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Glittering India

India is one of the largest exporters of gems and jewellery. The industry contributes a major portion to the total foreign reserves of the country and hence considered to play a vital role in the Indian economy.

The overall net exports of gems and jewellery stood at USD 35.6 bn during FY2016-17 registering a growth of 9.1% over FY 2015-16. Exports of cut and polished diamonds, gold jewellery & silver jewellery registered a growth of 10.2%, 1.9% & 35.9% respectively during FY2016-17. Exports of gold coins & medallions stood at USD 1.9 bn while silver jewellery stood at USD 3.3 bn during April 2017-February 2018.

India is a major importer of gems and jewellery as well. Its imports of gems and jewellery stood at USD 28.3 bn during April 2017-February 2018 which increased at a compound annual growth rate (CAGR) of 7.8% from USD 11.63 bn in FY2004-05 to USD 28.8 bn in FY2016-17.

US, Hong Kong and UAE are the major exporters who accounted for 75% of the total gems and jewellery exports from India during FY 2016-17. While on the other hand UAE, US, Russia, Singapore, Hong Kong, Latin America and China are the biggest importers of Indian jewellery.

The GoI has permitted 100% Foreign Direct Investment (FDI) in the sector under the automatic route.  For more details refer FDI Policy 

HIGHLIGHTS

  • Largest diamond processing center in the world
  • One of the largest exporters of gems & jewellery
  • Biggest buyer of gold in the world

Industry Scenario

Gems & jewellery sector market size is about 7% of the country’s GDP.

Gems and jewellery sector in India contributes about 16% to India’s total merchandise exports and has grown at a CAGR of over 14.8% over the last 50 years. India’s gems and jewellery sector is one of the largest in the world contributing 29% to the global jewellery consumption. Its market size is about USD 60 bn as of 2017 which is expected to reach USD 110 bn by 2022. It currently employs ~4.5 mn people and is expected to provide employment opportunities to more than 8.2 mn people by 2022.

Gems & Jewellery could be divided in the following subsectors:

  •   Diamonds
  •   Gemstones
  •   Pearl
  •   Gold, Silver & Platinum Jewellery

 

India being the largest manufacturer of cut and polished diamonds in the world (almost 12 out of 14 diamonds sold in the world are either polished or cut in India), its global diamond market share is 60% & 90% in value & volume terms respectively.

Gems & Jewellery industry in India is one of the largest in the world contributing 29% to the global jewellery consumption. India being the biggest buyer of gold in the world (FY 16-17), its gold jewellery forms around 80% of the Indian jewellery market.

Growth Drivers

GD
  • Employment generation (skilled & semi-skilled)

    4.5 mn

  • Contribution to country's total commodity exports (FY15)

    13% 

  • Industry CAGR (2014-19)

    16%

  • Contribution to GDP

    ~ 7%

Key policies

BIS Hallmarking Scheme

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.

Foreign Trade Policy 2015-20

Exporters of gems and Jewellery can import / procure duty free input for manufacture of export product.

The schemes are as follows:

(i) Advance Procurement / Replenishment of Precious Metals from Nominated Agencies;

(ii) Replenishment Authorisation for Gems;

(iii) Replenishment Authorisation for Consumables;

(iv) Advance Authorisation for Precious Metals.

Gold Monetisation Scheme

a) Mr Arun Jaitley, Minister of Finance, Government of India, launched the Gold Monetisation Scheme in November 2015. This scheme enables individuals, trusts and mutual funds to deposit gold with banks and earn interest on the same in return.
b) The designated banks accept gold deposits under the Short Term (1-3 Years) Bank Deposit as well as Medium (5-7 years) and long (12-15 years) Term Government Deposit Schemes.

Goods and Services Tax (GST) benefits to gems and jewellery

Highlights

a) Rate of duty on cut and polished colored gemstones changed from 2.5% to 5%.

b) Rate of duty on diamonds including lab grown diamonds-semi processed, halfcut or broken; non-industrial diamonds including lab-grown diamonds (other than rough diamonds), including cut and polished diamonds changed from 2.5% to 5%.

c) Rate of duty on Imitation Jewellery changed from 15% to 20%.

Sovereign Gold Bond Scheme

a) The Government of India launched the Sovereign Gold Bond Scheme. This scheme enables the Reserve Bank of India (RBI) to issue gold bonds denominated in grams of gold individuals in consultation with Ministry of Finance.
b) This scheme provides an alternative to owning physical gold. It is aimed at keeping a check on imports of gold.

FDI Facts

  • The cumulative FDI (USD) in diamond and gold ornaments between April 2000 and December 2017

  • FDI is permitted under the automatic route in this sector

  • CAGR for cumulative FDI in diamond and gold ornaments in India FY 2008-17

Recent Investments

  • April 2018 - Russian diamond mining major Alrosa to set up diamond base in India.

  • January 2018 - De Beers Group invests USD 5 mn in Surat diamond grading unit. The facility, employing about 100 people, has the capacity to process diamonds worth over USD 500 mn every year.

  • October 2017 - South India-based Kalyan Jewellers has lined up investment of about USD 21.2 mn to expand its footprint in the Uttar Pradesh market.

  • August 2017 - Jewellery major, Joyalukkas has decided to invest USD 94.4 mn in the current fiscal to expand its retail footprint in India, where it is expecting to increase its turnover by 18.9% in the current financial year to USD 1.3 bn.

Major Investors