been appointed as the nodal
agency in India under the Kimberley Process Certification Scheme.
Training and Research
The GJEPC runs many institutes that provide training in all aspects of manufacturing and design
in Mumbai, Delhi, Surat and Jaipur.
Varied Interests
The Council publishes many brochures, statistical booklets, trade directories and a bi-monthly
magazine - Solitaire International, which is distributed internationally as well as to its members.
Gem & Jewellery Trade Council of India (GJTCI):
The GJTCI was founded in 2000, and is tasked with resolving any issue arising from trade in
gems and jewellery. It plays an important role in showcasing the Indian gems and jewellery to
the international as well as the domestic market. Like the GJEPC, GJTCI also provides
information to its members through a monthly newsletter, various educative and trade-
motivational events such as seminars, workshops, exhibitions, festivals etc.
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The Bureau of Indian Standards:
The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body
set up under the Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold
jewellery in India.
12.2 Foreign Direct Investment Policy
At present, the Indian government allows 100% foreign direct investment (FDI) in gems
and jewellery through the automatic route.
For exploration and mining of diamonds and precious stones FDI is allowed up to 74%
under the automatic route.
For exploration and mining of gold and silver and minerals other than diamonds and
precious stones, metallurgy and processing, FDI is allowed up to 100% under the
automatic route.
12.3 Kimberley Process (KP)
The Kimberley Process came into force when the South African diamond producing nations met
at Kimberley in South Africa in May 2000. The Kimberly Process was set up to discuss ways to
stop the trade in ‗conflict diamonds‘ and to ensure that diamond purchases did not fund
violence. As of November 2008, the KP had 49 members, representing 75 countries. The
Kimberley Process Certification Scheme (KPCS) was implemented in India on January 1, 2003
to verify the legitimacy of the import / export of rough diamonds as per the UN resolution and
to curb the entry of conflict diamonds into the global trade flow. The system of verification and
issuance of KPC is administered from the Mumbai and Surat offices of GJEPC. In India‘s
Foreign Trade Policy 2009-14, the following measures related to the Kimberley Process
Certification Scheme (KPCS) have been adopted:
No import or export of rough diamonds shall be permitted unless accompanied by the KP
certificate as specified by the GJEPC.
The export and import of rough diamonds to and from Venezuela has been prohibited by
the Indian government owing to the voluntary separation of Venezuela from the KPCS.
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12.4 Government Initiatives to Boost the Sector
Measures taken by the government in the Union Budget 2009-10:
Customs Duty on Gold and Silver
Customs duty on serially numbered gold bars (other than tola bars) and gold coins to be
increased from Rs 100 per 10 gram to Rs 200 per 10 gram. Customs duty on other forms
of gold to be increased from Rs 250 per 10 gram to Rs 500 per 10 gram.
Customs duty on silver to be increased from Rs 500 per kg to Rs 1,000 per kg. These
increases will also be applicable when gold and silver (including ornaments) are imported
as personal baggage
Central Excise Duty
Excise duty on branded articles of jewellery to be reduced from 2% to nil.
All categories within HS code 71 except the ‗diamonds whether or not worked but not
mounted or set‘ (HS code 7102) and certain sub-categories within HS code 7104 and
7106 currently have an excise duty rate of 16%.
The category ‗diamonds whether or not worked but not mounted or set‘ (HS code 7102)
currently does not attract any excise duty.
Sub-category ‗Piezo-electric quartz‘ (HS code 71041000), silver (including silver plated
with gold or platinum) in powdered form (HS code 71061000), unwrought (HS code
71069100) and other (HS code 71069290) do not attract any excise duty.
Fiscal Stimulus Measures (December 2008)
The Reserve Bank of India announced certain fiscal stimulus measures in December
2008 to revive the Indian economy during the onset of the global financial crisis. The
following measures were announced for the Indian gems and jewellery sector:
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Increasing the post-shipment Rupee export credit period from 90 days to 180 days from
November 28, 2008.
Increasing the pre-shipment rupee export credit period from 180 days to 270 days from
November 15, 2008.
Providing an interest subvention of 2% up to March 31, 2009, subject to minimum rate of
interest of 7% per annum, to make pre and post-shipment export credit for gems and
jewellery more attractive.
Allowing exporters to avail refund of service tax on foreign agent commissions of up to
10% of FOB value of exports. They will also be allowed refund of service tax on output
services while availing of benefits under Duty Drawback Scheme
Banks will charge interest rate not exceeding Benchmark Prime Lending Rate (BPLR)
minus 4.5% on pre-shipment credit up to 270 days and post-shipment credit up to 180
days on the outstanding amount for the period December 1, 2008 to September 30, 2009.
12.5 Export Facilitation Measures by the Ministry of Commerce and
Industry
Further, in February 2009, the gems and jewellery sector got a special boost from the Ministry
of Commerce with the following announcements: Gems and jewellery, diamonds and precious
metals were given a special boost by the Ministry of Commerce and Industry, the Export
Promotion Council for Gems and Jewellery and Star Trading Houses (in the gems and jewellery
sector). Besides, the Diamond India Ltd, MSTC Ltd and STCL Ltd were added under the list of
nominated agencies of foreign trade policy for the import of precious metals.
Surat, Gujarat has been given the recognition of a town of export excellence, because it is
home to thousands of diamond units that employ many diamond workers.
