SECTION IV: ABOUT OUR COMPANY

INDUSTRY OVERVIEW

1. Economic Outlook

1.1. Global Economy

Global growth, which stood at 3.3% in CY23, is anticipated to fall to 3.2% in CY24 and then bounce back again to 3.3%
in CY25. The CY24 forecast has remained same compared to the April 2024 World Economic Outlook (WEO) Update,
and increased by 0.1 percentage point compared to the January 2024 WEO. Despite this, the expansion remains
historically low, attributed to factors including sustained high borrowing costs, inflation woes, reduced fiscal support,
lingering effects of Russia’s Ukraine invasion, Iran–Israel War, sluggish productivity growth, and heightened geo-
economic fragmentation.

Chart 1: Global Growth Outlook Projections (Real GDP, Y-o-Y change in %)

8.0%

6.0%
GDP growth (Y-o-Y %)

4.0%

2.0%

0.0%
CY19 CY20 CY21 CY22 CY23 CY24P CY25P CY26P CY27P CY28P CY29P
-2.0%

-4.0%

-6.0%

World Advanced Economies Emerging Market and Developing Economies

Notes: P-Projection; Source: IMF – World Economic Outlook, July 2024

1.2. Trend in Global Inflation rate

Since 2022, inflation has been falling for all major global economies following a surge in inflation during 2021-22 due
to the twin supply shocks of COVID and Russian invasion of Ukraine. This surge was preceded by a long period of low
inflation for US, UK and the Eurozone countries like Germany. While inflation accounted due to the large fiscal stimulus
provided in these countries was foreseen, the Russia-Ukraine war added an additional shock and led to this surge specially
in Germany with high energy and gas bills being the major contributors of inflation. Even Japan which has had disinflation
for many years, also saw an uptick in inflation post 2022 after which the Bank of Japan finally raised rates after years of
ultra-loose monetary policy. Seeing these price shocks as transitory, Central Banks around the world reacted a little late
to inflation but have been on a tightening cycle since 2022. Inflation, while falling, is yet to reach to pre-pandemic levels
for these countries.

For China, this trend has been contradictory with its inflation remaining lower than many of its peers during 2020-2023,
with a little rise in 2022, raising concerns of deflation. Unlike other major global economies, consumer spending did not
rise much when lockdown restrictions were lifted. Weak domestic demand along with weak trade data, and challenges in
housing market have been the major reasons for this trend. Youth unemployment along with increasing debt burden of
the country are two major problems the country is facing whilst fighting deflation. While there has been recovery in
manufacturing activity, increasing inflation numbers in 2024, it still is not expected to reach pre-pandemic level anytime
soon.

India's response to the COVID-19 pandemic, through fiscal stimulus, had only a short-lived effect on inflation, which
remained persistently high compared to other economies. Over the past few years, the Indian economy has faced a series

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of shocks, including the pandemic, supply-chain disruptions, and geopolitical tensions, which have kept inflation
elevated. The Reserve Bank of India struggled to keep inflation within its target range, missing its mandate during several
quarters. Despite these difficulties, India has managed to reduce both headline and core inflation through strategic
administrative and monetary measures. By tightening monetary policy and increasing interest rates, the RBI has
successfully curbed core inflation, bringing it down significantly by mid-2024.

Chart 2: Inflation across key economies

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%
CY19 CY20 CY21 CY22 CY23 CY24P
US 1.8% 1.2% 4.7% 8.0% 4.1% 2.9%
UK 1.8% 0.9% 2.6% 9.1% 7.3% 2.5%
Germany 1.4% 0.4% 3.2% 8.7% 6.0% 2.4%
Japan 0.5% 0.0% -0.2% 2.5% 3.3% 2.2%
China 2.9% 2.5% 0.9% 2.0% 0.2% 1.0%
India 4.8% 6.2% 5.5% 6.7% 5.4% 4.6%

Note: P-Projections, Source: IMF- World Economic Outlook Database (April 2024)

1.3. Trend in Global Trade

In CY23, the trade volume growth rate was relatively low 0.8%, due to a mix of economic uncertainty, geopolitical
tensions, inflationary pressures, and lingering supply chain disruptions, followed by a period of accelerated expected
growth reaching 3.4% in CY25P, before stabilizing at around 3.3% for the subsequent years CY26P to CY29P. This
pattern suggests that trade volumes are expected to recover and grow steadily, with a more moderate pace of growth in
the long run.

Chart 3: Global Trend in Trade Volume of Goods and Services

4.0%
3.4% 3.4% 3.3% 3.3%
3.5% 3.3%
3.1%
3.0%

2.5%

2.0%

1.5%

1.0% 0.8%

0.5%

0.0%
CY23 CY24P CY25P CY26P CY27P CY28P CY29P

Note: P-Projections, Source: IMF- World Economic Outlook Database (October 2024)

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1.4. Indian Economic Outlook

Resilience to External Shocks remains Critical for Near-Term Outlook

India’s real GDP grew by 7.0% in FY23 and stood at ~Rs. 161 trillion, as per the First Revised Estimate, despite the
pandemic in previous years and geopolitical Russia-Ukraine spillovers. In Q1FY24, the economic growth accelerated to
8.2%. The manufacturing sector maintained an encouraging pace of growth, given the favorable demand conditions and
lower input prices. The growth was supplemented by a supportive base alongside robust services and construction
activities. This momentum remained in the range in the Q2FY24 with GDP growth at 8.1%, mainly supported by
acceleration in investments. However, private consumption growth was muted due to weak rural demand and some
moderation in urban demand amid elevated inflationary pressures in Q2FY24. The GDP growth number improved for
Q3FY24 at 8.6%.

India's GDP at constant prices surged to Rs. 47.24 trillion in Q4FY24 from Rs. 43.84 trillion in Q4FY23, marking a 7.8%
growth rate. This upswing was fueled by robust performances in construction, mining & quarrying, utility services, and
manufacturing sectors and investment drove the GDP growth, while both private and government consumption remained
subdued.

Real GDP in the year FY24 is estimated to grow at 8.2% at Rs. 173.82 trillion as per provisional estimate of the Ministry
of Statistics and Programme Implementation. It is expected that domestic demand, especially investment, to be the main
driver of growth in India, amid sustained levels of business and consumer confidence.

In Q1FY25, real GDP grew by 6.7% y-o-y, hitting a 15-month low, as compared to 8.2% y-o-y in the previous quarter.
Private consumption, a key driver of the GDP, showed resilience increasing by 7.45% while government spending
contracted by 0.24%. This growth was largely driven by elections and extreme summer conditions, which impacted
economic activities across several sectors.

GDP Growth Outlook

• Driven by fixed investment and improving global environment, domestic economic activity continues to expand. The
provisional estimates (PE) placed real GDP growth at 8.2% for FY24.

• Industrial activity led by manufacturing continues its momentum on the back of strengthening domestic demand.
Moreover, the services sector-maintained buoyancy as could be observed by growth in high frequency indicators such
as E-way bills, GST revenues, toll collections, aggregate, and a healthy growth in domestic air cargo and port cargo.
The purchasing managers’ index for both manufacturing and services continues to exhibit a sustained and healthy
expansion.

