1. MADE IN ITALY JEWELS IN THE INDIAN MARKET New Delhi, 5 th July, 2008 Claudio Maffioletti, General Manager THE INDO-ITALIAN CHAMBER OF COMMERCE AND INDUSTRY c.maffioletti@indiaitaly.com, www.indiaitaly.com

2. THE INDIAN JEWELLERY INDUSTRY AN OVERVIEW Three hundred thousand traditional jewellers 96% unorganised retail 4% organised retail 2 Major segments Gold Jewellery: 80% of the market Diamonds & Gemstone studded Jewellery: 20% of the market Total exports - 10.7 billion in 2006-07 and 13 billion in 2007-08 (provisional) Total imports - 8.8 billion in 2006-07 and 11 billion in 2007-08 (provisional) Worlds largest diamond processing (cutting and polishing) country FDI upto 51% in single brand retail stores has been allowed by the government Multi-national jewellery brands such as Tiffany, Cartier, Zales and Harry Winston, Bulgari interested to come to India

3. RETAIL SCENARIO IN INDIA Reliance Retail is planning an aggressive entry into the jewellery retail market through its about 400 to 500 jewellery retail outlets and stores across the country. Damas India part of one of the largest jewellery retail outlets in the world launched its flagship store in August 2005 and is adding 16 new stores. Swarovski, the global crystal goods manufacturer and marketer plans to set up 30 stores by 2009, from the current 13. Italian luxury silverware manufacturer, Greggio Argento, has set up two exclusive stores in Mumbai and Delhi, through a marketing tie-up with Gitanjali Lifestyle. Mumbai-based Vardhaman Developers plans to build four jewellery malls in the city and is already set to launch Jewel World-Mumbais first jewellery mall Dubai-based Joy Alukkas has recently opened its largest showroom in Chennai Gold Souk India has plans for bringing 100 Souks in 100 months

4. ItemDuty Rough Diamonds0% Cut & Polished Diamonds0% Rough Coloured Gemstones0% Cut & Polished Coloured Gemstones0% Gold/Silver Jewellery (Plain & Studded)11.40% Platinum Jewellery (Plain & Studded)Rs. 200 per 10g Gold/Silver/Platinum Branded Jewellery13.76% Rough Pearls5.15% Processed Pearls5.15% Rough Synthetic Gem Stones0% Unworked Coral5% IMPORT DUTIES Effective for the year 2008-2009

5. RESEARCH TARGET This research targets Italian jewellery companies –with more than 75% of turnover from export –who spend more than 10% of turnover for promotion abroad in the mature market –who spend less than 10% of turnover in the emerging market The topics of focus are: –Is exhibiting still an important tool for Italian companies in India? –Which marketing strategy is to be adopted for marketing Italian products in India? –What kind of agreement is required for entry of foreign companies in Indian market? –What is the perception of Made in Italy Brand in India? –What is the role of associations and other promotional bodies in Jewellery sector? –What is the target?

6. THE INTERVIEWED Jewellery manufacturers (8) Dealers (20) Designer and Consultants (5) Associations (2) Media (5) TOTAL: 40

7. RESEARCH OBJECTIVE & ANALYSIS Three sections Section A: Exhibition as a tool aims at defining the role of international exhibiting initiatives held in India as a tool for effective promotion of jewellery products Section B: Made in Italy Brand focuses on the level of recognition and appreciation that Made in Italy products have acquired in the Indian market tries to detect the specific features which distinguish Italian products as unique Section C: the Indian market aimed at identifying the most effective market entry and branding strategies specific focus on the most required materials and jewellery categories highlights the difficulties and bottlenecks Italian brands might face while entering the Indian market.