The authorised persons of gems and jewellery units in export-oriented units will be
allowed to carry personal carriage of gold in primary form up to 10 kg in a financial year
subject to the RBI and customs guidelines.
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Import restrictions on worked corals have been removed to address the grievance of gem
and jewellery exporter
12.6 Foreign Trade Policy 2009-2014
Foreign Trade Policy has identified the gems and jewellery sector as a thrust area with prospects
for export expansion and employment generation. The highlights of the policy are:
a. Import of gold of 8 carat and above allowed under replenishment scheme subject to
import being accompanied by an Assay Certificate specifying purity, weight and alloy
content.
b. Duty Free Import Entitlement (based on FOB value of exports during the previous
financial year) of consumables and tools, for:
1. Jewellery made out of:
i. Precious metals (other than gold and platinum) – 2%
ii. Gold and platinum – 1%
iii. Rhodium finished silver – 3%
2. Cut and polished diamonds – 1%
3. Duty free import entitlement of consumables for metals other than gold, platinum
will be 2% of FOB value of exports during the previous financial year.
c. Duty-free import entitlement of commercial samples shall be Rs 300,000.
d. Duty free re-import entitlement for rejected jewellery shall be 2% of FOB value of
exports.
12.7 Special Economic Zones (SEZ)
In order to boost foreign trade and investment, the Indian government introduced the SEZ policy
in April 2000 under the Export-Import (EXIM) policy. Under the policy, the government
allowed companies to set up units in SEZ to manufacture goods or provide services that
facilitated a hassle-free environment for exports. However, it was the SEZ Act 2005 – passed in
February 2006 – that laid down regulatory frameworks and rules for setting up and for the
operation of SEZs. With extended tax holidays up to 15 years – from previous tax holiday of 10
94
years, the SEZ Act managed to generate considerable level of interest; as a result, the number of
SEZs witnessed a sharp rise in a matter of few years. The Act envisages promoting exports of
goods and services, promoting FDI, creating employment, generating economic activity and
most importantly, developing infrastructure.
To promote the exports of gems and jewellery, the government has set up various SEZs with
specific incentives. Some important government policies relating to SEZs in the gems and
jewellery sector are highlighted below:
No import or export of rough diamonds will be permitted unless the shipment parcel is
accompanied by the Kimberley Process Certificate issued by the Development
Commissioner.
Cut and polished diamonds and precious and semi-precious stones (except rough
diamonds, precious or semiprecious stones having zero duty) shall not be allowed to be
taken outside the SEZ for sub-contracting.
A gem and jewellery unit may receive plain gold or silver or platinum jewellery from the
Domestic Tariff Area or from an EOU or from a unit in the same or another SEZ in
exchange of equivalent content of gold or silver or platinum contained in the said
jewellery after adjusting permissible wastage or manufacturing loss allowed under the
provisions of the Foreign Trade Policy read with the handbook of procedures.
Table 12.1 Operational Gem & Jewellery SEZs in India
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Table 12.2 SEZs Approved under the SEZ Act, 2005
Table 12.3 List of Valid in Principle Approvals
T
96
Table 12.4 Formal Approvals granted in the Board of Approvals
12.8 Diamond, Gem & Jewellery Export Promotion Schemes Policy
The Policy relating to Replenishment (REP) Licence, Diamond Imprest Licence, Bulk Licence
and Schemes for gold/ silver/platinum jewellery is given.
Replenishment Licence
An application for REP Licence may be made to the licensing authority concerned along with the
documents prescribed therein.
The application shall be filed within six months following the month/quarter during which the
97
export proceeds are realised. For export proceeds realised during the month/quarter, consolidated
application for entire month/quarter shall be filed. However, if any supplementary application is
to be filed, it may be accepted with a cut of 10% on entitlement. In case of third party exports,
Replenishment benefit shall be admissible provided the EP copy of the Shipping Bill shows the
names of both the manufacturer and the third party and REP licence against such exports is
claimed by either of the parties after furnishing a disclaimer from the other party. REP licences
will be transferable.
In case where part payment has been realised against an invoice, the application for REP licence
may be made within six months following the month during which part payment was realised,
provided;
(a) Not more than two such applications may be made for each such invoice; and
(b) The first such application shall be made only after 50% of the proceeds of the invoice is
realised.
In case where payment is received in advance and exports take place subsequently, the
application for REP licence shall be filed within six months following the month during which
the exports are made.
The rate of entitlement will be with reference to the date of export.
REP Licence Against Rough Diamonds
Export of rough diamonds is permissible of the imports made against relevant Bill of Entry for
the purpose of replenishment benefit. This will be applicable for exports effected on or after 13th
April,1998. For the purpose of claiming REP licence against such export of rough diamonds, the
exporter shall furnish Bill of Entry in his own name for imports of rough diamonds . The
licensing authority while issuing the REP licences, shall make suitable endorsement on the
original Bill of Entry to avoid further use of the same Bill of Entry for claiming additional REP
Licences.
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Imprest Licence
An application for Diamond Imprest licence may be made to the licensing authority concerned
along with the documents prescribed therein. In addition, the exporter shall give:
(i) Declaration giving the name and address of his bankers;
(ii) Certificate from his bankers to the effect that realisation of export proceeds against exports
made by the exporter are not outstanding for a period of more than six months.
