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Gem and Jewellery Export Promotion Council has proposed a reduction in import duty on cut and polished diamonds to 2.5% from the existing 7.5% to double exports of gems & jewellery to US$ 70 billion by 2025.

Gems and Jewellery Industry in India

    Last updated on Feb, 28 2021

Indian Gems and Jewellery Industry Report  (Size: 637.02 KB ) (November, 2020)

Introduction

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.

Market size

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.

Investments/Developments

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 December 2020, in collaboration with Persistent Systems & IIT- Bombay, the Gem & Jewellery Skills Council of India (GJSCI) launched a Centre of Excellence (CoE) for Jewellery Artificial Intelligence & Data-science Excellence (J.A.D.E.), which will boost incorporation of AI, ML and data science techniques into the gem and jewellery industry.
  • In November 2020, Platinum Guild International (PGI) launched their new 'Men of Platinum’ collection for men in leading retail stores across India.
  • In April 2020, majority of the players in the Indian market like Malabar Gold, Tanishq, and Joyalukkas offered jewellery online for Akshay Tritiya.
  • Companies such as PC Jewellers, PNG Jewellers and Popley and Sons are planning to introduce a virtual-reality (VR) experience for their customers. The customer will have to wear a VR headset, through which they can select any jewellery, see it from different angles and zoom it to view intricate designs.

 

Government Initiatives

  • Indian Government made hallmarking mandatory for Gold Jewellery and Artefacts. A period of one year is provided for implementation i.e. till January 2021.
    • In December 2020, All India Gem and Jewellery Domestic Council (GJC) welcomed the decision to make hallmarking compulsory from June 2021 in a phased manner; urged the government to examine the key concerns of the industry for smooth implementation of the initiative.
  • In November 2020, Chairman of Gems and Jewellery Export Promotion Council, Mr. Colin Shah, proposed lowering import duties on gold from 12.5% to 4.5% and on diamonds from 7.5% to 2.5%. The proposal is under consideration.
  • As per Union Budget 2019–20, the GST rate was reduced from 18% to 5% (*5% without Input Tax Credit (ITC)) for services by way of job work in relation to gems and jewellery, leather goods, textiles etc.
  • The Bureau of Indian Standards (BIS) has revised the standard on gold hallmarking in India from January 2018. The gold jewellery hallmark will now carry a BIS mark, purity in carat and fitness as well as the unit’s identification and the jeweller’s identification mark. The move is aimed at ensuring a quality check on gold jewellery.           
  • The Gem and Jewellery Export Promotion Council (GJEPC) signed a memorandum of understanding (MoU) with Maharashtra Industrial Development Corporation (MIDC) to build India’s largest jewellery park in at Ghansoli in Navi-Mumbai on 25 acres land with a capacity to have more than 5000 jewellery units of various sizes ranging from 500–10,000 square feet. The overall investment will be of Rs. 13,500 crore (US$ 2.09 billion).

 

Road Ahead

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

  • *Till September
  • **between April 2020 and October 2020

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.

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