• Domestic economic activity remains strong. On the supply side, with advancing monsoon, kharif sowing has picked
up, improving agricultural production prospects. Additionally, growth in GVA for major non-agricultural sectors like
manufacturing, construction, and utilities has stayed above 5% for Q1FY25, indicating expansion in the mentioned
sectors. On the demand side, household consumption is bolstered by a recovery in rural demand and consistent
discretionary spending in urban areas. Fixed investment activity is robust, supported by the government's ongoing
focus on capital expenditure, healthy balance sheets of banks and corporates, and other policy measures. Private
corporate investment is picking up, driven by an increase in bank credit. Merchandise exports grew in June, albeit at
a slower rate, while the growth in non-oil-non-gold imports accelerated, indicating resilience of domestic demand.
Services exports saw double-digit growth in May 2024 before slowing down in June 2024.

• Improved agricultural activity would improve rural consumption, while urban consumption would be supported by
buoyancy in services activity. Additionally, improvement in global trade prospects are expected to support external
demand.

Persistent geopolitical tensions and volatility in international financial markets and geo-economic fragmentation do pose
risk to this outlook. Based on these considerations, the RBI, in its August 2024 monetary policy, has projected real GDP
growth at 7.2% y-o-y for FY25.

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Table 1: RBI's GDP Growth Outlook (Y-o-Y %)

FY25P (complete
Q2FY25P Q3FY25P Q4FY25P Q1FY26P
year)

7.2% 7.2% 7.3% 7.2% 7.2%

Note: P-Projected; Source: Reserve Bank of India

1.5. Consumer Price Index

India’s consumer price index (CPI), which tracks retail price inflation, stood at an average of 5.5% in FY22 which was
within RBI’s targeted tolerance band of 6%. However, consumer inflation started to upswing from October 2021 onwards
and reached a tolerance level of 6% in January 2022. Following this, CPI reached 6.9% in March 2022.

CPI remained elevated at an average of 6.7% in FY23, above the RBI’s tolerance level. However, there was some respite
toward the end of the fiscal wherein the retail inflation stood at 5.7% in March 2023, tracing back to the RBI’s tolerance
band. Apart from a favorable base effect, the relief in retail inflation came from a moderation in food inflation.

In FY24, the CPI moderated for two consecutive months to 4.7% in April 2023 and 4.3% in May 2023. This trend snapped
in June 2023 with CPI rising to 4.9%. In July 2023, the CPI had reached its highest point at 7.4%, this was largely due to
increase in food prices. The notable surge in vegetable prices and in other food categories such as cereals, pulses, spices,
and milk have driven this increase. In August 2023, the food inflation witnessed some moderation owing to government’s
active intervention. This was further moderated for second consecutive month in September 2023 to 5%, led by a sharp
correction in vegetables prices and lower LPG prices. Helped by deflation in the fuel and light category, the retail inflation
in October 2023 softened at 4.9%. This trend reversed in November 2023 due to spike in certain vegetable prices as well
as sticky inflation in non-perishable food items such as cereals, pulses and spices and the CPI rose to 5.6%. In the month
of December 2023, elevated food prices and an unfavourable base drove headline inflation to a four-month peak of 5.7%.
However in the month of January and February, food prices softened and the inflation was reported at 5.1% for both the
months. March witnessed furthur softning of prices registering 4.9% growth. For FY24 inflation moderated to 5.4%
which are within the boundaries set of 2% to 6% by the RBI.

High inflation in specific food items poses inflation risk, even though an improvement in south-west monsoon and
progress in sowing are improving the food inflation outlook. This makes it crucial to monitor monsoon distribution.
Additionally, global food prices also show some softening in July, post increases in March 2024. While government
initiatives are expected to mitigate upward price pressure, external risks from geopolitical tensions may affect supply
chains and commodity prices. The numbers for April 2024-August 2024 show a decline in inflation growth y-o-y to 4.4%
as compared to inflation growth y-o-y of 5.6% in April 2023-July 2023 period. For August 2024, CPI inflation stood at
3.7% which has been the second lowest retail inflation in the last 5 years. There was a decline in inflation observed among
the subgroups spices, meat and fish, and pulses and products. Additionally, food inflation was also at the second lowest
in this month since June 2023.

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Chart 4: Retail Price Inflation in terms of index and Y-o-Y Growth in % (Base: 2011-12=100)

6.7% 184.1 190.1

5.9% 6.2% 182.1
174.7
163.8 5.6%
Retail price index (number)

155.3
4.9%
135.0 139.6 146.3
130.3 4.4%
118.9 124.7 4.5% 4.8% 5.5% 5.4%
110.0 112.2
3.4%

Y-o-Y growth in %
3.6%
2.0%

Apr'23-Aug'23

Apr'24-Aug'24
FY22
FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY23

FY24
Index number Y-o-Y growth in %

Source: MOSPI

The CPI is primarily factored in by RBI while preparing their bi-monthly monetory policy. At the bi-monthly meeting
held in August 2024, RBI projected inflation at 4.5% for FY25 with inflation during Q2FY25 at 4.4%, Q3FY25 at 4.7%,
Q4FY25 at 4.3%, and Q1FY26 at 4.4%.

1.6. Rural and Urban Consumption

The rural food consumption has decreased from 59.4% in CY00 to 47.5% in CY23. Urban food consumption also shows
a similar trend from 48.1% in CY00 falling to 38.7% in CY23.

From CY00 to CY23, India has seen a clear shift in consumption patterns, with food expenditure decreasing and non-
food expenditure increasing. This shift highlights a transition from a primarily agrarian economy to a more diversified
rural economy where spending on non-food goods and services (education, healthcare, housing, transportation, etc.) is
becoming increasingly important. As urban-rural incomes rise, rural households can spend more on lifestyle, education,
and health, signifying greater economic development and evolving consumption habits.

Chart 5: Trend in rural consumption composition (in %)

70.0%
59.4%
60.0% 57.0%
53.1% 52.9% 52.5%
46.9% 47.1% 47.5%
50.0% 43.0%
40.6%
40.0%

30.0%

20.0%

10.0%

0.0%
CY00 CY05 CY10 CY12 CY23

Rural food Rural non-food

Source: MOSPI

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1.7. Household Spending patterns

In the past five years, Indian households have experienced a notable shift in spending patterns, transitioning from essential
expenditures to a greater focus on discretionary spending. The share of expenditure on discretionary items has increased
from 53.6% in FY19 to 54% in FY23, whereas share of expenditure on essential items has decreased from 46.4% in
FY19 to 46% in FY23. The only exception to the trend can be observed in FY21 when essential spending share saw an
uptick to 49.1% on account of pandemic.

Households are allocating a high portion of their budgets to non-food, reflecting a growing disposable income.
Consequently, spending on non-food items such as clothing, entertainment, transportation, and health has risen sharply.
This trend highlights an evolving consumer mindset, where families prioritize experiences and lifestyle enhancements
over necessities, showcasing a shift towards a more affluent and diverse consumption culture.