Gem Replenishment Licences
The Gem REP Licences shall be valid for import of rough diamonds, precious stones, semi-
precious and synthetic stones and pearls. In addition, the licence shall also be valid for import of
empty jewellery boxes upto 5% of the value of the licence within its overall cif value. The Gem
REP licences issued against export of studded gold/silver/platinum jewellery articles, shall also
be valid for import of cut and polished precious/semi-precious stones other than emerald upto
10% of the cif value of the licence within its overall cif value.
12.9 IMPORT- EXPORT PROCEDURE
Conditions of Exports
The exports shall be allowed by the customs authorities provided the endorsement made on the
shipping bill and the invoice are correct and the value addition achieved is not below the
minimum prescribed in the Policy.
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Proof of Exports
The exporter has to furnish the proof of exports, wherever required for export of
gold/silver/platinum jewellery and articles thereof, by furnishing the following documents:
(a) Copy of the shipping bill;
(b) Customs attested invoice;
(c) Bank certificate of export documents has been sent for negotiations/collections; and
(d)A declaration on the following lines: "I/We declare that outstanding realisation of export
proceeds beyond 180 days does not exceed 10% of average exports of preceding three licensing
years. I/We further declare that no export proceeds are outstanding beyond one year or such
extended period for which RBI permission has been obtained."
Personal carriage
In case of Personal carriage by foreign buyer, the following documents should be submitted by
the exporter/seller as proof of exports for claiming export entitlements:
(a) Copy of the shipping bill filed by the Indian Seller;
(b) A copy of the Currency Declaration Form filed by the Foreign Buyer with the Customs at the
time of his arrival; and
(c) Foreign Exchange Encashment Certificate from the Bank. In addition to this, Personal
Carriage on Documents Against Acceptance (DA)/ Cash On Delivery (COD) basis is also
allowed. The exporter will have to furnish the following documents as proof of exports for
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claiming export entitlements: (i) Copy of Shipping Bill filed by the Indian Seller; and (ii) Bank
Certificate of Export and Realisation Instructions issued by the Customs Department in this
regard should be followed mutatis mutandis.
Terms of payment
Export of gold/silver/platinum jewellery and articles thereof shall be against irrevocable letter of
credit, payment of cash on delivery basis, Documents Against Acceptance (DA) basis or advance
payment in foreign exchange.
Port of Export
Exports under the schemes of gold/silver/platinum jewellery and articles thereof shall be allowed
by airfreight and Foreign Post Office through the Customs House at Mumbai, Calcutta, Chennai,
Delhi, Jaipur, Bangalore, Kochi, Coimbatore, Ahmedabad, Dabolin Airport, Goa and Hyderabad.
Export by courier shall also be allowed through Custom Houses at Mumbai, Calcutta, Chennai,
Delhi, Jaipur, Bangalore, Ahmedabad and Hyderabad upto FOB value of Rs.20 lakhs per
consignment.
Export by Post
In case of exports through Foreign Post Office which may include export via Speed Post through
Foreign Post Office, the value of the jewellery parcels shall not exceed US$50000 and 20 kg. by
weight. At the time of exports, the exporter shall submit the following documents:
(i) Shipping bills or invoice presented at the foreign Post Office ;
(ii) Certificate from nominated agencies indicating the price at which gold/ silver/platinum was
booked or given on outright sale basis or loan basis.
(iii) Three copies of invoice
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CHAPTER 13 OPPORTUNITIES IN BELGIUM
13.1 Small in size, great in opportunities
Belgium is a small but densely populated country with a stable, market-driven economy, situated
in one of the most economically active regions in the world
The country has always been a crossroads of European trade and culture. As a result, foreign
businesses can benefit from the flexibility, language skills and business know-how built up over
centuries.
Located at the center of the European Union, Belgium provides an excellent transport and
communications infrastructure. A solid platform for businesses looking to develop activities in
the wider European market.
Being one of the largest importers of foreign goods and services in the OECD, Belgium offers
you a very interesting target market: concentrated, diverse, cosmopolitan. Belgian consumers are
relatively wealthy, well-traveled and responsive to new products and ideas: home improvement,
transportation, electronics, household appliances, communication, lifestyle & leisure, healthcare,
travel.
UK Trade & Investment (UKTI) staff in British embassies around the world are always looking
to provide an international network of opportunities for UK companies.
Around 400 business opportunities are published across all sectors and in over 100 markets each
month on the UKTI website. As a UK business, when you register with our website we can put
you in contact with the companies who have posted these opportunities.
102
UK Trade & Investment Belgium is dedicated to helping British businesses make the most of the
fantastic opportunities in Belgium.
Many British companies have been particularly successful in Belgium in areas like consumer
goods, biotechnology, ICT, security and business services, but opportunities abound in other
areas too. UK Trade & Investment Belgium assigns a Trade Adviser to every industry area who
specializes in hunting down the best opportunities in each industry.
