India’s gem and jewellery exports climbed to $2.21 billion in June, a 26.5% increase compared to last year. This growth was fueled by lower international gold prices and strong overseas demand for gold and lab-grown diamond products. While this marks a recovery, the industry continues to manage sourcing challenges related to tax regulations on gold imports.
Detailed Coverage
India’s gem and jewellery sector saw a notable recovery in June, with total exports rising 26.5% year-on-year to $2.21 billion. This performance follows a period of mixed results and provides a significant boost to the industry, which had seen flat growth in the April-June quarter at $6.61 billion overall.
Price Correction Boosts Export Volume
The primary driver behind this growth was a sharp correction in international gold prices, which dropped over 10% month-on-month. This decrease in raw material costs allowed Indian exporters to lower prices, making their products more competitive in key international markets such as the UAE, the US, Saudi Arabia, Singapore, and the UK. According to data from the Gem & Jewellery Export Promotion Council (GJEPC), gold jewellery led the charge, with exports jumping 54.5% to $1.09 billion during the month.
Beyond traditional gold jewellery, the sector also saw strong interest in new-age segments. Lab-grown diamond exports recorded a significant 52.25% increase, while platinum jewellery exports rose by 34.77%. Cut and polished diamond exports also saw a modest rise of 8.71%, contributing to the positive sentiment in the overall export basket.
Regulatory and Sourcing Hurdles
Despite the positive export data, the industry is not without its difficulties. The GJEPC has pointed to ongoing technical issues regarding the application of Goods and Services Tax (GST) on gold imports handled by RBI-notified nominated agencies. These regulatory complications have created sourcing hurdles for exporters. The industry body is currently in discussions with the government to resolve these issues, as they directly impact the ease of procuring raw materials.
Furthermore, not all segments participated in the growth. Silver jewellery and coloured gemstone exports struggled, declining by 23.98% and 23.63%, respectively, in June. This variation indicates that while demand for gold-based products remains firm, other specialized segments are facing a more challenging demand environment.
What Investors Should Track
For investors monitoring companies within the jewellery and diamond manufacturing space, the key monitorable is the sustainability of this demand trend over the coming quarters. While lower gold prices have provided a tailwind in June, future performance will depend on whether global demand remains stable amid fluctuating commodity prices. Additionally, any updates from the government regarding GST applicability for nominated agencies will be critical, as a resolution could ease working capital pressure and improve supply chain efficiency for large exporters.