Chart 6: Shifting Patterns in Household Consumption Expenditure

100%
90%
80% 46.0% 46.0%
46.4% 49.1% 47.7%
70%
60%
50%
40%
30% 54.0% 54.0%
53.6% 50.9% 52.3%
20%
10%
0%
FY19 FY20 FY21 FY22 FY23

Discretionary spending Essential spending

Source: MOSPI

Note: Essential Spending includes Food and non-alcoholic beverages, Clothing and footwear, Housing, water, electricity,
gas, and other fuels

Discretionary Spending includes Alcoholic beverages, tobacco and narcotics, Clothing and footwear, Furnishing,
household equipment and routine household maintenance, Health, Transport, Communication, Recreation and culture,
Education, Restaurants and hotels, and Miscellaneous goods and services

1.8. Trend in Gross Savings (as % of GDP)

Gross Savings as a percentage of GDP has seen flat growth, moving within a narrow range. Within the last five years, it
was highest in FY19 at 31.7%. It declined to less than 30% during FY20 and FY21 on account of the pandemic, increasing
again to 31.2% in FY22 before declining to 30.2% in FY23.

As of FY23, Savings were Rs. 81,500 billion indicating a y-o-y growth of 10.7% while GDP was at Rs. 2,69,497 billion
showing a growth of 14.2%.

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Chart 7: Gross Savings (as % of GDP) (at current prices)

100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0% 31.7% 29.6% 29.1% 31.2% 30.2%
30.0%
20.0%
10.0%
0.0%
FY19 FY20 FY21 FY22 FY23
•

Source: MOSPI

1.9. Trend in Private Consumption

Private Final Consumption Expenditure (PFCE) is the largest component in the Gross Domestic Product of the country.
It has held a share of above 60% for the past five years. Within the last five years, it reached the highest share of 61.1%
in FY21, post which it has been progressively declining albeit marginally.

This trend is attributed to a combination of factors impacting consumer spending. The pandemic, high global and
domestic inflation, and tighter financial conditions have constrained private consumption. Poor agricultural output has
particularly hurt rural demand, while the shift in household budgets towards higher health expenditures, at the expense
of education, has further strained consumer finances. Increased health spending has added financial burdens, limiting
spending on other essential items like food, clothing, and housing, which has been evident in the decreasing PFCE growth
in these categories. Additionally, weak urban demand, driven by ongoing employment challenges, has exacerbated the
situation. Although the anticipated revival of monsoon conditions may boost rural demand in the current fiscal year, the
overall decline in PFCE highlights persistent issues in both rural and urban consumption patterns. As of FY24, the share
of PFCE in GDP stands at 60.3%. In Q1FY25, PFCE improved y-o-y by 12.4%, reaching a share of 60.4% as compared
to 58.9% in Q1FY24.

Chart 8: Private Consumption (as % of GDP) (at current prices)

100.0%
90.0%
80.0%
70.0% 60.9% 61.1% 61.0% 60.9% 60.3% 58.9% 60.4%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
FY20 FY21 FY22 FY23 FY24 Q1FY24 Q1FY25

Source: MOSPI

1.10. Growth of the middle class in India and the rural economy in India

India's rural economy is becoming a significant driver of the Fast-Moving Consumer Goods (FMCG) sector's resurgence,
signalling a promising turnaround in aggregate demand after a slow start to the 2024-25 financial year. The Reserve Bank
of India (RBI) highlights that rising incomes and improved infrastructure are fueling increased rural consumption of
FMCG products. This boost is supported by a rise in rural savings, marked by growing numbers of savings bank accounts
and balances, and a reduction in inflationary pressures, which has allowed rural consumption to catch up with urban

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areas. Additionally, favourable monsoon conditions and improved sowing data are expected to sustain this growth,
complemented by increased government spending on rural development and infrastructure.

The expansion of middle-income households in rural India is transforming the country's economic landscape. This growth
is driven by rising incomes, increased discretionary spending, a shift towards online and omnichannel shopping, and
advancements in payment and logistics infrastructure. There is also a notable dietary shift in rural areas from carb-based
foods to more protein-rich diets. India’s middle class, characterized by significant income variability, exhibits diverse
spending patterns. Lower-middle-class households allocate much of their income to private healthcare, education, and
essential consumer goods, such as motorbikes and basic appliances. In contrast, the upper-middle class invests in luxury
items, entertainment, property, and personal services, with a higher propensity to own assets like cars, computers, and air
conditioners. Both segments of the middle class are substantial and emerging as key drivers of consumption and economic
growth in India. Recent policies, including the Mahatma Gandhi National Rural Employment Guarantee Act, have
increased rural incomes, enabling more rural households to enter the middle class. The growing, more inclusive, and
politically engaged middle class reflects broader economic growth, although there is a risk of social strain if growth
falters and quality job creation does not keep pace.

1.11. Increasing Women’s participation in the Workforce

The labour force participation rate (LFPR) is the proportion of individuals who are actively engaged in the labour force
relative to the total population. The female LFPR has been on a steady upward trajectory since 2017-18 with significant
structural shifts. Older women with lower education levels are leaving the workforce, while younger women with higher
educational attainment are entering it, leading to a rise in the number of women in salaried positions and a decline in
informal wage work. The proportion of women working in agriculture is decreasing, with more women moving into the
services sector. This overall increase in female participation is largely driven by rural women joining the workforce,
supported by government initiatives aimed at women's empowerment through education, skill development,
entrepreneurship, and workplace safety. These policies have particularly benefited women from upper expenditure
classes, who have seen a more significant rise in labour force participation, largely due to an increase in self-employment.

Between 2017-18 and 2019-20, the growth in women's participation was marked by an increase in helpers in household
enterprises, but from 2019-20 to 2022-23, the rise was mainly due to more women becoming own-account workers. This
shift is partly attributed to the return of male migrants during the pandemic, which led women to take up their own-farm
or other non-farm activities to support household income. This trend of increasing self-employment among women spans
various sectors, including agriculture, manufacturing, and services, reflecting a broader shift in the labour market
dynamics for women. For 2022-23, the female LFPR was 37%, underscoring the increasing participation of women in
the workforce. The increase in female LFPR from 37% in 2022-23 to 41.7% in 2023-24 can also be attributed to the
increase in self-employment among women.

Chart 9: Women's Labor Force participation rates

50%
45% 41.7%
40% 37.0%
32.5% 32.8%
35% 30.0%
30%
23.3% 24.5%
25%
20%
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24

15 years and above

•

Note: 2023-24 refers to the period July 2023-June 2024 and likewise for previous years; LFPR is for the usual status

Source: PLFS

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1.12. Trends in Population Growth

Gender wise
From the period CY19 to CY23, the female population as a percentage of the total population has risen marginally from
48.35% in CY19 to 48.42% in CY23, while the male population share has declined slightly from 51.65% in CY19 to
51.58% in CY23.
• Chart 10: Gender-wise breakup of the population

100%
90%
80%
51.65% 51.63% 51.61% 51.59% 51.58%
70%
60%
50%
40%
30%
48.35% 48.37% 48.39% 48.41% 48.42%
20%
10%
0%
CY19 CY20 CY21 CY22 CY23

Female (% of total population population) Male (% of total population population)

Source: World Bank Database

Age Wise

Population constituting 15-64 aged people constitute the majority share of the total population increasing from 66.39%
in CY19 to 68.03% in CY23, reflecting the burgeoning youth populace in the country. The share of people aged 65 and
above has only marginally increased from 6.47% in CY19 to 7.07% in CY23 while the share of people less than 14 years
of age has declined from 26.59% in CY19 to 24.9% in CY23, reflecting a decline fertility rate in the country.