Table 13.1 Demography of Belgium
Age Person
0-18 2.214.156
18-64 6.765.590
65above 1.860.159
0
2,000,000
4,000,000
6,000,000
8,000,000
person
0-18 18-64 65above
age group
Demography
Person
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Table 13.2 Households of Belgium
singles living alone 1,534,317
Households without kids 983,136
Households with kids: 1,817,847
Table 13.3 Life expectancy in Belgium
Gender Years
Males 77.15
Females 82.43
Households
singles living alone Households without kids Households with kids:
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Table 13.4 Pattern of spending in Belgium
Pattern of spending: In %
Food / drink / tobacco 15.6
Clothing / footwear 4.3
Gross rent 18.7
Heating / lighting / water 5.7
Furniture / household appliances 6.2
Health 4.7
Transport 13.7
Communication 2.7
Culture / leisure activities 8.1
Bars / restaurants / hotels 5.1
Tourist travel 4.6
Financial services / insurance 5.1
Other 5.5
Life expectancy
Gender Males Females
105
Figure 13.1 Patten of Spending in Belgium
The above graph shows that pattern of spending at Belgium. People spends high percentage of
money in Gross rent & then after Food / drink / tobacco & Transport respectively. Small % of
money spends in other like Culture / leisure activities, Furniture / household appliances, Heating
/ lighting / water, etc.
Pattern of spending:
Food / drink / tobacco
Clothing / footwear
Gross rent
Heating / lighting / water
Furniture / household
appliances
Health
Transport
Communication
Culture / leisure activities
Bars / restaurants / hotels
Tourist travel
Financial services /
insurance
Other
106
Figure 13.2 Monthly import and export of textile, clothes and footwear
The above graph shows that monthly import & export of Clothes & Footwear between 2007 –
2011 in EUR million. The exports are lesser than imports & between 40 to 90 EUR million in
five years. While imports are more fluctuate in five years & between 110 to 290 EUR million
Implication of Graphs as Opportunities
Belgium have demography between 18-64 age so younger & sufficient employment
available. It also helps for diamond, gems & jewellery as a customer.
People of Belgium are mostly having household with kids which indicates loyal &
consistent employee available. And also high single living which helps to not require
more non monetary employee welfare.
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Females are main customer for diamond business and they are having life around 83
years at Belgium so long time & more no. of customer available.
Health expenses are less that it indicates people are having very well health so absent
ratios may be less from employee.
People spends more in food, drink, leisure & luxuries items so they are rich and easily
can buy diamond as luxuries symbol.
13.2 Feasible Opportunity In Belgium
The Jewelry and Investment segments together represent 83 percent of the value of rough
diamonds produced. The industry is controlled as a monopoly by the De Beers diamond
company which operates from South Africa and London. The wholesale trade and cutting of
diamonds is limited to only a few places in the world namely New York, Surat, Tel Aviv,
London, and Amsterdam and the most important being Antwerp.
The diamond industry currently produces US$13 billion worth of rough diamonds each year,
leading to the employment of 10 million people globally from mining to retailing. 70% of rough
diamonds are sold for industrial purposes with the remaining 30% ―gem quality‖ being
distributed to experts for cutting, polishing and jewellery manufacturing. The global jewellery
market has increased three-fold in the last 25 years and is currently worth US$72 each year.
In 2000, the De Beers model changed,[19] due to factors such as the decision by producers in
Russia, Canada and Australia, to distribute diamonds outside of the De Beers channel, thus
effectively ending the monopoly.[6][18] Current major players in the diamond industry are the
African producers Debswana and Namdeb, De Beers, Rio Tinto, BHP Billiton, Lev Leviev,
Harry Winston, and Alrosa.
108
Belgium belongs to the Organization for Economic Co-operation and Development (OECD) and
is one of the founding members of the European Community (EC). It became a first-tier member
of the Economic and Monetary Union of the European Union in January 1999. In 2006, the per
capita income was $31,800. Despite the heavy industrial component, services account for 72.5%
of GDP. Agriculture accounts for only 1.4% of the GDP.
109
CHAPTER 14 FEASIBILTIY STUDY
14.1 MARKETING ANALYSIS
Managing Supply and Demand
De Beers dominates the diamond industry unequivocally. De Beers produces 50 per cent of the
World‘s gem diamonds (by value), from its own mines in South Africa and in partnership with
the Governments of Botswana, Namibia and Tanzania. In addition, it purchases diamonds from
'outside Markets' and in turn markets them through its CSO. The total of De Beers own mining
output plus Diamonds purchased from the 'outside market' results in De Beers selling each year,
on average, 70 To 80 per cent of the world's diamond output.
No strong marketing tactics or strategy needed for any company because of
- Major export and import activities
- Brand (Famous Diamond)
2. How Prices are maintained
Next to the United States, the Asia-Pacific region is the largest retail market for
cut and polished diamonds and Diamond jewelry. However, with the disintegration of Asian
economies in 1997, retail diamond sales fell by 18per cent in a single year. De Beers responded
by significantly reducing diamond sales through its CSO inthe latter part of 1997 and throughout
1998, stockpiling diamonds in order to maintain the price levels of previous years. As a result,
sales by the CSO during 1998 were US$3,345 million — a drop of 28 per cent on the previous
year. De Beers then convinced other 'core sellers' which were contracted to the CSO to share the
burden by agreeing to stockpile 26 per cent of their production, despite the short-term effect on
revenue. Overall, De Beers was successful in reducing stocks of rough and polished diamonds by
a value of US $1 billion and, in Dc Beer‘s terms, 'leaving the stock-to-sales ratios in the cutting
110
centre‘s at much healthier levels'. What this means for the consumer is artificially determined
higher retail prices.
