FDI in Indian Diamond Industry

The Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 7% of the country’s GDP and 15% to India’s total merchandise exports. It also employs over 4.64 million workers and is expected to employ 8.23 million by 2022. One of the fastest growing sectors, it is extremely export oriented and labour intensive.

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 deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour. India is the world’s largest cutting and polishing centre for diamonds, with the cutting and polishing industry being well supported by government policies.

The Indian Government has permitted 100% FDI in Indian diamond industry or gems and jewellery sector under the automatic route.

  • 1

    Largest diamond processing centre in the world

  • 2

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

  • 3

    Biggest buyer of gold in the world

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 gems and jewellery market in India is home to more than 300,000 players, with the majority being small players. Its market size is about $75 bn as of 2017 and is expected to reach $100 bn by 2025

Gold demand in India rose to 523.93 tonnes between January - September 2018. India's gems and jewellery exports stood at US$ 28.52 billion between Apr 2018 –Feb 2019

Exports of gold coins and medallions stood at $686.51 mn and silver jewellery exports stood at $765.98 mn between April 2018 - February 2019

India is one of the largest exporters of gems and jewellery and the industry is considered to play a vital role in the Indian economy as it contributes a major chunk to the total foreign reserves of the country

  • Traditional Domestic Demand

    Rise in gold demand during weddings and festivals
  • Rising Income Levels

    Rise in income levels is directly proportional to
  • Growing Middle-Class Population

    Population to reach 500 mn by 2025
  • Increasing Expenditure

    India to become 3rd largest consumer economy by 20
  • Growing Organized Retail Format

    Indian retail market to reach $ 1 tn by 2020
  1. Nov 2018: The government proposes ‘Gold Policy’ to balance regulatory concerns with Ease of Doing Business.
  2. Aug 2018: Deals worth Rs.8,000 crore ($1.19 bn) were made at the Indian International Jewellery Show held in August 2018.
  3. Jan 2018: De Beers Group invests $5 mn in Surat diamond grading unit. The facility, employing about 100 people, has the capacity to process diamonds worth over $500 mn every year.
  4. Oct 2017: South India-based Kalyan Jewellers has lined up investment of about $21.2 mn to expand its footprint in the Uttar Pradesh market.
  5. Oct 2017: Companies such as PC Jewellers, PNG Jewellers, 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 the jewellery from different angles and zoom on it to view intricate designs.

  • $1.2 bn Cumulative FDI in Indian diamond industry and gold ornaments between April 2000 and March 2019
  • 20.5% CAGR for cumulative FDI in diamond and gold ornaments in India FY 2008-17
  • 100% FDI in jewellery sector is permitted under the automatic route in this sector

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