Chart 11: Age-wise Breakup of the Population

100%
6.47% 6.67% 6.80% 6.90% 7.07%
90%
80%
70%
60% 66.93% 67.22% 67.51% 67.80% 68.03%
50%
40%
30%
20%
10% 26.59% 26.11% 25.69% 25.31% 24.90%
0%
CY19 CY20 CY21 CY22 CY23

Ages 0-14 (% of total population) Ages 15-64 (% of total population)

Ages 65 and above (% of total population)

Source: World Bank Database

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Urbanization

The urban population is significantly growing in India. The urban population in India is estimated to have increased from
476.8 million (34.5% of total population) in CY19 to 519.5 million (36.4% of total population) in the year CY23. People
living in Tier-2 and Tier-3 cities have greater purchasing power.
• Chart 12: Urbanization Trend in India

36.4%
Urban population (% of

35.9%
total population)

35.4%
34.9%
34.5%

CY19 CY20 CY21 CY22 CY23

Source: World Bank Database

Dependency Ratio

Age Dependency Ratio is the ratio of dependents to the working age population, i.e., 15 to 64 years, wherein dependents
are population younger than 15 and older than 64. This ratio has been on a declining trend. It was as high as 76% in 1983,
which has reduced to 47% in 2023. Declining dependency means the country has an improving share of the working-age
population generating income, which is a good sign for the economy.

Chart 13: Dependency Ratio trend in India

50% 49.40%
50%
Age dependency ratio (%

48.78%
49%
49% 48.13%
of working-age
population)

48% 47.50%
48% 47.00%
47%
47%
46%
46%
CY19 CY20 CY21 CY22 CY23

Source: World Bank Database

1.13. Key growth/demographic drivers for economic growth

• Innovation, Capital Investment, and Demographic Advantage: India’s progress in innovation and technology
along with enhanced worker productivity are crucial drivers of future growth. Additionally, the country’s
favourable demographics, characterized by a large and youthful population, will further bolster its growth
prospects. Increasing savings rates, driven by rising incomes and financial sector development, are likely to boost
the availability of capital for investment. The Indian government’s recent efforts in facilitating investment have
created a conducive environment for private-sector capital expenditure. As the private sector steps up, supported
by healthy balance sheets of corporations and banks, capital investment will be a significant growth driver.
Additionally, addressing the challenge of labour force participation by creating opportunities and investing in
training and upskilling will be vital to harnessing demographic advantages and ensuring sustainable economic
progress.

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• Global Offshoring and Manufacturing Hub: India's position as a key player in global offshoring is gaining
renewed momentum. Traditionally known for outsourcing services like software development and customer
service, India is now expanding its role as a critical back office to the world. The rise of distributed work models
and tighter global labour markets are reinforcing this trend. Beyond services, India is poised to become a major
manufacturing hub. Corporate tax cuts, investment incentives, and significant infrastructure investments are driving
capital inflows into manufacturing. This dual role of service outsourcing and manufacturing is expected to create a
robust foundation for long-term economic growth, providing India with diverse revenue streams and strengthening
its global economic position. Some recent such investments include:

Table 2: Investments by Corporates

Value (in Rs.

Event Month State Purpose/Project/Announcement
Million)
Vibrant Gujarat January 2024 Gujarat NA Lakshmi Mittal, Chairman of
Global Summit ArcelorMittal, announced the
completion of the first phase of the
Hazira Expansion Project by 2026.
Vibrant Gujarat January 2024 Gujarat NA Toshihiro Suzuki, President of Suzuki
Global Summit Motor Corporation, highlighted plans to
launch the first electric vehicle
produced in India while expanding
production capacity and reducing
greenhouse emissions through
sustainable practices.
Vibrant Gujarat January 2024 Gujarat NA Mukesh Ambani of Reliance Group
Global Summit announced a 5000-acre Dhirubhai
Energy Giga Complex in Jamnagar, to
be commissioned by the second half of
2024.
Regional July 2024 Jabalpur 15,300 Madhya Pradesh’s regional industry
Industry conclave attracted significant interest,
Conclave leading to the virtual inauguration of 67
industrial units, projected to create
4,342 jobs.
Chief Minister August-September Tamil Nadu 76,180 The 14-day overseas trip resulted in 19
MK Stalin's visit 2024 Memoranda of Understanding involving
to the USA eight companies from San Francisco
and 11 from Chicago. These agreements
are expected to create employment for
11,516 people across several cities in
the state, including Madurai,
Tiruchirappalli, and Chennai.

Source: Industry Sources

• Surge in Consumer Spending: India's consumer market is on the cusp of a substantial transformation. With
expectations of increased disposable income, the country’s consumption patterns are set to shift dramatically. The
anticipated rise in disposable income and consumption will stimulate demand across various sectors, driving
economic activity and fuelling the growth of retail and service industries. As income distribution becomes more
equitable, consumer spending will play a pivotal role in bolstering economic growth.

• Advancements in Energy Access and Transition: Energy development is critical for India's economic
advancement. While India will continue to rely on fossil fuels, the shift towards renewable energy sources—such
as biogas, ethanol, hydrogen, wind, solar, and hydroelectric power—will be substantial. This transition is expected
to reduce dependence on imported energy and improve living conditions, addressing pollution issues in some of
the world's most affected cities. The burgeoning demand for electric solutions, including electric vehicles and green
hydrogen-powered transportation, aligns with global sustainability trends and will support long-term growth.

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1.14. Concluding Remarks

The major headwinds to global economic growth are escalating geopolitical tensions, volatile global commodity prices,
high interest rates, inflation woes, volatility in international financial markets, climate change, rising public debt, and
new technologies. Despite the global economic growth uncertainties, the Indian economy is relatively better placed in
terms of GDP growth compared to other emerging economies. According to IMF’s forecast, it is expected to be 7% in
CY24 compared to the world GDP growth projection of 3.2%. The bright spots for the economy are continued healthy
domestic demand, support from the government towards capital expenditure, moderating inflation, investments in
technology and improving business confidence.

Likewise, several high-frequency growth indicators including the purchasing managers index, E-way bills, bank credit,
toll collections and GST collections have shown improvement in FY24. Moreover, normalizing the employment situation
after the opening up of the economy is expected to improve and provide support to consumption expenditure.

At the same time, public investment is expected to exhibit healthy growth as the government has allocated a strong capital
expenditure of about Rs. 11,110 billion for FY25. The private sector’s intent to invest is also showing improvement as
per the data announced on new project investments and resilience shown by the import of capital goods. Additionally,
improvement in rural demand owing to healthy sowing, improving reservoir levels, and progress in the south-west
monsoon along with the government’s thrust on capex and other policy support will aid the investment cycle in gaining
further traction.

2. Indian Retail Consumer Basket

2.1. Overview

The Indian retail sector is one of the fastest-growing sectors. It has the largest consumer base, and as a result, the
industry’s market size has been increasing significantly. Further, robust demand, increasing investments, innovations,
and government initiatives fuelled India’s retail growth. As digitization widens the market, better access channels, faster
customer acquisition leading to cash conversion, and rapid shifts in both demand & supply factors will accelerate the
momentum of retail expansion in India.

