RSM India

Gems and Jewellery

Our service offerings for the Gems and Jewellery industry

General:

  • The Gems & Jewellery Industry is one of the fastest growing segments in India
  • India’s export of Gems & Jewellery products (constituting cut and polished diamonds, gold jewellery, coloured gemstones, pearls, non-gold jewellery, synthetic stones, etc.)  is expected to generate a revenue of about US$ 35 bn in 2015
  • The domestic market is also robust at well over US$ 40 bn
  • India is the largest consumer of gold in the world and consumes nearly 20% of the world consumption. A majority of this consumption goes in making of gold jewellery
  • India has an abundant supply of skilled manpower suited for designing and producing high volumes of exquisite jewellery at low labour costs
  • Due to the very high export orientation of the industry, most of the large players have established their offices / subsidiaries / associates in nearly all the important trading centres of the world like USA, Singapore, Hongkong, China, UAE, Tokyo, Belgium, Tel Aviv, London etc.
  • India is the largest diamond cutting and polishing centre in the world and globally enjoys a 60% share in value, 82 % share in caratage terms and 95% share in terms of pieces
  • Effectively, 9 out of 10 diamonds sold worldwide are processed in India
  • India’s export of Gems & Jewellery products (constituting cut and polished diamonds, gold jewellery, coloured gemstones, pearls, non-gold jewellery, synthetic stones etc) was at US $ 21.2 billion in 2008 and is expected to be approx. US $ 20.1 billion in 2009.


Retail sector:

  • While recently there have been a growing trend of large business entities entering this sector, the Gems & Jewellery sector still continues to be dominated by small and medium sector entities
  • With a growing middle class, the market for branded jewellery is expanding substantially, with  many of the large players in the industry are setting up retail chains of jewellery showrooms across India which market gold (plain and studded) jewellery, fusion jewellery, diamonds etc.
  • With gold being seen as an investment alternative, the market for gold coins / bars has also increased substantially


Opportunities and Challenges

With the phenomenal increase in the growth opportunities and scales of business operated, the challenges have also increased manifold. Some of the significant challenges faced by the industry are:

  • Price risk of key raw materials
  • Foreign exchange risk
  • Security risk during mass scale production, handling and movement
  • Fast changing fashions, models, etc.
  • Credit risk
  • Country / territory risk for market concentration in few countries
  • Compliance risk has increased significantly as a result of the multinational operations of the industry
  • Ability of management in handling country specific challenges
  • In case of diamonds, concentration of rough diamonds supply with a few suppliers is a major challenge
  • Increased international and domestic vigilance by authorities considering Gems & Jewellery products (eg. gold, diamonds etc) being considered as sensitive goods
  • Scaling up the local systems and procedures to suit international standards and requirements
  • Products are more based on discretionary and impulsive buying and hence get affected first during any downturn

While the challenges are many, the industry also offers significant growth opportunities considering the future outlook.

How we can help

RSM in India has been involved in the Gems & Jewellery industry for over two decades and provides a wide range of professional services to this industry, viz:

  • Internal and management audits (including compliance audits)
  • International and Indian tax
  • Corporate advisory and structuring covering Tax / Foreign Exchange regulations, Double Taxation Avoidance Agreements (DTAA) regulations, Commercial regulations, etc.
  • Advisory and assistance in outbound and inbound Foreign Direct Investments from and into India, formation / re-structuring of Joint Ventures, Mergers and Acquisitions, etc.
  • Quality Management Systems covering compliance of standards defined by De Beers, Rio Tinto, etc.
  • Operations consulting covering lean management systems, JIT approach, inventory management tools, preparation of Standard Operations Manuals (SOPs), defining pre-agreed systems and procedures, etc. and assisting in their implementation
  • Financial process outsourcing
  • Transfer pricing
  • Information technology solutions covering data and process automation, assisting in the identification and implementation of software, ERP, etc.
  • Enterprise risk management enabling organizations to help identify, control and mitigate / manage risk across the organization
  • Company law compliance and commercial documentation
  • Executive search and recruitment

Advantage RSM:

RSM in India is considered as a Preferred Service Provider by the players from the Gems & Jewellery industry. We service a large number of industry players who are involved in the Gems & Jewellery industry (domestic focused as well as internationally focused) including a dominant portion of the Gems & Jewellery exporters. We cater to their professional services requirements both, in India and at their overseas locations. Further, given our national and international reach, we are able to provide the said services to our clients at all their business locations..

