India has tremendous appetite for gold and diamond jewellery – creating one of the largest markets in the world for jewellery. Further, India is the largest import of gold in India and the gems and jewellery sector contributes nearly 6-7% of the Indian GDP – making it an sector. With India having a booming middle class and growing economy, the demand for gold is set to further raise in the coming years. Therefore, jewellery business holds a lot of promise in the coming years. In this article, we look at the procedure for starting a jewellery business in India.
Types of Jewellery Business:
India’s domestic gems and jewellery industry was estimated to have a market size of about Rs.251,000 crores in 2013 with the potential to grow to Rs.500,000 crores by 2018. The entire gems and jewellery industry is set to witness a very healthy Compounded Annual Growth Rate (CGAR) of about 15.95% making it very attractive for investments. The Indian Jewellery Business can be divided
into different types as follows:
- Retail Jewellery Shops
- Online Jewellery Retail
- Gold Trading
- Gold Importers
- Jewellery Manufacturers
Requirements for Starting a Retail Jewellery Shop:
India has over 2.5 million jewellery shops, around 450,000 goldsmiths and nearly 100,000 gold jewelers. Retail jewellery shops are very popular in India and research has shown that Indian consumers are less focused on buying branded jewellery as they rather prefer local ones more. Further, in India nearly 96% of all Jewellery retail shops are family owned small businesses making it an ideal sector for setting up a small business.
Jewellery businesses tend to have large turnover (Turnover in excess of Rs.1 crore) easily. Hence, its recommended that jewellery businesses be registered as a private limited company to enjoy the benefits of limited liability protection, easy transferability and more. Further, by incorporating a private limited company for the jewellery business, funds in the form of debt or equity can be easily raised.
Sale of gems and jewellery are taxable under VAT. Hence, all jewellery businesses must have a VAT registration from the local state tax department. Once, VAT registration is obtained, monthly/quarterly VAT returns must also be filed by the business on time to avoid penalties.
Import Export Code:
An Import Export Code or IE Code is required for importing goods into India. However, jewellers must be aware of all the regulations prior to importing any gold into India. Learn about the procedure for importing gold into India.
BIS License for Selling Hallmark Jewllery:
Hallmarking is the accurate determination and official recording of the proportionate content of precious metal in the article/jewellery. Hallmark is thus official mark used in many countries as a guarantee of purity or fineness of precious metal in jewellery/artefacts. The principle objectives of the Hallmarking Scheme are to protect the public against substandard, adulterated products and to obligate manufacturers to maintain declared purity standards of fineness.
A jeweller who wishes to sell hallmarked jewellery must obtain a license from BIS for the particular retail outlet.
Each BIS license to sell hallmark jewellery is given for a particular retail premises or sales outlet. Therefore, one company that has multiple outlets must obtain multiple BIS License to sell hallmark jewellery.
After grant of licence, the jeweller has to follow the terms and conditions mentioned in the agreement. In case of any deviations in purity of precious metal (gold and/or silver) and observance of operations not in conformance to stated requirements may result in cancellation of the licence and proceedings for penalties.