14.2 TECHNOLOGICAL ANALYSIS
Product category Product
Manufacturing: Octopus Pre polishing and polishing equipment
Pen
dragon
Polishing mill
Balancer To become a perfect equilibrated
scaife
EOS New type of girdling machine
Solid Three dimensional laser
Examination: D-Scope Diamond microscope
G-Scope Gemological microscope
D-Screen Compact screening device
Merlin Rough scanner and marker
Avalon Smoothness tester
Avalight Smoothness tester on the D-Scope
Machineries help to diamond cut, Polish. So it is easy to work .it is easily available or
import from outside so it is favor to start a diamond business and achieve a growth in
short time duration.
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14.3 FINANCIAL ANALYSIS
FOR TRADING DIAMOND IN BELGIUM
Foreign Investment and Foreign companies:
A Foreign company can also establish a presence in Belgium by setting up a branch
office. A branch office has no separate legal personality and is an extension of the foreign
company but implies the involvement of a management function or at least a representative with
the ability to deal directly with third parties from a Belgian location.
The foundation of a branch office is more complicated than the incorporation of a
Belgian company, since a number of documents of the foreign company must be translated,
legalized or even authenticated.
Foreign companies are subject to the requirement as Belgian companies. Moreover, the
annual accounts of the parent company are to be published, in their relevant format in Belgium.
The legal representatives of a Belgian branch of a foreign company are liable in the
same way as directors of Belgian companies. The foreign company is liable for all undertakings
of the branch office in Belgium.
The Belgian bankruptcy legislation is applicable to branches of foreign companies, but
its scope is limited to the assets in Belgium. Even without establishment in Belgium, the foreign
company may in certain cases be required to register for Belgian VAT purpose.
Raising adequate external finance is not always easy, especially for smaller businesses.
However, with professional guidance, the problem of obtaining adequate funding for an initial
investment, as well as for future growth and expansion, should not prove difficult.
DOING BUSINESS IN BELGIUM
112
Equity Finance
Private Finance
For certain levels of investment, venture capitalists provide a common source of equity
funding. The amounts of money potential available via this source can be significant but success
in securing such funding may not be so easy. Venture capitalist demands a rapid (and relatively
high) return on their investments and requires evidence of a sound management track record and
a clear exit plan.
In return, they may provide not only financial support but also valuable relevant
experience. Often, they are also part of the Board of Directors.
Listing
Obtaining a listing on one of the open markets may provide the solution to business
seeking to expand further. A listing will not only provide access to capital and growth and a
market for trading in shares, but will also increase public profile and credibility.
Nasdaq Europe provides an alternative to a listing on Euro next Brussels. This is more
attractive for smaller growth-oriented businesses with a smaller market capitalization.
Established financial control producers and a solid administrative organization are
essential for a listing to be accepted. A listing on Euro next Brussels normally implies a certain
track record of trading. Normally, a merchant bank of stockbroker will guide the company and
will ensure compliance with the legal regulations.
Overdraft
Borrowing from a bank by way of overdraft remains the simplest form of external
funding. However, as an overdraft can be called in at short notice since the interest rates will be
higher, its use should generally be restricted to short-term cash flow funding, with longer- term
needs met by more secure loans.
Term loans
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Fixed-term loans may provide a better solution to fund start-up costs, since repayment
schedules and interest rates can be agreed and budgeted for from the outset. Such loans are
usually secured by a pledge on assets, such as property, debtors or plant and machinery. For
smaller companies, the lender may also require personal guarantees from the directors or
controlling shareholding. Fixed or variable interest rates may be available, with more complex
arrangement available for larger loans, including ―caps‖, ―collars‖ and ―floors‖. These restrict
the interest chargeable.
Other loans
Loans to assist in the purchase of specific may come in different forms, varying from
straight-forward hire purchase of items through finance or operating leases. As each method will
have differing cost and taxation implications, advice should be sought on the most appropriate
method for each situation.
Factoring and discounting
With factoring, the factor pays the company a proportion of the relevant invoiced
amount and is then free to collect the debt itself. Once collected, the balance of the invoice, less
interest and administration charges, is paid over to the business. The business will usually remain
liable to pay the factor for any bad debts.
With invoice discounting, the business itself retains control of the debt collection. All
the factor does is to provide a proportion of the invoice face value until such a time as the debt is
collected.
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Incentives and grants
Companies thinking of setting up factories, offices or distribution units in Belgium
should be aware that, through the Belgian Federal Government, the different Regions and the
European Union, there are many grant schemes and incentives that can help reduce the cost of a
specific investment.
It cannot possibly describe all incentives in detail, but we will summaries the most
important ones:
R & D grants: available in Belgium for the development of innovative products;
Investment incentive: for small, medium- sized and big companies ;(they refer to the
expansion of the company in Belgium);
Employment grants: for companies employing young employees (receiving an
unemployment allowance) or employees with a low grade of education, or reorganizing
the workload (part time labor, reduction of working hours,). There are also tax reductions
for having employees with a very low salary;
Grants in connection with environmental protection;
Grants in connection with venture capital, stock options
Central Excise Duty
Excise duty on branded articles of jewellery to be reduced from 2% to nil.
All categories within HS code 71 except the ‗diamonds whether or not worked but not
mounted or set‘ (HS code 7102) and certain sub-categories within HS code 7104 and
7106 currently have an excise duty rate of 16%.
