Editor’s Note
This analysis examines the strategic reforms proposed by India’s gem and jewellery sector, highlighting their critical role in navigating volatile global demand and shifting trade policies to secure future growth.
These reform proposals symbolize the Indian gem and jewellery industry’s strategic move forward in a complex global economic environment. The sector is facing significant pressure due to volatile international demand and changing trade policies, making domestic fiscal and regulatory adjustments crucial for sustaining growth and maintaining market share.
Representatives of India’s gem and jewellery sector are urging the government for significant policy interventions in the upcoming Union Budget 2026-2027. Industry bodies have outlined a series of reforms aimed at enhancing cost efficiency and improving positioning in the international market amidst changing global trade dynamics. The Gem & Jewellery Export Promotion Council (GJEPC) has submitted a pre-budget memorandum highlighting key areas for reform.
To maintain India’s competitive advantage, the council has advocated for rationalizing import duties on cut and polished diamonds and colored gemstones. They also seek amendments to the Customs Act, 1962 to integrate modern practices like risk-based clearance, AI-enabled digital valuation, and self-certification for trusted exporters. These measures aim to enhance efficiency, transparency, and reduce turnaround time for the export-oriented sector.
Separately, the All India Gem & Jewellery Domestic Council (GJC) has focused its representation on domestic fiscal measures. GJC Chairman Rajesh Rokhade has proposed reducing the Goods and Services Tax (GST) on gold and silver jewellery from the current 3% to 1.25%. Rokhade argues this reduction would restore proportionality, reduce financial strain on consumers, and widen the tax base. The council has also demanded exemption from capital gains tax on the exchange of hallmarked jewellery, provided the amount is immediately reinvested in new purchases, promoting continuity in asset holding.
A key demand from GJC focuses on operationalizing the tourist GST refund scheme. The council urges the government to notify necessary regulations at major international airports and establish a digital claim and verification system. A phased pilot at Delhi, Mumbai, and Bengaluru airports has been suggested, citing high jewellery sales and foreign tourist arrivals there.
Due to this disparity, despite its strong craftsmanship, India loses significant retail demand. Without such schemes, India loses revenue that could boost domestic sales and exports, a challenge exacerbated by effective VAT/GST refund systems in competing countries.
The GJEPC’s demand for amendments to the Customs Act, 1962, reflects the need to align India’s trade facilitation with global standards. Current processes are considered archaic, hindering the agility required for an export-focused sector. Implementing risk-based customs clearance and AI-enabled digital valuation aims to expedite cargo movement, reduce bureaucratic hurdles, and enhance transparency. For trusted exporters, self-certification procedures could further simplify processes, reducing turnaround time and operational costs. This modernization is considered crucial for India to fully leverage its manufacturing capabilities and global supply chain integration.
India’s gem and jewellery industry, a significant contributor to the nation’s economy and exports, is under pressure from the global economic slowdown and volatile commodity prices. Major players like Titan Company Limited, whose market capitalization often exceeds ₹2.5 trillion with a P/E ratio around 75, and Kalyan Jewellers India Limited, with a market cap in the hundreds of billions and a P/E ratio typically between 40-50, are directly impacted by consumer spending patterns and the regulatory environment. Industry stakeholders believe supportive reforms and a stable trade environment are paramount. If these budget proposals are implemented, they could significantly improve the sector’s cost efficiency, attract foreign investment, boost export competitiveness, and position India for sustained growth in the international jewellery market, turning global challenges into opportunities.