2. Growth of the Middle Class
In 1990, India had approximately 30 million middle-class consumers, less than 1% of the population. With economic reforms spurring GDP growth, the middle class has expanded progressively. Current estimates place the Indian middle class at 31%, around 442 million, expected to reach 38% by 2031. This burgeoning middle class is a catalyst for economic advancement, contributing to increased consumption of gold for both personal adornment and investment, reflecting the cultural significance of gold in the Indian subcontinent. The Indian and Chinese markets collectively account for a substantial 56% of global gold jewelry demand.
While Indian jewelry purchases remain closely tied to weddings, constituting over 50-55% of demand, the expanding middle class and a relatively young population with a median age of 28 indicate a rising trend in fashion jewelry for daily wear, making up 35-40% of the total demand (Data from World Gold Council).
In terms of production, Surat, a crucial commercial center in Gujarat State and the global hub of diamond polishing, serves as the origin for up to 90% of the world’s polished diamonds. It is also the world’s leading diamond trading center. Recently, a new diamond bourse spanning over 6.6 million square feet was opened in Surat. This diamond bourse is envisioned as an integrated center that is expected to create 150,000 new jobs, in addition to the already over 1.5 million people employed in Surat’s diamond industry. Furthermore, Surat is one of India’s major production centers for lab-grown diamonds.
Beyond Surat, Mumbai stands as another significant Indian center for trading polished diamonds, with a market that seamlessly blends both traditional and contemporary jewelry. Mumbai is also renowned as the fashion capital. Jaipur, a major production hub with skilled craftsmen, is particularly known for crafting traditional jewelry and is also renowned for the production and trade of various precious stones and ornaments. Hyderabad, often named "the city of pearls," has gained global fame for its pearls, including locally crafted precious and semi-precious stones jewelry.
While the COVID-19 pandemic severely impacted India's economy in the past, especially the manufacturing sector, which heavily relies on labor and faced high raw material price volatility causing supply chain disruptions, there has been a notable shift towards online platforms. This shift is particularly evident in purchases made through online channels, especially in the category of imitation jewelry and fashion accessories, which have experienced a significant surge in sales. This has led to a rapid resurgence of the market.
The primary demographic fueling these online purchases comprises young individuals with an interest in foreign cultures and fashion trends, showcasing an increased reliance on online media consumption. The casual jewelry market, reflecting personal identity with contemporary designs or easily accessible fashion jewelry, appeals to both men and women, presenting a viable option to address the demands of this evolving market.
In conclusion
China and India, as significant global consumer markets and pivotal players in supply chain connectivity, exhibit parallels in their economic landscapes. The growth of their urban economies has led to the expansion of a robust middle class, propelling both nations into influential consumer groups shaping the global gem and jewelry market. While the majority of middle-class consumers currently reside in the European Union and the United States, a noteworthy shift is anticipated in the next decade, with India, China, and other Asian nations (excluding Japan) taking the lead. Projections for 2035 suggest that two out of four global middle-class consumers will call India and China home.
Considering consumption dynamics, it is undeniable that both the Chinese and Indian markets play crucial roles, significantly impacting global trade. Simultaneously, in terms of production, both nations have implemented policies fostering the growth of their respective industries, positioning them as competitive forces on the global stage. India and China are perceived as both partners and competitors to other nations. Engaging in fierce competition may not always be optimal; however, adopting a Win-Win policy, finding common ground for mutual economic benefits through collaboration, shared ecosystems, broader market access, resource sharing, technology exchange, skill transfer, and joint research and development efforts can contribute to the sustained development of industries in both countries. This cooperative approach reflects the wisdom of adapting, akin to a willow bending with the wind to endure storms.