Snapshot

Glittering India

India is one of the largest exporters of Gems and Jewellery. The industry plays a vital role in the Indian economy for its role as a major contributor to the total foreign exchange reserves of the country.

The overall net exports of Gems and Jewellery registered an annual growth of 9.1% to reach $ 35.6 bn during 2016-17. Exports of cut and polished diamonds, gold jewellery and silver jewellery registered a growth of 10.2%, 1.9% and 35.9%, respectively during 2016-17. Exports of gold coins and medallions from India stood at $ 1.9 bn, while exports of silver jewellery stood at $ 3.3 bn during April 2017-February 2018.

India is also a major importer of gems and jewellery.  The imports of gems and jewellery increased at a CAGR of 7.8% from $ 11.63 bn in 2004-05 to $ 28.8 bn in 2016-17. The imports during April 2017-February 2018 stood at $ 28.3 bn.

US, Hong Kong and UAE are the major exporters, who accounted for 75% of the total gems and jewellery exports from India during 2016-17. Other big importers of Indian jewellery include Russia, Singapore, Latin America and China. 

The Indian Government has permitted 100% Foreign Direct Investment (FDI) in the sector under the automatic route.

For further details, please refer FDI Policy

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A

Largest diamond processing centre in the world

B

2nd largest Foreign Exchange Earner (FEE) in the Indian economy

C

Biggest buyer of gold in the world

Industry Scenario

The market size of Gems and Jewellery in India contributes to about 7% of the country’s GDP. 

Gems and Jewellery industry contributes to about 16% to India’s total merchandise exports and has grown at a CAGR of over 14.8% over the last 50 years. The Gems and Jewellery industry in India is one of the largest in the world, contributing 29% to the global jewellery consumption.

The overall market size is expected to reach $ 110 bn by 2022 from approximately $ 60 bn in 2017. The industry that currently employs over 4.5 mn people, is expected to provide employment opportunities to over 8.2 mn people by 2022.

Gems and Jewellery comprises of the following sub-sectors:

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

 
India being the largest manufacturer of cut and polished diamonds globally, its global diamond market share is 60% and 90% in value terms and volume terms, respectively. The country where gold jewellery forms around 80% of the total jewellery market, stood as the biggest buyer of gold globally in 2016-17.

Growth Drivers

  • Traditional Domestic Demand

    Rise in gold demand during weddings and festivals like Diwali

  • Rising Income Levels

    Rise in income levels is directly proportional to rise in gold demand

  • Growing Middle-Class Population

    Population to reach 500 mn by 2025

  • Increasing Expenditure

    India to become 3rd largest consumer economy by 2025

  • Growing Organized Retail Format

    Indian retail market to reach $ 1 tn by 2020

Major Investors

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FAQ

Frequently
Asked Questions

When we issue gold as raw material to our Job Worker for Job Work and he returns that gold as finished goods, what GST treatment will be done and how to calculate the value?

The job worker, if registered, would be required to pay GST at the rate of 5% on job charges only. The jewellery manufacturer would in turn take credit of GST paid on such job work and may utilize the same for payment of GST on his outward supply of manufactured jewellery.

For more information, click here.

Banks lend gold in physical form for a period not exceeding six months and receive interest on the gold ounces disbursed as the same is converted into Rupees after calculation of interest on the ounces and the $/INR conversion. Will the same methodology continue in case of GST as well wherein Banks shall pay a provisional GST (i.e. IGST/SGST/CGST) on ongoing market prices and pay the final GST as and when the prices are fixed?

Yes, Banks may avail of the benefit of provisional assessment provided under section 60 of the CGST Act, 2017.

What are the GST benefits under gems and jewellery sector?

Few Goods and Services Tax (GST) benefits under the gems and jewellery sector is as follows:
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%.

What is the aim of Sovereign Gold Bond Scheme?

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. This scheme provides an alternative to owning physical gold.

For more information, click here.

What is Bureau of Indian Standards Hallmarking scheme?

The BIS Hallmarking Scheme has been aligned with International criteria on hallmarking. As per this scheme, Registration is granted to the jewellers by BIS under Hallmarking Scheme. The BIS certified jewellers can get their jewellery hallmarked from any of the BIS recognized Assaying and Hallmarking Centres.

For more information, click here.

 

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Authored By:
Strategic Investment Research Unit (SIRU)

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