8. 83% of the target population believe that exhibitions are an important tool for Italian companies in India 94% appreciated the quality of international exhibitions in India (see chart) SECTION A EXHIBITION AS A TOOL

9. Made in Italy as a brand is widely recognised (83% of target audience), although 17% highlight the fact that Italian jewellery potential is not fully exploited. The identity of Italian jewels style brings out an interesting insight: 53% of the interviewed said Italian design distinguishes itself from the Indian one 12% identify its unusual design as a distinctive feature whilst 35% think the possibilities to blend the Italian and Indian styles is a successful formula. Extreme adaptability of the two styles and the possibility to offer the market a wide portfolio of solutions SECTION B – MADE IN ITALY

10. However Italian jewellery is a success in India, on the other hand its potential is still not completely exploited. 57% define the response of the Indian market to Italian jewellery as good 43% think it is either very good or overwhelming

11. The approach to the Indian market has been experienced in different ways: 42% of the interviewed people it did not entail any particular problem 35% encountered hurdles due to difficulty in finding the right partner in India (35%) 10% due to red-tape entailed in the bureaucratic processes SECTION C THE INDIAN MARKET

12. 54% agree that being associated with an Indian brand already present in the Indian market, availing of a well-established distribution channel is the best way to approach India. only distribution is advisable for those Italian brands which do not have the capacity to deal with a large volume of orders required by the Indian partners Solo branding is recommended for those brands which can already count on a well-established reputation worldwide

13. Most suitable location where to sell Made in Italy jewellery shopping malls (47%), which ensure a high footfall of potential customers, crucial in defining the Italian product identity stand alone shops (37%), they are crucial in defining the product identity

14. most effective ways of brand building and promotion are magazines and TV programs/ads fashion shows are considered as ancillary exercises to strengthen the impact of the former Associations and Trade Promotion Councils carry out promotional activities aimed at widening the customers and general publics awareness through business delegations, fashion shows, seminars and conferences

15. Material and categories of jewels most appreciated by the Indian market: plain gold (25%) studded gold (23%) ethnic jewels (16%)

16. 61% jewellery products purchased by upper class (more than 20.000 income per year upper middle-class (from 15.000 to 20.000 per year) and middle class (from 10.000 to 15.000 per year) account for the remaining 39% Jewellery purchasers (42%) belong to the age group between 25 and 36 years old (this is the span of time when most couples get married, especially in metro cities) 35% are over 35 years old interestingly 23% of the market share is captured by consumers aged between 15 and 25 years old CONSUMER SEGMENTATION

17. CONCLUDING REMARKS Opportunities for Italian Jeweller companies and designers: Gems & jewellery industry is among the fastest growing industries in the country Increased purchasing power and disposable income of the middle class resulting in consumption growth of gems and jewellery by about 11% in the five-year period preceding 2006-07 The growth of the affluent class Indian government facilitating imports of jewellery products through favourable trade policies Local production is the most advantageous solution both for Italian design products and for mixed designs due to: –Low cost of production –Availability of skilled labour –Ready availability of most materials in the Indian market –long-established tradition in jewellery crafting and manufacturing

18. Founded in 1966 Six offices throughout India More than 1000 members More than 60 professional staff 16 desks from Italy Affiliated to Assocamerestero IICCI – AT A GLANCE

19. IICCI - BUSINESS ASSISTANCE Preliminary Activities Market analysis for products Assistance in developing market entry strategies Partner Selection Identification of trade partners (manufacturers, suppliers, exporters, importers, agents, distributors) Identification and selection of partners for industrial and financial collaborations Organisation of individual B2B meetings Corporate and financial information on potential partners Establishment of Operations Legal consultancy and support in finalising trade, industrial and financial collaboration agreements Registration of trademarks & patents Setting up of representative offices, branch offices, subsidiary companies and joint ventures Comparative analysis for selection of locations Assistance in acquiring and setting up commercial or industrial units Setting up of sales networks Marketing and promotion activities Scouting and selection of staff Interpretation and translation

20. IICCI- PROFESSIONAL TRAINING Italian language courses, general and customised for individuals and companies Sommelier courses for food & wine industry professionals Participation of Indian students in Italian fashion and design courses Participation of Indian chefs in professional courses in Italian cuisine Development of sector specific technical assistance projects

21. IICCI - PROMOTIONAL ACTIVITIES Seminars & conferences Technical workshops Business delegations Participation in fairs & exhibitions Sector analyses & reports Publications Media interaction Special events Networking events

22. OUROUR DESKS DESKSOUROUR DESKS DESKS

23. Thank you Claudio Maffioletti General Manager c.maffioletti@indiaitaly.com