The category ‗diamonds whether or not worked but not mounted or set‘ (HS code 7102)
currently does not attract any excise duty.
Sub-category ‗Piezo-electric quartz‘ (HS code 71041000), silver (including silver plated
with gold or platinum) in powdered form (HS code 71061000), unwrought (HS code
71069100) and other (HS code 71069290) do not attract any excise duty.
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14.4 ECONOMICAL ANALYSIS
GDP per capita - current price: - US$ 45,367 (2009 estimate)
GDP per capita PPP: - $36,834 International Dollars (2009 estimate)
GDP - composition by sector:- Agriculture: 0.6%
Industry: 22%
Services: 77.4% (2009 estimate)
Gross domestic expenditure on R&D (% of GDP):- 1.92% (2008)
Inflation rate: - Unemployment rate:-
2008 4.5% 2008 7%
2009 0% 2009 8%
2010 2.3% 2010 8.4%
2011* 2.9% 2011* 8.4%
Belgium have very stable GDP growth except 2 year and good per capita .industrial
sector helps to earn GDP around quarter (1/4) percentage and having acceptable
inflation as well as unemployment rate so it is also favorable for diamond industries.
Source:
http://www.gfmag.com/gdp-data-country-reports/318-belgium-gdp-country-
report.html#ixzz1ecl73XOW
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Today most modern diamond mines are managed to the ISO 14001 standards of environmental
management, and the major companies have a policy of regularly publishing reports on their
environmental performance. Many of the major diamond mining companies go beyond the ISO
14001 standard and use Environmental Impact Assessments and Social Impact Assessments to
identify the environmental and social impacts of mines as well as to identify gaps at their
operations.
The environmental impact of the land exploration involved in diamond mining is
minimized in several ways:
a) Vehicle tracks are reused
b) Minimal amounts of soil are cleared during drilling and sampling
c) Topsoil from exploration sites is refilled and replace
Energy efficiency and renewable energy programmers are widely used across the
diamond mining industry. Emission levels are monitored through energy and carbon emission
assessments. Mines have reduced their energy use by introducing a range of schemes: installing
timers on boilers, shutting off pressurized fans over weekends, running mud pumps in off-peak
periods and introducing battery-powered vehicles that do not emit harmful gases. Furthermore,
solar panels and energy-saving schemes have reduced the amount of electricity used at mines.
14.5 ECOLOGICAL ANALYSIS
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CHAPTER 15 BARRIERS IN DIAMOND BUSINESS
15.1 Culture & Communication
It difficult to accept or even to understand those views held by other cultures. The difficulties of
communicating at a global level have become increasingly widespread. Lack of understanding
deriving from ethnocentrism or ignorance of culturally based assumptions erroneously believed
to be universal can readily escalate to unproductive conflict among people of differing cultural
orientation.
Problems in business communication conducted across cultures often arise when participants
from one culture are unable to understand culturally determined differences in communication
practices, traditions, and thought processing. At the most fundamental level, problems may occur
when one or more of the people involved clings to an ethnocentric view of how to conduct
business. Ethnocentrism is the belief that one's own cultural group is somehow innately superior
to others
15.2 Risks
Limited Standardization
Jewellery consumption is primarily of gold. The bulk of the jewellery buying is still rooted in
tradition, and jewellery is sold in traditional designs. Gold jewellery is also bought as an
investment. In the present system of selling gold jewelerry in India, the purity may or may not be
standard and the buyer can lose - cheating on caratage (and purity) is widespread.
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Possible Long-Term Threat from China
Although currently enjoys dominance in the world's cut and polished diamonds market, China
may emerge as a viable rival, if not in the near term, certainly in the longer term. An increasing
number of diamond processors from Israel and Belgium, and even India, are setting up
facilities in China, for reasons like the cheap and disciplined labor force, significant
increase in potential consumers in the high- income segment within the country and
the steadily improving quality of Chinese workmanship. Technology is another area.
Threat from Polishing in Producing Nations
The preference for polishing diamonds in the producing countries has been seen to be growing.
There has been increased political pressure by major diamond producing countries in Africa
to gain further economic benefits from diamond production through jobs creation in a
domestic cutting and polishing industry.
Monopoly of DeBeers
The DeBeers cartel is singularly responsible for the price being so high as a result of restricting
supply and aiming to increase demand. This paper will begin by describing the evolution of the
DeBeers involvement in the evolution of the diamond industry.
Historically diamonds were extremely scarce, found only in the river beds of India and the
jungles of Brazil , and as such were highly prized by nobility around the world. In 1870, large
reserves were found in South Africa, and with that the idea of them becoming more widely
available was borne. Production levels of individual miners were restricted by their lack of
equipment so local business men aided them by renting them costly mining equipment. One such
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businessman, Cecil Rhodes, began purchasing claims to the production of the diamond mines.
By 1887 the company he set up, DeBeers, owned the rights to all the mines in South Africa;
―DeBeers were initially able to develop their complete control in South Africa
De Beers is well known for its monopolistic practices throughout the 20th century, whereby it
used its dominant position to manipulate the international diamond market.The company used
several methods to exercise this control over the market: Firstly, it convinced independent
producers to join its single channel monopoly, it flooded the market with diamonds similar to
those of producers who refused to join the cartel, and lastly, it purchased and stockpiled
diamonds produced by other manufacturers in order to control prices through supply.
