Gold bangles are displayed at a jewellery store
Credit: Reuters photo
Bengaluru: India’s gem and jewellery sector faces a potential upheaval as the United States rolls out its ‘fair and reciprocal plan’ on trade. “This policy could necessitate adjustments to maintain India’s dominance in the US market, where we hold substantial shares in cut and polished diamonds (45.09%), gold jewellery (24.61%), and worked lab-grown stones (92.17%),” warned Kirit Bhansali, Chairman of the Gem and Jewellery Export Promotion Council (GJEPC).
India’s February exports for gems and jewellery exports were down 23.49% year-on-year (YoY) overall with a decline across segments, following a continued dip in demand in the US and China, GJEPC had previously reported. March has not fared any better as it is a continuous decline, Bhansali said.
Yet, he is looking forward to some recovery. Hong Kong, another of India’s export markets, recently held two jewellery shows in which India participated and strengthened inter-country trade ties. Meanwhile, the Chinese diamond market is showing recovery, which means India can start exporting more to China, he added.
In the period between February 2024 and February 2025, India’s total gem and jewellery exports to the US declined by 16.5% to $631.33 million, while its exports to China shot up by 13.91% to $9.49 million.
“The stabilising diamond prices and revival of Chinese demand are positive indicators for the global industry. India’s strong manufacturing base and adaptability position it well to capitalise on this opportunity for long-term growth,” he elaborated.
With this rejuvenated interest shown by countries like Hong Kong and China, it is the US tariff which will be the determining factor on India’s exports.
The US runs a trade deficit of $6.27 billion with India in the sector, a gap that the Trump administration is seeking to narrow. India, a key supplier of gems and jewellery to the US, is staring at possible tariffs ranging between 5 and 20%, on its nearly $10 billion annual exports to the US. This would challenge the sector severely, as well as the over 2 lakh workers it employs.
“But I am crossing my fingers; India will definitely protect our interests,” Bhansali added.
Domestic stays strong
At the same time, the domestic market for gems and jewellery has not seen a similar impact, even with the consumption downturn that several sectors have experienced, Bhansali told DH.
“Across the world, we are facing recession. China is down, the US is down, but domestic is doing extremely well,” he said. Even the soaring gold prices have not deterred Indian consumers, with the domestic market actually showing growth. This year’s festive season is expected to be an improvement on last year’s already strong season, in addition to the upcoming wedding fervour.
Bhansali dismissed concerns of investors shifting away from physical gold to gold exchange traded funds (ETFs) or gold bonds. “India believes in acquiring physical,” he asserted, adding that this was especially true for the large population living in tier-II cities and beyond.
Bhansali added that the customs duty cut seen in the recent Budget, bringing to a “reasonable” level, will likely be followed up by further reduction. The sector, at least, has made a strong demand for this.
Another boost to the sector has been e-commerce, which is also expected to help push exports in addition to already growing domestic retailers. Still, it is hard to say how much e-commerce has helped exports so far since the phenomenon is too recent, Bhansali stated.
There may be more partnerships with e-commerce players for GJEPC, which is in talks with different parties.
Karnataka’s thrust
Recently, Karnataka’s Large and Medium Industries Minister MB Patil proposed allocating land near Bengaluru’s international airport for a dedicated mega jewellery park.
The GJEPC will conduct a survey immediately to check viability, Bhansali told DH, with the aim of creating a possible jewellery park or similar initiative for localisation.