- From just being a $28 million export industry more than 50 years ago, it has grown to $40 billion today
- Employs 4.3 million people
- Contributes 12% to the country’s merchandise exports
Policy and regulations have always played an important role for the development and growth of any business, and this stands true, especially for the Gem & Jewellery sector. Constant support from the Govt. from time to time, in terms of reforms and policies, has helped in the evolution of this industry. It was only in 1990s that the Gold Control Act was relaxed and ultimately abolished, there by unleashing huge energy into this sector. Fortunately, India already had a big presence in the world markets through the Diamond and Coloured Gemstone industry. By the creation of Special Economic Zones like SEEPZ in the 1970s, India could enter into the world market in a small but successful way, and it became a competitive supplier of fashion jewellery.
Today India has a robust domestic market, and it is one of the major exporters of gems and jewellery, accounting for USD 40 billion in exports annually—of which, Diamonds is the major contributor with 60%, gold jewellery is at 30%, and Silver, Coloured Gemstones & others together constitute the balance 10%.
In 1967-68 India’s exports of diamonds stood at merely Rs.18 crore, a relatively miniscule figure in the world market which was then heavily controlled by Belgium, Israel and America. However, with the passage of time, the Indian Gem & Jewellery industry started improving and accepting challenges posed by the international markets. Gradually with the enhancement in cutting standards, India’s exports showed exponential growth leading to high employment in the labour-intensive sector. Parallelly, the industry started challenging the existing manufacturing centres. The Govt. of Gujarat in its bid to support and boost this industry further abolished VAT and did not introduce service tax on the industry, especially for smaller business units. This ensured uninterrupted, smooth, and efficient processing of diamonds in the state.
The industry has stood the test of time. During the 2008, the diamond industry could overcome the financial crisis with the support of the government and self-regulatory measures taken by the industry.
The Covid-19 pandemic was one of the most unprecedented challenges this world has faced. This time the crisis was more severe, a humanitarian disaster compounded by the economic devastation. The outbreak of the pandemic in March 2020 followed by the complete global lockdown resulted in the choking of the gem and jewellery value chain at both ends – from mining to retail. The suspension of production restrained supplies and the lack of customers dried up demand in the international market. Furthermore, almost all the countries which are India’s export destinations viz. USA, UAE, UK etc. were in bad shape and major sources of imports such as Switzerland, Belgium were also wrecked. Consequent to the above situation, exports of gem and jewellery nosedived by 98.79% in April 2020.
At the behest of the GJEPC, the Indian Government swung into action and introduced several relief measures to ease economic stress of the manufacturers.
Among the slew of measures that were speedily rolled out by the Government were:
- The extension of time for repayment of export credit by 15 months, and gold loans by 6 months;
- A moratorium on interest and EMI payments up to 31st August 2020;
- The reclassification of MSMEs on 26th June;
- Support to stressed accounts, allowing one-time restructuring as per the recommendation of the KV Kamath Committee to tackle Covid-19 related stress.
Colin Shah, Chairman, GJEPC said, “Ours is a labour-intensive industry, contributing around 12% to India’s total merchandise exports. Based on its potential for growth and value addition, the Government declared gems and jewellery sector as a focus area for export promotion. During the Covid-19 pandemic, the Govt. has been proactive and introduced relief measures which helped the industry to cope up with the situation. Additionally, the Government has undertaken various measures recently to promote investment and upgrade technology and skills to promote ‘Brand India’ in the international market. The conducive environment for trade and business would help us to achieve USD 75 billion of gems and jewellery exports in the coming year.”
Apart from these, over the last two years, the Govt. has announced a series of polices and reforms that would help the gem and jewellery industry to transform and achieve multi-fold growth in the coming years. These include the revamped Gold Monetisation Scheme; exemption from mandatory Hallmarking for B2B government-approved exhibitions, exports, and re-imports; Reduction in import duty on Precious Metals Gold and Silver; Exemption of AIDC on gold/silver bars and dore to boost jewellery exports; alternate method for transfer of space by exiting unit in SEZ; introduction of RoDTEP scheme, etc.
|Key Policy Announcements & Reforms in the last two years|
|Reduction in import duty on Precious Metals Gold and Silver|
|Clarification on export of Gems and Jewellery through courier mode|
|Revamped Gold Monetisation Scheme|
|Clarification regarding applicability of AIDC on import of Gold/Silver for export purposes.|
|Hallmarking: Exemption of exports & re-import of gold jewellery from mandatory Hallmarking and B2B government approved exhibitions|
|RoDTEP rates announced for gem & Jewellery sector|
|Clarification on Transfer of property in SEZ|
These reforms and polices have given the industry a conducive environment to scale new heights. The industry is confident of achieving its target of $41.65 billion exports of gem & jewellery this fiscal year, and it is certain of reaching $75 billion in exports in the next few years.