The gems and jewellery sector plays a significant role in the Indian economy, contributing around 7% to country’s GDP and 15% to India’s total merchandise export. It employs over 4.64 million people, which is expected to reach 8.23 million by 2022. One of the fastest growing sectors, it is extremely export oriented and labour intensive.
Based on its potential for growth and value addition, the Government declared gems and jewellery sector as a focus area for export promotion. The Government has undertaken various measures recently to promote investment and upgrade technology and skills to promote ‘Brand India’ in the international market.
India exports 75% of the world’s polished diamonds as per statistics from the Gem and Jewellery Export Promotion Council (GJEPC). India's Gems and Jewellery sector has been contributing in a big way to the country's foreign exchange earnings (FEEs). Government has viewed this sector as a thrust area for export promotion. The Indian Government presently allows 100% Foreign Direct Investment (FDI) in the sector through the automatic route. The sector employs over 4.64 million employees, which is expected to touch 8.23 million by 2022.
India’s gems and jewellery sector is one of the largest in the world, contributing 29% to the global jewellery consumption. The sector is home to more than 300,000 gems and jewellery players. Its market size will grow by US$ 103.06 billion during 2019–2023.
India’s demand for gold reached 690.4 tonnes in 2019. In FY21**, exports of gems & jewellery stood at US$ 11.62 billion. In the same period, India exported cut and polished diamonds worth US$ 18.66 billion, thereby contributing 52.4% to the total gems and jewellery export.
India’s import of gems and jewellery stood at US$ 24.41 billion in FY20 and for FY21* imports accounted to US$ 4.23 billion.
The gems and jewellery sector is witnessing changes in consumer preferences due to adoption of western lifestyle. Consumers are demanding new designs and varieties in jewellery, and branded jewellers have managed to fulfil their changing demands better than the unorganised players. Moreover, increase in per capita income has led to an increase in sales of jewellery as jewellery is a status symbol in India.
Cumulative FDI inflows in diamond and gold ornaments in India stood at US$ 1,183.07 million between April 2000 and September 2020 according to Department for Promotion of Industry and Internal Trade (DPIIT).
Some of the key investments in this industry are listed below:
In the coming years, growth in gems and jewellery sector would largely be contributed by the development of large retailers/brands. Established brands are guiding the organised market and are opening opportunities to grow. Increasing penetration of organised players provides variety in terms of products and designs. Online sales are expected to account for 1–2% of the fine jewellery segment by 2021–22. Also, the relaxation of restrictions of gold import is likely to provide a fillip to the industry. The improvement in availability along with the reintroduction of low-cost gold metal loans and likely stabilisation of gold prices at lower levels is expected to drive volume growth for jewellers over short to medium term. The demand for jewellery is expected to be significantly supported by the recent positive developments in the industry.
Note: Conversion rate used for December 2020 is Rs. 1 = US$ 0.014
Note: P - Provisional
References: Media Reports, Press Releases, Reserve Bank of India, Gem & Jewellery Export Promotion Council
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
E-commerce transactions where buyers and sellers interact ...
India is poised to counter its environmental challenges with i...
The leather and footwear industry is a labour intensive sector, providing employment to 4.42 mi...
The Indian automobile sector Is on its way to recovery after...
During the August 2020 Mann ki Baat address to the ...
Happy to kick start the year with IBEF's first blog on "Higher Education." This i...