Figure 1: Indian Retail Sector Composition

Source: CareEdge Research

2.2. Indian Retail Market

In the 1990s, metro cities saw the growth of pure-play modern retail, which was once controlled by traditional retail.
Consumer preferences began to move from need-based to premium purchasing, and the first hints of modernization in
operations (backend) and formalization of the value chain emerged.

Furthermore, the introduction of hypermarkets, super-marts, large format stores and exclusive jewellery outlets in tier 1
cities further drove the evolution of retail. Consumers' primary concern shifted from quality shopping experiences to
convenience. The jewellery sector adapted by providing in-store experiences with personalized services and loyalty

137
programs. Meanwhile, technology began to play a crucial role in operations, as retailers launched websites to offer
product details and allowed consumers to browse collections online before visiting stores.

Online retail grew rapidly as retailers realized they needed to adopt digital technology to stay relevant to the increasing
number of online shoppers. Online retail in gold and jewellery also expanded rapidly, as consumers became more inclined
toward digital shopping. Personalized recommendations and virtual try-on tools became vital for retailers to cater to the
discerning jewellery customer.

Modern retail is still in its early stages of growth in emerging markets. Micro-retailers, kiosks, hawkers, open market
vendors, wholesalers, and distributors make up traditional retail. Traditional retail is based on interpersonal relationships
between customers and merchants. It is dominated by an unorganized segment of the retail channels.

While modern retail in gold and jewellery continues to grow, the unorganized sector—comprising micro-jewelers, local
goldsmiths, and market vendors—still holds a substantial share. This traditional segment thrives on long-standing
relationships between customers and merchants. However, modern retail players, such as national jewellery chains and
high-end stores, provide a more structured shopping experience. Inventory management, logistics, and merchandising in
modern jewellery outlets are organized and data-driven, which distinguishes them from the unorganized sector.

Chart 14: Indian Retail Market Size, by Value (FY21-FY28P)

164.93
142.06
123.34
Rs. In Trillion

107.73
94.62
83.47
56.26 62.9

FY21 FY22 FY23 FY24 FY25P FY26P FY27P FY28P

Source: IBEF, CareEdge Research

2.3. Demand Drivers for the Indian Retail Market

• Increasing Purchasing Power

The rising disposable income, which has grown at a CAGR of 8.88% between the period FY14 to FY24, is expected to
lead to increased demand for residential real estate in India as more and more people are able to afford real estate
purchases. This will lead to more consumption of steel in the country and help the steel manufacturers to produce more
steel, thus improving the demand in the steel industry.

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Chart 15: Net Disposable Income for Past

2,14,951
1,98,125
1,74,816
1,52,504 1,48,408
1,44,620
1,31,743
In INR

1,20,052
1,09,315
1,00,439
91,843

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 [PE]
[FRE]

Source: CMIE, CareEdge Research

• Innovative Financing Modes

To keep up with the changing market dynamics, innovative financing modes have been introduced to meet the financial
needs of retailers, such as Merchant Cash Advances (MCA). It is a type of financing that allows retailers to receive cash
advances based on their future credit and debit card sales. Whereas invoice financing is a type of financing where retailers
can get upfront cash by selling their unpaid invoices to a financial institution. The collective efforts of financial
institutions and banks with retailers are enabling retailers to fund their inventory and grow their businesses.

• Continuous Government Support

The government has implemented several policies and initiatives to create a favourable business environment for retailers
and promote the growth of the sector. Some of the ways in which the Indian government is supporting the retail market
are given below:

1) FDI policy:

The government has liberalized the FDI policy in the retail sector to attract foreign investment. In 2012, the government
allowed 100% FDI in single-brand retail and 51% FDI in multi-brand retail. The government has also allowed FDI in e-
commerce companies, which has helped the growth of online retail in the country.

2) GST Implementation:

The implementation of the Goods and Services Tax (GST) has simplified the tax structure. It has helped streamline the
supply chain and reduce the compliance costs for retailers.

3) Pradhan Mantri Mudra Yojana (PMMY):

The PMMY scheme was launched in 2015 to provide collateral-free loans to small businesses, including retailers, to help
them expand their business operations. Approx. 370 million people have benefitted in the last 9 years.

4) National Retail Policy:

In 2013, the government introduced the National Retail Policy to create a conducive environment for the growth of the
country’s retail sector. The policy is focused on promoting small retailers, improving supply chain infrastructure, and
encouraging e-commerce. Other initiatives include infrastructure development, skill development, start-up initiatives,
etc.

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2.4. Overview of the Organized Indian Retail Market

The retail sector in India is largely unorganized. However, the share of organized retail is witnessing continuous growth
with about 18% contribution to the total retail market in FY21, a sizeable increase from 9% in FY17. The market size for
organized retail reached Rs. 8.5–10.5 trillion in FY21.

Chart 16: Share of Organised Retail

% share in retail

70% 60%
91% 88% 82%

30% 40%
9% 12% 18%

FY17 FY20 FY21 FY25P FY30P

Organised retail Unorganised retail
Source: Industry Sources, CareEdge Research

3. Global Gems and Jewellery Industry

3.1. Overview of the Global Gems and Jewellery Industry

The global jewellery market is shaped by diverse economic trends, cultural practices, and shifting consumer preferences.
The interest in gold chains and necklaces extends beyond just weddings and unique events. People are increasingly
wearing platinum and gold rings, delicate gold chains, bracelets, and anklets as everyday fashion accessories. These
items are also commonly given as gifts for occasions like birthdays and anniversaries. This shifting consumption pattern
is likely to drive market growth. Modern designs and emerging fashion trends are drawing in customers, and
manufacturers are capitalizing on these frequent changes by creating unique products to attract buyers. Coloured
gemstones such as emeralds, sapphires, and opals are gaining prominence, adding vibrant touches and uniqueness to
jewellery collections. While classic earring and necklace sets remain popular, artificial jewellery is exploring new
avenues, with items like hair clips, headbands, anklets, and waist chains gaining popularity as ways to showcase personal
style.

The global appetite for jewellery is anticipated to grow as more individuals seek luxury items. Jewellery offers various
benefits, including enhancing certain body features, reflecting fashion trends and styles, and improving one's appearance
or that of others. Its appeal as a status symbol among higher-income groups has accelerated its consumption. The rising
demand for contemporary designs and the influx of new designers are further driving market expansion.

The global gold jewellery market is likely to grow due to increasing consumer disposable income and the appeal of gold
as a long-term investment. Gold is considered a haven, and most investors turn to gold during market turmoil for safe
investment. Between CY19 to CY23, the global jewellery market rebounded, achieving a Compound Annual Growth
Rate (CAGR) of ~9%. The global jewellery market size was valued between USD 235 and USD 245 billion in CY23
and is projected to reach USD 247– USD 257 billion by 2028, exhibiting a CAGR of 5%.

Annually, around 3,600 tons of gold is mined globally, around 1200 tons of gold is recycled, and around 4,400 tons of
gold is consumed for various purposes like, jewellery fabrication, technology, investments, etc. Around 52% of the total
gold demand comes from China and India. China is the largest country producing gold in the world, accounting for around
10% of total CY23 gold production. Africa which includes various other countries produces around 28%, whereas Asia
produces 18% of total newly mined gold. Central and South America produce around 15%, North America produces
around 13%, and Australia and Russia produce around 8% of the total newly mined gold.