15.3 Hurdles to Expand Business
Vertical Integration
Vertical Integration is when an organization expands production along the vertical supply chain.
The scale and scope of vertical integration in the diamond industry is fuzzy as the lines are hard
to distinguish.
Nature of Competition
One of the first things that should be done to examine competition is to identify substitute
products. Diamonds as a form of jewelry competes with other precious stones like emeralds,
rubies etc and with non precious and manufactured stones like cubic zirconia‘s, diamonds etc.
Implications of Globalization
Globalization, also known as internationalized capitalism, is a major concern in all countries. A
diamond from start to finish travels through many different countries each of which have
120
different economic and social concerns. The controversies which may be caused by diamonds in
places like Angola, Sierra Leone, and the Congo are far away from the ultimate diamond buyers
in the international markets such as United States and Europe. Even so, these ultimate buyers are
starting to realize that there purchasing decisions in the domestic realm can have substantial
effects abroad
15.4 Economic, Social and Environmental Issues
The surrounding controversy of blood diamonds shows the economic, social land environmental
impacts that the diamond industry partakes in. Proceeds of diamond sales have been shown to
fund warlord activities in African countries such as Liberia and Angola, Democratic Republic of
the Congo and Sierra Leone .
Workers, in mines, in cutting and polishing shops, and at various other steps along the product
chain, are shown to be treated in burdensome conditions ,low compensation, and with inhumane
conduct. For example, Diamond polishers are exposed to cobalt which has been shown in studies
to cause Interstitial pulmonary fibrosis which is an inflammatory lung disease.
Additionally, the process used to extract and manufacture diamonds show how the industry is
putting economic concerns before environmental strain. There are other methods that may be
more expensive but are better for the environment.
There are many economic, social and environmental concerns that are prevalental each step
along the diamond process. Managers in the diamond industry can learn from their stakeholder
about economic, social and environmental issues that arise
121
15.5 The Diamond mining industry faces environmental challenges
It must be recognized that mineral extraction by its very nature of mining does have the potential
to impact the environment unless carefully managed. The key challenge is Land Disturbance;
Diamond mining uses a variety of methods, some of which involve the removal of large
quantities of soil from the earth. However it must be remembered that it is economically
beneficial to recover the greatest amount of diamonds while moving the least amount of other
material. Therefore diamond mines seek to have the minimum sized footprint, and move only
that necessary material (known as waste) efficiently. Modern day best practice calls for a full
review of the plans for removal, storage and return of this topsoil/waste and the environmental
impact it will have to allow the area to return to its previous state.
In addition to land disturbances there are a number of other associated challenges:
Energy use and emission
Waste and recycling
Use of water
Impact on Biodiversity
However, importantly, diamond mining unlike other industrial processes and types of mining
does not use hazardous material.
Environmental standards
Today most modern diamond mines are managed to the ISO 14001 standards of environmental
management, and the major companies have a policy of regularly publishing reports on their
environmental performance. Many of the major diamond mining companies go beyond the ISO
14001 standard and use Environmental Impact Assessments and Social Impact Assessments to
identify the environmental and social impacts of mines as well as to identify gaps at their
122
operations. Generally, conducting these assessments is a legal requirement used by local
authorities before permission to mine is granted. Predicting environmental and social impacts
from the outset enables planners ways to identify reduce potentially negative impacts on the
environment and then to shape the negative impact on the local environment and harness the
positive impacts.
15.6 Social Problems and Control
Policing and the judiciary are organized at the national level. After a major police reform in
1999, there will be one police force with authority to operate in the entire nation. Delays in
handling cases in Brussels are often related to a lack of bilingual magistrates. In recent years,
civilian patrols without legal powers of intervention have come into existence, but their function
is mainly to deter robbers.
Informal social control is much stronger in small villages and towns than it is in large cities.
Organized crime is rare except in drug trafficking, prostitution, and illegal immigration.
Organized crime is mostly controlled by foreign criminals such as the Russian mafia. There are
relatively few murders and armed robberies. The most common crime is property theft.
123
CHAPTER 16 RECOMMENDATIONS
Belgian government & industry should provide benefits to outside EU countries like tax,
more % of import – export of diamond, etc so other country also attract to do business
with Belgium.
Diamond industry should marketing well so it will get Belgium people demand & spend
more money in gem & jewellery. Because they spend more in luxuries activities.
World diamond industry & countries government have to take some actions for misusing
diamond as a finance for purchase military arms which affects diamond business.
Belgium should no levy import duty or reduces it for importers of their country which
create more globalize business.
Diamond industry should keep fund from profit or business to improve environmental
impact arises.
Equitable fair wage should provide to both men & women which reduce gender gap &
also increase industrial labor.
Diamond business can provide house & transport facilities to Belgian people which helps
to reduce tax and also employee welfare activity.
Women are main to provide new ideas & things for gems & jewellery business so appoint
more as employee.
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CHAPTER 17 CONCLUSION
India is one of the largest manufacture of cutting and polish center of diamond in the world. The
gems and jewellery industry is a major exchange exchequer as major portion (around 80%) of its
turnover was contributed by exports This classified into five main segments cut and polished
diamonds, gemstones, gold and jewellery, pearl and synthetic stones, and others, including
precious metal jewellery (other than gold), synthetic stones and costume fashion jewellery. India
contributes over 12% to the total export earnings of the country and employs highly skilled 1.5
million workers.
