As of January 2021, India’s gold and diamond trade contributed ~7.5% to India’s Gross Domestic Product (GDP) and 14% to India’s total merchandise exports. The gem and jewellery sector is likely to employ ~8.23 million persons by 2022, from ~5 million in 2020.
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.
The Government has permitted 100% FDI in the sector under the automatic route, wherein the foreign investor or the Indian company do not require any prior approval from the Reserve Bank or Government of India.
In FY21*, exports of gems & jewellery stood at US$ 16.88 billion. In December 2020, exports of gems and jewellery stood at US$ 2.57 billion. In September 2020, the US was the largest country (at 44%) to import gems and jewellery (US$ 938.54 million) from India, followed by Hong Kong (~33%) and the UAE (~13%).
In FY21*, imports of gems & jewellery (pearls, precious & Semi-precious stones) is estimated at US$ 11.74 billion. Imports of gold recorded US$ 16.78 billion from April 2020 to December 2020.
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 development 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 January 2021 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.
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