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Market Size and Trend of the Global Gems and Jewellery Industry
• Chart 17: Global Gems and Jewellery Market Size (CY19-CY29P)

350
308
292
300 277
264
252 246 251
235 243
250 228
In USD billion

195
200

150

100

50

-
CY19 CY20 CY21 CY22 CY23 CY24P CY25P CY26P CY27P CY28P CY29P
Source: IMARC Group, CareEdge Research

In CY23, the global gems and jewellery industry was valued at around USD 235 billion and there was a stagnant CAGR
of 1% during CY19–CY23. This is due to economic uncertainties, pandemic-related disruptions, and shifting consumer
preferences toward essential spending. There has been a slight slowdown in CY23 compared to CY22 due to the ongoing
economic slowdown caused by geopolitical tensions and regional conflicts. However, the gems and jewellery market is
expected to reach USD 308 billion by CY29, driven by economic recovery, rising disposable incomes in emerging
economies, and increased demand for innovative and ethically sourced jewellery options.

The global gems and jewellery market is expected to experience steady growth in the coming years, fueled by emerging
economies and rising disposable incomes. Although gold and diamond jewellery will continue to dominate the market,
alternative materials are likely to see increased demand due to concerns over ethics and affordability. Additionally, the
growth of e-commerce platforms and innovations in jewellery design technology are anticipated to drive significant
expansion.

4. Indian Gems and Jewellery Industry

4.1. Overview of Indian Gems & Jewellery Industry

The Indian gems and jewellery industry is a significant pillar of the national economy, contributing approximately 7% to
the country’s GDP and around 15% of total merchandise exports. The sector is expected to grow steadily, driven by
domestic consumption and international demand. India holds a prominent position globally, being the largest diamond-
cutting and polishing hub, producing over 90% of the world’s polished diamonds.

The industry comprises various segments, including gold jewellery, diamond jewellery, coloured gemstones, and studded
jewellery, with gold jewellery dominating the market. Gold plays a vital cultural and religious role in India, symbolizing
prosperity and wealth, and is an essential part of weddings, festivals, and other ceremonies. Geographically, the
manufacturing base is concentrated in key states like Maharashtra, Gujarat, and Tamil Nadu.

Organized players are gaining traction as the industry undergoes formalization. Increasing consumer preference for
branded jewellery, quality assurance, and contemporary designs is driving this transition. Government initiatives, such
as mandatory hallmarking for gold jewellery, the Gold Monetization Scheme, and easing gold import restrictions, are
bolstering the formal sector.

In 2024, seven major trade fairs were organized by prominent councils such as the Gem and Jewellery Export Promotion
Council (GJEPC), the All India Gem and Jewellery Domestic Council and others. These events were held across cities,
including Jaipur, Mumbai, Bengaluru, Coimbatore, Delhi NCR, Hyderabad, and Kolkata, showcasing the dynamic Gems
and Jewellery sector in India. Serving as vital platforms, these fairs promoted innovation, enhanced domestic and
international trade, and fostered collaborations among industry stakeholders.

141
4.2. Indian Gems & Jewellery Industry Market Size

The Indian Gems and Jewellery (G&J) business has traditionally been fragmented with consumers purchasing from
family jewellers. The fragmented nature of this sector makes it difficult to quantify the number of jewellers in India.

However, the industry has seen structural transformation in the recent decade with more G&J players moving up the
value chain with a greater focus on branded jewellery. Moreover, consumers are more predisposed to branded jewellery
particularly in metro & tier I cities, given the rising media and Western influences and willingness to pay a premium
price.

Chart 18: Indian Gems & Jewellery Industry Market Size (CY20-CY29)

10,645
9,841
9,105
8,430
7,811
7,243
Rs. in billion

6,482
5,093
3,841
3,037

CY20 CY21 CY22 CY23 CY24P CY25P CY26P CY27P CY28P CY29P

Source: IMARC Group, CareEdge Research

4.3. Indian gold jewellery industry market size (CY20-CY29)

The Indian jewellery market is traditionally dominated by gold jewellery. Gold jewellery purchases in India are not just
limited to consumption as is the case with fashion jewellery. They have a strong saving significance. This is more evident
in rural communities where access, literacy, and acceptance of other financial savings instruments are low. These factors
have resulted in gold being a major saving asset class. Cultural differences, religious & trust concerns, and other elements
that influence jewellery purchases have all contributed to gold jewellery 's significance.

Chart 19: Indian Gold Jewellery Industry Market Size (CY20-CY29)

8,000
7,162
7,000 6,559
6,013
6,000 5,516
5,064
5,000 4,653
Rs. in billion

4,115
4,000
3,167
3,000
2,333
1,808
2,000

1,000

-
CY20 CY21 CY22 CY23 CY24P CY25P CY26P CY27P CY28P CY29P

Source: IMARC Group, CareEdge Research

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Chart 20: Indian Gold Jewellery Industry Breakup by Region (% Share) in CY23

North
West
20%
24%

East
14%

South
42%
•

Source: IMARC Group, CareEdge Research

4.4 Share of Various Segments in the Indian Gems & Jewellery Industry

Key Segments of Indian Gems and Jewellery Industry:

The Indian G&J industry broadly consists of gold jewellery, studded jewellery and other jewellery types like platinum
jewellery, fashion jewellery, and silver jewellery.

Chart 21: Indian Domestic Jewellery Market Share in CY23

3%

13%

84%

Gold Studded Others

Source: Industry Sources, CareEdge Research. Note: Studded include: diamonds, coloured gems, gemstones, & others
including platinum jewellery, fashion jewellery, silver jewellery, etc.

Gold Jewellery

The Indian jewellery market is traditionally dominated by gold jewellery. Gold jewellery purchases in India are not just
limited to consumption as is the case with fashion jewellery. They have a strong saving significance. This is more evident
in rural communities where access, literacy, and acceptance of other financial savings instruments are low. These factors
have resulted in gold being a major saving asset class. Cultural differences, religious & trust concerns, and other elements
that influence jewellery purchases have all contributed to gold jewellery 's significance.

143
Chart 22: Gold Demand Trend in India
Gold - Consumer Demand (Tonnes)

187 174 185

146

130
611 601 576
545
60 87

316
221 202

CY19 CY20 CY21 CY22 CY23 H1CY23 H1CY24

Gold Jewellery (Tonnes) Gold Bars and Coins (Tonnes)

Source: Industry Sources, CareEdge Research

In H1CY24, total domestic demand for gold (including jewellery, bars and coins) was estimated at 289 tonnes as
compared to 281 tonnes in H1CY23. In CY23, the gold demand was 761 tonnes, a decline of 1.7% y-o-y over CY22, this
was primarily due to a ~15% y-o-y increase in gold prices.

The jewellery segment continued to be the largest contributor and accounted for ~76% of the gold demand in India, while
bars and coins accounted for the balance. The gold jewellery demand declined by 4.1% y-o-y in CY23. The demand was
impacted due to increasing gold prices.

Studded Jewellery

Apart from gold jewellery, the other type of jewellery gaining traction is the studded ornaments segment. The key factor
contributing to this segment’s growth is the younger population’s preference for diamond-studded gold jewellery,
typically made of 14- or 18-carat gold rather than heavy 22-carat gold. There has also been a noticeable shift towards
more informal and everyday use of diamond studded jewellery.

