India’s Gems and Jewellery Exports Fall 2% in May as Gold Supply Constraints and High Prices Hurt Demand

However, cut and polished diamonds saw some relief. Exports in this category increased by 3% to $981 million. Exports of polished lab-grown diamonds jumped 26% to $101 million. In contrast, gold jewelry exports fell by 15% to $758 million.

The sector's performance remained weak in the first two months of the current financial year. Total gems and jewelry exports declined by 6% to $4.27 billion during April-May. In rupee terms, this marked a decline of 4%, reaching ₹40,399 crore.

Meanwhile, gems and jewelry imports also declined by 13% to $3.25 billion. The largest decline was seen in ordinary gold jewelry imports, which declined by 40%.

The GJEPC expressed concern that regulatory constraints on the availability of gold through banking channels have increased. Furthermore, the sharp rise in gold prices and the increase in import duty from 6% to 15% have significantly increased costs.

The industry body states that rising costs, limited gold supply, and outdated duty drawback rates are putting pressure on exporters' competitiveness and profitability.

The sector believes that if the constraints related to gold supply are not resolved soon, then pressure on gems and jewellery exports may continue in the coming months.