With our integrated and customized IT software solutions (insert hyperlink to service tier 1 of Information technology (IT) assurance and IT solutions) for the Gems and Jewellery industry we are one of the leading service providers of end to end IT solution, implementation services and management consultancy.

Our multi-disciplinary teams of professionals with expert professional knowledge in the fields of audit, tax, legal, Information Technology, HR, Operations Consulting, etc. and senior professionals possess extensive experience in catering to this industry. With a deep understanding of the various finer aspects of the Gems & Jewellery industry on a variety of fronts, we are in a unique position to offer a range of pragmatic and customized solutions to clients. Some of our credentials are given below:

  • RSM in India is consistently ranked amongst India’s top six accounting and consulting groups and globally RSM is the seventh largest audit, tax and consulting network
  • Extensive experience in advisory, taxation and accounting matters of the Gems & Jewellery sector across various functions and geographies
  • Multi-disciplinary team of professionals comprising of Chartered Accountants, MBAs, Engineers, Company Secretaries, CISA / DISA, Cost Accountants and Law graduates

Newsflash - ITAT Deletes Sec. 271G Transfer Pricing Penalty for diamond merchants

16 November 2017
The Mumbai ITAT in the case of ACIT V/s M/S D.

Newsflash: DTAA with Hong Kong Soon - Union Cabinet gives its approval

16 November 2017
On 10th November 2017, the Union Cabinet chaired by the Prime Minister Shri Narendra Modi gave its approval for entering into a Double Taxation Avoidance Agreement (DTAA) with Hong Kong.

Newsflash: Highlights of the 23th GST Council Meeting

13 November 2017
The 23rd GST council meeting was held on 10 November 2017 at Guwahati. The following are the key highlights of said meeting: -    Proposed revised GST rates for certain goods -    Proposed revised GST rate for restaurants. -    Relaxation in GST return filing -    Certain other aspects

Newsflash - Certain clauses of ICDS found contrary to the binding judicial precedents and thus, held unconstitutional - Delhi High Court

13 November 2017
In a path breaking judgment, the Hon’ble Delhi High Court on 8 November 2017 has ruled that certain clauses of various Income Computation and Disclosure Standards (ICDS) are unconstitutional and also suffers from the vice of excessive delegation.

Newsflash - Income Tax - Final Rules with respect to Country-by-Country reporting and furnishing of master file

13 November 2017
We are pleased to release our newsflash on the captioned subject. Background:

Newsflash - Income Tax - Regional Headquarter of Foreign Multinationals in India would not create POEM exposure where activities are of routine nature

13 November 2017
The new tax residency rule for foreign companies based on the concept of Place of Effective Management (‘PoEM’) has been effective since 1st April, 2017, i.e., Assessment Year 2017-18 onwards.

Highlights of the 22nd GST Council Meeting

13 November 2017
We are pleased to release our newsflash on the captioned subject. The 22ND GST council meeting was held on 6 October 2017 at New Delhi. The following are the key highlights of said meeting: -   Proposed revised GST rates for certain services

Newsflash: Government withdraws PMLA Notification relating to Gems and Jewellery sector with immediate effect

13 November 2017
The Prevention of Money-laundering Act, 2002 (PMLA) aimed at combating money laundering in India came into force with effect from 1st July 2005. Under the PMLA, the reporting entities inter-alia, included dealer in precious metals, precious stones and other high value goods, as may be notified by the Central Government.

Newsflash - Draft Rules with respect to Country-by-Country reporting and furnishing of master file

13 November 2017
Under the Finance Act 2016, the Central Board of Direct Taxes (CBDT) had inserted section 286 in the Income Tax Act, 1961 to implement the recommendation of 2015 Final Report on Action 13, titled “Transfer Pricing Documentation and Country-by-Country Reporting”, identified under the OECD Base Erosion and Profit Shifting (BEPS) Project.

Newsflash - Restriction on number of layers of subsidiaries for certain classes of holding companies

4 October 2017
Section 2(87) of the Companies Act, 2013 (Act) defines a subsidiary company as under: Subsidiary company or subsidiary, in relation to any other company (that is to say the holding company), means a company in which the holding company- i. controls the composition of the Board of Directors; or

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