Furthermore, many urban millennials, unlike the previous generations, are drawn to studded jewellery. Also, most young
population believe that heavy gold jewellery is for the elderly. Similarly, they regard that modern designs cannot be found
in pure gold. Studded jewellery comes in a wide range of styles and prices. When paired with white gold, a studded
diamond appears to be more expensive, thereby evoking the quality feel of platinum.

Although diamond studded jewellery may not have the same advantages as gold as a store of financial value, increasing
price transparency and repurchase guarantees offered by most jewellers have helped persuade customers that their
investment would not depreciate.

144
4.5 City-Wise Demand of the Indian Jewellery Market

Chart 23: City-Wise Demand of the Jewellery Market (Top 10) in CY23

300 284
271

250
204 200
200
In Rs. billion

174
162
150
103
100
70
55
40
50

Source: IMARC Group, CareEdge Research

4.6 Indicative Share of Indian Gems and Jewellery Industry

India's gems and jewellery market is one of the largest and most vibrant in the world, deeply embedded in the country's
cultural and economic life. The market can be divided by material type, with gold, diamonds, gemstones, and other
materials each playing a significant role in its diversity and value.

Chart 24: Gems and Jewellery Market Breakup- By Material Type (CY23)

Silver Others
4% 4%
Diamond
10%

Gold
82%

Source: IMARC Group, CareEdge Research

In 2023, gold was the dominant material in India's gems and jewellery market, making up 81.8% of the total market
share. It was followed by diamonds (9.7%), silver (4.6%), and other materials (3.9%).

145
4.7 Domestic Gold Demand from Various Segments

Chart 25: Trend in Domestic Gold Demand- in Volume Terms

700
601
576
600

500
In tonnes

376 374
400

300
174 185 163
200
118
100

0
CY22 CY23 9MCY23 9MCY24

Jewellery Bars and Coins

Source: WGC, CareEdge Research

In 9MCY24, the total domestic demand for gold (including jewellery, bars, and coins) was estimated at 537 tonnes as
compared to 494 tonnes in 9MCY23. In CY23, the gold demand was 761 tonnes, a decline of 1.7% y-o-y over CY22,
this was primarily due to a ~15% y-o-y increase in gold prices.

The jewellery segment continued to be the largest contributor and accounted for ~76% of the gold demand in India, while
bars and coins accounted for the balance. The gold jewellery demand declined by 4.1% y-o-y in CY23. The demand was
impacted due to increasing gold prices.

4.8 Impact of Interest Rates, Geopolitical Tensions on Gold Prices

Gold jewellery accounts for a major share of overall jewellery consumption in India. However, the demand for gold,
particularly physical gold in the form of coins and bars, which is primarily for investment, is dependent on movements
in gold prices.

Chart 26: Trend in International Gold Prices

80,000 3,000
70,000
2,500
60,000
2,000
50,000
40,000 1,500
30,000
1,000
20,000
500
10,000
0 0

Gold -Domestic price (Rs. 10/gm)(LHS) Gold - International price (USD/troy ounce) (RHS)

Source: CMIE; CareEdge Research

In February 2023, the gold prices cooled off to USD 1,854 per troy ounce. The international gold prices increased to USD
1,954 per troy ounce in March 2023 and further to USD 2,019.4 USD per troy ounce in mid-April 2023 as the collapse
of Silicon Valley Bank and the takeover of distressed Credit Suisse by UBS Group created uncertainty and drove

146
investments in gold. The gold price rise was also on account of the expectation of the pause in rate hikes by the US
Federal Bank.

Further, gold prices marginally corrected from May 2023 to September 2023 due to increasing interest rates globally.
However, following the escalation of the conflict between Israel and Hamas in the first week of October 2023, gold prices
were again on an upward trajectory. The domestic gold prices have increased at a CAGR of 14.32% between September
2018 to September 2023.

From October 2023 to September 2024, the prices fluctuated, spanning from USD 1913 per troy ounce to USD 2,567 per
troy ounce. In September 2024, gold price reached an all-time high of USD 2,567 per troy ounce. This variation was
driven by a weaker US dollar which in turn aided to an increase in demand for gold putting pressure on prices. Further,
the Fed already made cuts in the rates by 50 basis points and there are further expectations of Fed interest rate cuts.

Additionally, factors such as geopolitical instability, political developments related to elections in different countries,
and volatility in the equity markets have consistently maintained investors’ interest in gold, preventing a significant
decline in its value. Following a better-than-expected US jobs report and a halt to reported gold purchases by the People's
Bank of China (PBoC), the global price declined even more in the first half of June 2024.

4.9 Trends in Imports and Exports of Gems and Jewellery in India

Overview

The gems and jewellery sector is a key contributor to India’s total exports. G&J accounted for about 7% (Rs. 2.65 trillion)
of India’s total exports in FY24. G&J imports accounted for a comparatively smaller share, about 3% (Rs. 1.84 trillion)
of the country's total imports in the same fiscal year.

Chart 27: Yearly Import Export Trends - Overall Gems and Jewellery

3
In Rs. trillion

0
FY19 FY20 FY21 FY22 FY23 FY24 H1FY24 H1FY25
Imports (Rs. in trillion) 1.80 1.70 1.20 1.90 2.10 1.84 0.88 0.83
Exports (Rs. in trillion) 2.70 2.50 1.90 2.90 3.00 2.65 1.26 1.12

Source: Gems & Jewellery Export Promotion Council (GJEPC)

Growing Government Focus toward Export Promotion

The Government of India, along with all the stakeholders of the G&J sector, are well committed to aggressively
promoting exports, identifying challenges, and addressing them with necessary interventions, assisting exporters,
especially SME units and exploring new markets while consolidating existing ones. With rapid growth prospects, the
government of India has also declared the G&J sector as one of the focus areas for export promotion.

With such continuous government support, the superior quality of Indian manufacturers has enabled the Indian gems &
jewellery trade market to penetrate markets like the USA, UAE, Hong Kong, Israel, Switzerland, and Belgium. The USA
market is the largest destination for Indian gems and jewellery exports, accounting for a 30% share of India’s exports in
FY24.

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Chart 28: Country-wise Export Share in FY24 - Overall Indian Gems and Jewellery

2.2%
11.8% United States Of America
2.1%
Hongkong
30.4%
6.1% Middle East
Belgium
Switzerland
26.5% Israel
20.9%
Other countries

Source: Gems & Jewellery Export Promotion Council (GJEPC)

Focus on Middle East Countries

Chart 29: Share of Exports of Middle Eastern Countries-Overall Indian Gems and Jewellery in FY24

1.1% 1.1% 1.0%

United Arab
0.4% Emirates
1.1%

Saudi Arabia

Qatar

Kuwait

Bahrain
95.3%

Oman

Source: Gems & Jewellery Export Promotion Council (GJEPC)

The Share of Middle Eastern countries is around 27% in the total export of the Indian gems and jewellery industry. It
comes 2nd after the USA. Middle Eastern countries which India exports to consist of Unites Arab Emirates (UAE), Saudi
Arabia, Qatar, Kuwait, Bahrain, and Oman. But the maximum share is of UAE with 95% share.

