Analysis of India’s Gem & Jewellery Industry Performance in FY23

India’s gem and jewellery industry has demonstrated remarkable resilience and perseverance, delivering commendable growth and securing its position as a key player in the international market. Despite inflationary pressures in the United States, the ongoing Russia-Ukraine conflict, and an extended lockdown in China, a crucial market, the industry has not only weathered the storm but has also achieved significant progress. This comprehensive analysis delves into the performance of the gem and jewellery sector in FY23, highlighting notable growth figures, market dynamics, and emerging trends.

Overall Growth and Market Performance

The provisional gross export of plain gold jewellery between April 2022 and March 2023 reached an impressive Rs 33,177.86 crore ($4,128.57 million). The gem and jewellery exports for FY 2022-23 experienced a 2.48% growth, totaling Rs 3,00,462.52 crores ($37,468.66 million) compared to the previous fiscal year’s figure of Rs 2,93,193.19 crores ($39,331.71 million). The consistent growth in the sector can be attributed to several factors, including effective policy implementation, strategic international partnerships, and continuous innovation.

Key Factors Driving Growth

1. India-UAE Comprehensive Economic Partnership Agreement (CEPA): The timely implementation of the India-UAE CEPA by the Ministry of Commerce & Industry has played a pivotal role in driving a remarkable 17% growth in the exports of plain gold jewellery in FY23. This bilateral agreement has enhanced trade relations between India and the United Arab Emirates, creating a conducive environment for increased exports.
2. Resilience in Challenging Times: The gem and jewellery industry has displayed remarkable resilience in the face of adversities caused by global challenges. Despite supply chain disruptions and fluctuating demand, the sector has adapted and innovated to meet the changing market dynamics. This adaptability has allowed India to maintain its position as a trusted and reliable supplier.
3. Strategic Market Focus: India’s major export markets for gem and jewellery products remain the United States, Hong Kong, and the UAE. These markets have consistently provided significant opportunities for Indian exporters. By catering to the specific demands and preferences of these regions, the industry has sustained its growth momentum.

Cut & Polished Diamonds: A Sectoral Analysis

The period between April 2022 and March 2023 witnessed a decline of 2.97% (9.78% decline in terms of US dollars) in the gross export of cut and polished diamonds, reaching Rs 1,76,696.95 crores ($22,044.58 million) compared to the previous year’s figure of Rs 1,82,111.14 crores ($24,433.75 million). While challenges in key markets like the USA and China impacted the demand for diamonds, certain regions in Europe and South-East Asia showcased resilient growth.

Overcoming Hurdles in the Diamond Sector

1. Inconsistent Russian Rough Diamond Supply: India faced challenges due to the inconsistent supply of Russian rough diamonds, impacting the production and export capabilities. This situation necessitates exploring alternative sources and diversifying the supply chain to ensure stability and minimize disruptions.
2. Enhancing Beneficiation Practices: Countries like Namibia, Botswana, and Angola prefer to have their rough diamonds cut within their own borders, leading to challenges in beneficiation for the Indian diamond sector. Focusing on enhancing local beneficiation practices and establishing partnerships with diamond-rich nations can alleviate this issue and strengthen India’s position as a global diamond hub.
3. Future Prospects: The diamond sector is expected to witness stability in the coming months, primarily driven by improved conditions in China and Far East Asia. These regions hold immense potential for growth and will play a crucial role in revitalizing the global diamond trade.

Gold Jewellery: A Flourishing Segment

India’s gold jewellery exports have showcased robust growth in the fiscal year 2022-23. The provisional gross export of total gold jewellery reached Rs 75,635.72 crores ($9,423.31 million), reflecting a remarkable 11.13% increase (3.22% in terms of US dollars) compared to the previous year’s figure of Rs 68,062.41 crores ($9,129.71 million). Within this segment, specific categories have shown noteworthy performance.

Category-wise Growth

1. Plain Gold Jewellery: The provisional gross export of plain gold jewellery surged by an impressive 17.22% (8.74% in terms of US dollars), reaching Rs 33,177.86 crores ($4,128.57 million) compared to the previous fiscal year’s figure of Rs 28,303.37 crores ($3,796.70 million). The demand for intricately crafted plain gold jewellery, both traditional and contemporary designs, has remained strong in international markets.
2. Studded Gold Jewellery: Gross exports of studded gold jewellery reached Rs 42,457.87 crores ($5,294.74 million), reflecting a growth of 6.79% (0.72% decline in terms of US dollars) compared to the previous year’s figure of Rs 39,759.04 crores ($5,333.01 million). The appeal of exquisitely adorned gold jewellery, embellished with diamonds, gemstones, and other precious stones, has continued to captivate global consumers.

Lab-Grown Diamonds: A Booming Sector

The emerging sector of lab-grown diamonds (LGD) has witnessed consistent growth in recent years. From April 2022 to March 2023, LGD exports surged by an impressive 37.31%, amounting to Rs 13,466.42 crores ($1,679.98 million). This growth has been further propelled by key initiatives and policy reforms.

Government Support and Technological Advancements

1. Research Grant for Technological Development: The Indian government’s research grant of Rs 242 crore to IIT Madras, spanning five years, aims to support the development of local manufacturing technology in the gem and jewellery industry. This investment will foster innovation and enable India to enhance its capabilities in manufacturing LGDs.
2. Customs Duty Exemption: The elimination of customs duty on LGD seeds, previously set at 5%, has provided a competitive edge to India in the complete production cycle of lab-grown diamonds and jewellery manufacturing. This step positions India favorably for global leadership in this rapidly growing sector.

Silver and Platinum Jewellery: Surging Demand

Silver and platinum jewellery exports have experienced notable growth in FY23, showcasing the evolving preferences of global consumers. The provisional gross export of silver jewellery reached Rs 23,492.71 crores ($2,932.12 million), reflecting a remarkable 16.02% increase (8.03% in terms of US dollars) compared to the previous year’s figure of Rs 20,248.09 crores ($2,714.14 million). Similarly, the provisional gross export of platinum jewellery stood at Rs 237.73 crores ($29.74 million), marking a notable 10.01% growth (2.49% in terms of US dollars) compared to the previous year’s figure of $29.01 million (Rs 216.09 crores).

Coloured Gemstones: A Lucrative Market

The market for coloured gemstones has witnessed remarkable growth, signaling an increasing appreciation for unique and vibrant gemstone jewellery. The provisional gross export of coloured gemstones reached Rs 3,373.43 crores ($419.63 million), showcasing an impressive growth of 45.44% (34.83% in terms of US dollars) compared to the previous year’s figure of Rs. 2,319.41 crores ($311.21 million). The demand for these captivating gemstones has surged across various international markets, creating lucrative opportunities for Indian exporters.

March 2023 Export Performance

In March 2023, the overall gross exports of gems and jewellery reached Rs 21,501.96 crores ($2,612.65 million), representing a decline of 23.75% (29.39% decline in terms of US dollars) compared to the same period in the previous year, which amounted to Rs 28,198.36 crores ($3,699.90 million). Furthermore, the gross export of cut and polished diamonds during March 2023 reached Rs 13,207.10 crores ($1,604.67 million), indicating a decline of 27.68% (33.05% decline in terms of US dollars) compared to the previous year. On the other hand, the total gross export of gold jewellery during March 2023 stood at Rs 5,769.24 crores ($701.26 million), showcasing a growth of 4.24% (3.44% decline in terms of US dollars) compared to the same period in the previous year.