India's gems and jewellery sector is one of the largest in the world, contributing around 29 per cent to the global jewellery consumption. The market size is estimated to reach Rs 6.99 lakh crore (US$ 100 billion) by 2025. The sector is home to more than 300,000 gems and jewellery players, contributing about seven per cent to India’s Gross Domestic Product (GDP) and employing over 4.64 million employees.
India's gems and jewellery sector contributes around 15 per cent to India’s total merchandise export. The overall net export of gems and jewellery stood at US$ 29.01 billion in FY20, whereas, import was at US$ 26.05 billion in FY20. The Government of India is aiming at US$ 80 billion in jewellery export over the next five years from 2019.
India is the world’s largest centre for cut and polished diamonds and export 75 per cent of the world’s polished diamonds. Today, 14 out of the 15 diamonds sold in the world are either polished or cut in India. India exported US$ 18.66 billion worth of cut and polished diamonds in FY20P. It contributed 64 per cent of the total gems and jewellery export.
India is the largest consumer of gold in the world. Rising middle class population and increasing income levels are key drivers behind the demand of gold and other jewellery in India. India’s demand for gold reached 690.4 tonnes in 2019. The Government has permitted 100 per cent Foreign Direct Investment (FDI) in the sector under the automatic route. The Rs 250,000 crore (US$ 35.77 billion) household jewellery industry is probably going to get a major lift through the Government’s decision for FDI in retail. The Bureau of Indian Standards (BIS) has revised the standard on gold hallmarking in India from January 2018 to include a BIS mark, purity in carat and fitness, as well as the unit’s identification and the jeweller’s identification mark on gold jewellery. The move is aimed at ensuring stringent quality check on gold jewellery. The Government has made hallmarking mandatory for gold jewellery and artefacts and a period of one year is provided for its implementation (till January 2021).
As per Union Budget 2019-20, the GST rate has been reduced from 18 per cent to 5 per cent (*5 per cent without Input Tax Credit (ITC)) for services by way of job work in relation to gems and jewellery, leather goods, textiles etc.
The cumulative FDI inflow in diamond and gold ornaments for the period April 2000–March 2020 stood at US$ 1.17 billion according to Department for Promotion of Industry and Internal Trade (DPIIT).
*Includes export of CPD (Bonded Warehouse) also