Size of jewellery market in India is expected to double in next six years. According to a recent assessment by Associated Chambers of Commerce & Industry of India (Assocham), current size of the market is estimated to be around $15 billion, which is likely to touch $30 billion by 2015 driven by demand for gold and diamond jewellery. Worldwide market for gems and jewellery industry is believed to be more than $150 billion.

 In an assessment on 'Prospects of Bullion Trade' for next 6 months, Assocham anticipates that current crisis may stabilise by Aug '09 and till then bullion market will continue to enthuse investors. According to Assocham, the prices of gold and silver are likely to peak out at Rs17,000 per 10 gram and Rs24,000 per kg respectively by August this year. The chamber believes that once the financial market stabilises, investors will look forward to other investment options such as stocks, mutual funds, government securities and bonds.

"With fall in prices of all commodities including crude oil in last ten months, other investment options have lost their attractions," said D S Rawat, secretary general, Assocham. He added that investors had seen value erosion upto 50% in their investment in shares and mutual funds, while gold and silver had given return of 30%, which implied that silver follows gold. Assocham expects that gold and silver prices will fall to Rs12,000 and Rs17,000 respectively by January, 2010. According to Rawat, India consumes nearly 800 tonne of gold, which account for 20% of the total gold consumption in the world. Of this, nearly 600 tonnes is used for jewellery making which shows the importance and economies of scale of the jewellery sector. "All possible measures should be taken to ensure that the current demand trend for jewellery is further augmented as per projections made earlier," he added.

The chamber has suggested that since gems and jewellery industry has its dependence on skilled labour and trained manpower, professional institutions are required for further value addition, which will in turn increase their exports. Secondly, the tax structure for this sector is multi-layered which need to be simplified with diamonds grading.

DNA Money Correspondent / DNA-Daily News & Analysis Source: 3D Syndication