The Indian jewellery sector is largely unorganized 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.
There are many regulating body exist in the India…..,like
Established in 1966 has around 6,500 members across India. GJEPC works closely with the
Indian government and the traders to implement and oversee the Kimberley Process Certification
Scheme; in fact, the Council has been appointed as the nodal agency in India under the
Kimberley Process Certification Scheme.
The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body
set up under the Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold
jewellery in India.
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The GJTCI was founded in 2000, and is tasked with resolving any issue arising from trade in
gems and jewellery. It plays an important role in showcasing the Indian gems and jewellery to
the international as well as the domestic market.
This policy affects the investment of the foreign investor in the diamond & gems and jewellery
sector .At present, the Indian government allows 100% foreign direct investment (FDI) in gems
and jewellery through the automatic route. So we can say that Indian government is are ready to
give permission to FDI to enter into jems and jewellery sector .which is help to increase and
develop the Indian jems and jewellery sector.
Customs duty on serially numbered gold bars (other than tola bars) and gold coins to be
increased from Rs 100 per 10 gram to Rs 200 per 10 gram. Customs duty on other forms of gold
to be increased from Rs 250 per 10 gram to Rs 500 per 10 gram.
Customs duty on silver to be increased from Rs 500 per kg to Rs 1,000 per kg. These increases
will also be applicable when gold and silver (including ornaments) are imported as personal
baggage.
Excise duty on branded articles of jewellery to be reduced from 2% to nil It is due to increase in
the demand of gold and silver in the Indian market.
Gujarat accounts for almost 80 % of the diamonds processed in India. Of this, 90 % are
processed by about 10,000 diamond units located in and around Surat alone. Rest of the diamond
units are located in Ahmedabad, Palanpur, Bhavnagar, Valsad and Navsari.
Belgian Ambassador Jean M. Deboutte in a press meet Friday said that they can strengthen their
economic ties with India by increasing their cooperation in the IT, non-conventional energy
sources and education along with gems and jewellery.
Gems and Jewellery Export Promotion Council (GJEPC) has strongly urged the Union
government to introduce presumptive tax system on the lines of Belgium and Israel, which will
make India the world's leading gems and jewellery hub and to protect its vanguard position as
the low-cost labour intensive global centre for diamond cutting and polishing activities.
126
Belgium is an important trading partner for India and it is India`s 2nd largest trading partner in
the European Union.
Nine of ten diamonds in the world would have been cut and polished in India. And Belgium has
market in Gems and Jewellery through india.
Forty percent of gems and jewellery in Belgium are imported from India and almost seventy to
eighty percent Indians staying in Belgium are associated with the gems and jewellery trade.
Around 180 Belgian companies including small and medium enterprises are operating in India.
(Infinity, Xsyxys and Vincke. Quite a large number of Indian companies including Videocon,
TCS, ICICI Bank are doing business in Belgium.)
1. The government, for instance, has declared this sector as a thrust area for exports.
2. Gems & Jewellery Export Promotion Council (GJEPC) was established in 1966, the GJEPC is
the apex body of the Indian gems and jewellery industry, and has around 6,500 members across
India.
3. The primary goal of the Council is to introduce the Indian gems and jewellery to the
international market and to promote their exports.
4. It promoting the product image-building exercises through advertisements, publications and
audio-visual means.
5. The Council also aids better interaction and understanding between traders and government
6. The GJEPC runs many institutes that provide training in all aspects of manufacturing and
design in Mumbai, Delhi, Surat and Jaipur
7. Gem & Jewellery Trade Council of India (GJTCI) was founded in 2000, and is tasked with
resolving any issue arising from trade in gems and jewellery
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8 .The Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold jewellery in
India.
9. In the pre-liberalization period (prior to 1991), severe restrictions on the export and import of
gold from and into India were imposed
10. The reasons for imposing these restrictions were:
To reduce demand for, as well as availability of gold
To alter the savings preferences of the population in favour of investments other than
gold/silver
To stop smuggling of gold
To conserve foreign exchange resources
Gems & jewellery is global business so diamonds are purchase from all over the world. In 2006,
diamonds were sold about $70 billion. Diamond is a luxurious product.
Women are the primary market for diamonds. Government also framing the department for this
sector.
Diamonds are sale through following ways
1) Tender
2) Regular customer
3) Window sale
4) Non-arm length
The DTC sell about 47% global market and it follows approved process for selling the diamonds.
128
Diamond jewellery and retail
Rough diamonds are polished and send in to the next sector of diamonds pipeline. They are
produced as per the fashion and consumer demand. Diamonds are splitting into higher value
diamonds for which there is a steady and decreasing smaller group diamonds.
Design and quality
Jewellery consumer are driven fashion and trend .they focus on hot design and product . it is a
difficult to make the price in comparing the quality .
Economic impact
Diamond industry is giving a generic job and business opportunities .difficult external factors
like economic social, political, legal environment is also affected mostly. It is difficult to
compare financial and economic benefit with gems & jewellery sector.
Fashion jewellery includes the alluminium jewellery, brass jewellery, lac jewellery, leather
jewellery, ivory jewellery, silver jewellery, beaded stone and tereactotta.
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file://localhost/G:/all%20gcr/download/marketing.htm
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