Whalesbook
February Exports Boosted by Market Diversification
India's gem and jewellery sector saw exports climb 3.86% year-on-year to $2.68 billion in February, according to the Gem and Jewellery Export Promotion Council (GJEPC). This modest rise follows flat year-to-date performance ($25.93 billion for April 2025-February 2026) and highlights a strategic shift in the industry. Exporters have expanded their market reach into the UAE and Australia, supported by Free Trade Agreements (FTAs). Markets like Hong Kong also continue to provide strong backing, showing an evolving export strategy less dependent on traditional hubs. This diversification is vital, as overall exports have stayed nearly flat over the eleven months of the fiscal year, changing little from the $25.92 billion recorded in the same period last year.
US Trade Policy and FTA Impact on Exports
The improved February performance occurs amid complex global trade conditions. The Gem and Jewellery Export Promotion Council (GJEPC) noted some support for the studded jewellery segment from changes in US tariff rules, but high uncertainty remains. A US executive order imposing a 10% import duty on natural diamonds and loose stones was a concern. However, a proposed US-India trade agreement to eliminate tariffs on loose natural diamonds and gemstones from India to 0% offered hope, though it is not yet finalized. Meanwhile, Free Trade Agreements (FTAs) are having a clear impact. The India-UAE Comprehensive Economic Partnership Agreement (CEPA) has significantly boosted gold and diamond jewellery exports to the Gulf region. Likewise, the India-Australia Economic Cooperation and Trade Agreement (ECTA) has removed tariffs, improving market access and driving nearly 36% export growth to Australia in the April-November 2025 period. This strategic market expansion is crucial, particularly as exports to the US, typically the largest market, fell sharply by 43.8% between April and November 2025.
Segment Performance and Geopolitical Risks
Despite the positive February figures, segment performance varied. Exports of cut and polished diamonds slipped 0.84% to $1.35 billion year-on-year. Polished lab-grown diamonds saw a modest 1.85% increase. Gold jewellery exports rose 3.23% to $928.85 million, showing sustained demand. Silver jewellery exports surged dramatically, more than doubling by 123.77% to $116.37 million. This contrasts with the wider diamond segment's struggles, where cut and polished diamond exports declined 6.7% year-on-year to $11.32 billion during April-February FY26. Escalating geopolitical tensions in West Asia are further complicating exports. Disruptions to critical shipping routes, like the Strait of Hormuz, are increasing freight and insurance costs, affecting supply chain reliability. The GCC region, a significant and growing share of India's total exports (around 36% in April-December 2025), is a key market for gems and jewellery and a vital source of raw materials. The conflict poses a direct risk to these flows, threatening demand in key centres like the UAE and potentially disrupting the inflow of rough diamonds and bullion, crucial for India's processing industry.
Company Valuations and Future Outlook
Major Indian listed jewellery companies show different valuation metrics. Titan Company, a market leader, has a P/E ratio of about 94.6x as of March 2026, with a market capitalization around ₹3.61 trillion. Kalyan Jewellers has a P/E ratio of approximately 34.68x, with a market cap of about ₹39,141 crore, while PC Jeweller trades at a more conservative P/E of around 10.4x, with a market cap of ₹6.82 billion. The industry outlook suggests continued growth, with the Indian market projected to reach $231.9 billion by 2034 at an 8.83% CAGR. However, the sector's strength will be tested by ongoing geopolitical instability and resolving trade tariff issues, especially concerning the US market.