Gem and Jewellery Industry in India: Structure, Exports and Policies

India’s gem and jewellery sector is a major driver of foreign exchange, merchandise exports, and domestic employment. The industry processes raw gemstones, manufactures intricate gold and silver jewellery, and cuts rough diamonds imported from across the globe. Supported by specialized manufacturing clusters and government export policies, the country is a leading global center for cut and polished diamonds and handmade jewellery.

Industry Structure and Key Segments

The Indian gem and jewellery sector operates as a two-tier structure composed of an organized modern retail segment and a vast unorganized network of traditional artisans and local goldsmiths.

• Cut and Polished Diamonds (CPD): Represents the largest segment of the export basket. India cuts and polishes around 90% of the world’s rough diamonds by volume.
• Gold and Silver Jewellery: Divided into plain gold ornaments and studded jewellery featuring precious stones, pearls, and lab-grown gems.
• Coloured Gemstones: Focuses on cutting, polishing, and trading emeralds, rubies, tanzanite, and sapphires.
• Lab-Grown Diamonds (LGD): Emerging sub-sector producing diamonds using High Pressure High Temperature (HPHT) and Chemical Vapour Deposition (CVD) methods.
• Costume and Fashion Jewellery: Non-precious metal jewellery, synthetic stones, and bead crafts catered to budget markets.

Major Manufacturing and Trading Clusters

Different regions in India specialize in distinct components of the gem and jewellery value chain based on historical traditions and localized skill sets.

Institutional and Regulatory Framework

The governance, quality control, and export promotion of gems and jewellery are managed through dedicated institutional bodies and regulatory mechanisms.

Gem and Jewellery Export Promotion Council (GJEPC)

• Role: Set up by the Ministry of Commerce and Industry in 1966.
• Mandate: Organizes international trade shows, acts as the nodal agency for the Kimberley Process Certification Scheme in India, and represents industry interests before the government.

Bureau of Indian Standards (BIS) and Mandatory Hallmarking

• Mandatory Hallmarking: Hallmarking of gold jewellery was made mandatory by the central government in selected districts starting June 2021.
• Hallmark Components: Each hallmarked gold article contains three distinct marks: the BIS logo, the purity grade (e.g., 22K916 for 22 karat gold), and a 6-digit alphanumeric Hallmark Unique Identification (HUID) code.
• Silver Hallmarking: Governed by BIS standards but remains voluntary for manufacturers and retailers.

Kimberley Process Certification Scheme (KPCS)

• Function: An international certification scheme designed to prevent “conflict diamonds” or “blood diamonds” from entering the mainstream rough diamond market.
• Indian Administration: The Department of Commerce is the designated authority, and GJEPC acts as the executive body issuing and verifying Kimberley Process certificates for all rough diamond imports and exports.

Export Profile and Trade Agreements

India exports precious jewellery and finished gemstones to major destination markets, supported by bilateral free trade agreements.

• Key Destination Markets: The United States, United Arab Emirates (UAE), Hong Kong, Belgium, Israel, and the United Kingdom.
• India-UAE CEPA: The Comprehensive Economic Partnership Agreement (CEPA), implemented in May 2022, provides duty-free access to Indian jewellery in the UAE market and concessional import duties on gold into India.
• India-Australia ECTA: Eliminates tariffs on Indian gem and jewellery exports entering Australia.
• SEZ and EOU Infrastructure: Special Economic Zones like SEEPZ (Santacruz Electronic Export Processing Zone) in Mumbai provide duty-free raw material imports for 100% export-oriented units.

Key Government Policies and Support Initiatives

Lab-Grown Diamonds (LGD) Support

The central government reduced the basic customs duty on seeds used in the manufacture of lab-grown diamonds to zero. It also provided an operational research grant to the Indian Institute of Technology (IIT) Madras to set up an India Centre for Lab-Grown Diamonds (InCent-LGD).

Revamped Gold Monetisation Scheme (RGM-Scheme)

Enables individuals, trusts, and institutions to deposit idle gold with banks to earn interest. The mobilized gold is refined and made available to domestic jewellers, reducing the need for physical gold imports.

Sovereign Gold Bond (SGB) Scheme

Introduced to shift physical gold purchases into financial savings. SGBs are government securities denominated in grams of gold, issued by the Reserve Bank of India on behalf of the Government of India.

Common Facility Centres (CFCs)

The Ministry of Commerce and Industry funds common facility centers in small towns to give traditional artisans access to advanced laser cutting, casting, and hallmarking machinery.

Key Facts

• Surat cuts and polishes nearly 9 out of 10 natural diamonds sold worldwide.
• The Bharat Diamond Bourse (BDB) in Bandra Kurla Complex, Mumbai, and the Surat Diamond Bourse (SDB) in DREAM City, Surat, are among the world’s largest diamond trading facilities.
• The Hallmark Unique Identification (HUID) is a 6-digit alphanumeric code laser-marked on every hallmarked jewellery piece to ensure traceability.
• India was the global chair of the Kimberley Process Certification Scheme in 2008 and 2019.
• Gold caratage indicates purity: 24K is 99.9% pure gold, 22K is 91.6% pure gold, 18K is 75% pure gold, and 14K is 58.5% pure gold.
• The first discovery of natural diamonds in recorded history occurred along the Krishna and Godavari riverbeds in the Golconda region of India.
• Jaipur is the global cutting center for emeralds and tanzanite.
• The Silver Filigree of Cuttack, known locally as “Chandi Tarakasi”, holds an official Geographical Indication (GI) tag.
• The Mega Common Facility Centre (Mega CFC) at SEEPZ SEZ in Mumbai was established to modernize jewellery manufacturing and train artisans.
• The import of rough diamonds into India is permitted duty-free under the Kimberley Process Certification guidelines.