148
Chart 30: Export Trend for Gems and Jewellery to the Middle East

800 100%
686 90.3% 707
700 80%
60%

y-o-y change (in %)

600
518
36.6% 40%
In Rs. billion

500 456
20%
400 13.5%
0%
300 -7.1%
240
-20%
200 -40%
100 -60%
-65.1%
- -80%
FY20 FY21 FY22 FY23 FY24

Middle East % change

Source: Gems & Jewellery Export Promotion Council (GJEPC)

Note: The Middle East countries include United Arab Emirates (UAE), Saudi Arabia, Qatar, Kuwait, Bahrain, Oman,
and Jordon

The compound annual Growth Rate (CAGR) for FY20-FY24 is 0.8% for overall exports of gems and jewellery to the
Middle East. As the India-UAE came into force in 2022 and hence we can see a significant increase of 90.3% y-o-y in
FY22 for the gems and jewellery exports. India-UAE CEPA has contributed to an increase in the share of G&J exports
to UAE, especially in Dubai.

Product-Segment Wise Import and Export Trend

The international trade of G&J includes several product segments, such as cut and polished diamonds, gold jewellery and
medallions, rough diamonds, gemstones, pearls, synthetic stones, and fashion jewellery. Of these, exports of cut and
polished diamonds accounted for 50% of the total G&J exports, while gold jewellery (plain and studded) accounted for
35% in FY24. The rest 15% consists of coloured gemstones, gold medallions & coins. In H1FY25, the exports of cut and
polished diamonds accounted for 52% while gold jewellery (plain and studded) accounted for 34% of the total G&J
exports. Rough diamonds held much of the share of about 64% and 58% in G&J imports during FY24 and H1FY25,
respectively, as it is a highly import-oriented segment.

Cut and Polished Diamonds:

India is the world's largest diamond-cutting and polishing centre. The country is regarded as the world jewellery market's
hub due to its low costs and steady availability of high-skilled labour.

The cut & polished diamond segment is an export-oriented segment in India. During FY24, the cut & polished segment
contributed 50% of the overall exports in the gems & jewellery segment and the overall exports of cut & polished
diamonds stood at Rs. 1,321.3 billion in FY24, showing a 25.2% decline as compared to Rs. 1,767.2 billion in FY23.
Also, imports during FY24 witnessed an increase of 51.1% to Rs. 158.4 billion as compared to Rs. 104.8 billion in the
previous year.

Rough Diamonds:

India is a large importer of rough diamonds due to a huge diamond processing industry. The rough diamonds, once
processed into cut and polished diamonds, are either exported or consumed domestically in jewellery. In FY24, rough
diamond imports stood at Rs. 1,180.4 billion and contributed with 64% share in total G&J imports. In H1FY25, the
import of rough diamonds declined by 21.7% y-o-y to Rs 481.4 billion.

Gold Jewellery:

The gold jewellery market holds the second-largest share in G&J exports after the cut and polished diamonds segment.
Gold jewellery accounted for 35% and 32% of total exports of G&J in FY24 and Q1FY25, respectively.

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Table 3: Exports of Gold Jewellery

Gold Jewellery (Rs. in billion) Exports Y-o-Y growth

FY20 852.3 2.4%
FY21 371.1 -56.5%
FY22 687.8 -19.3%
FY23 765.9 11.4%
FY24 923.5 20.6%

H1FY24 359.2
H1FY25 382.8 6.5%
Note: *compared with pre-pandemic year FY20
Source: Gems & Jewellery Export Promotion Council (GJEPC), CareEdge Research

In FY24 gold jewellery exports increased by 20.6% y-o-y. The commissioning of the India-United Arab Emirates
Comprehensive Economic Partnership Agreement (CEPA) resulted in significant growth in exports of plain gold
jewellery balancing the gap in exports to key markets such as the United States of America and Hong Kong. The gold
jewellery exports grew by 6.5% y-o-y in H1FY25 as compared to H1FY24.

Further, Dubai is a key market for Indian gold jewellery exports. The 'Dubai Gold Souk,' (Traditional gold market of
Dubai) where Indian jewellery from Kolkata and Mumbai is popular, makes for a substantial portion of gold sales in
Dubai. Mumbai, Chennai, and Kolkata account for many gold jewellery exports. However, several exporters outsource
manufacturing to Gujarat-based companies.

The India-UAE Free Trade Agreement (FTA) signed on 18th February 2022 and effective from 1st May 2022, is expected
to raise India's gold jewellery exports, create jobs, and provide chances for skill development in the jewellery
manufacturing and supply chain. The FTA between the two nations will encourage the establishment of a more organized
wholesale of Indian-made gold jewellery. This breakthrough will make Indian-made jewellery even more appealing to
UAE customers (residents and tourists).

Imports of Raw Gold:

After China, India is the world's second-largest gold consumer. India imports unwrought gold in the form of bars, gold
plated with platinum or in semi-manufactured forms, and gold powder. Imports are mostly used to meet the demand of
the domestic jewellery business. The demand for gold is expected to register a further increase on account of the festive
and marriage seasons.

Table 4: Imports of Raw Gold

Gold Imports Y-o-Y

Year Y-o-Y Growth (%) Gold Imports ( In Kgs)
(Rs. In Billion) Growth (%)
FY20 1,992.4 -13.2% 7,19,930 -26.7%
FY21 2,542.8 27.6% 6,51,240 -9.5%
FY22 3,440.9 35.3% 8,79,010 35.0%
FY23 2,804.8 -18.5% 6,78,300 -22.8%
FY24 3,772.5 34.5% 7,95,240 17.2%
Source: CMIE, CareEdge Research

The import duty on gold and silver findings and coins of precious metals had increased to 15% from 10% from January
2024. This includes Basic Custom Duty (BCD) of 10% and 5% of AIDC (Agriculture Infrastructure Development Cess).
Findings are items like hooks, clips, pins, screws, etc., which are components of jewellery making.

From June 2024, the Directorate General of Foreign Trade (DGFT) has brought gold jewellery studded with pearls,
diamonds, and precious & semi-precious stones in the ‘restricted’ category from ‘free’ with immediate effect which
means their import will require a government permit. These restrictions have been imposed as the imports from Indonesia
under the India-ASEAN free trade agreement had surged and some articles of gold were coming duty-free and being
melted in India to make jewellery. UAE is however exempted from these restrictions as per the India-UAE CEPA.
However, in July 2024, the Finance Minister of India announced that the Customs Duty on precious metals like gold and
silver will be reduced from 15% to 6% and for platinum, it will be reduced from 15.4% to 6.4%.

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Domestic gold imports reached Rs. 3,772.5 billion in FY24 as compared to Rs. 2,804.8 billion in FY23. During FY24
the imports of gold imports in India saw a rise of 34.5% y-o-y in value terms, whereas a rise of 17.2% y-o-y was seen in
volume terms.

4.10 Key Demand Drivers and Opportunities for Jewellery in India

Weddings and Festivals Drive Domestic Demand:

Seasonality in jewellery buying is a key factor that influences demand heterogeneity in India. Weddings, festivals, and
harvests in rural regions are the main drivers of the category, and the seasonal nature of each of these drivers assures that
demand for jewellery is tied to the different months and seasons.

• Chart 31: Seasonality in Jewellery Buying

Source: CareEdge Research based on Industry sources.

Increase in Per Capita Disposable Income:

Gross National Disposable Income (GNDI) is a measure of the income available to the nation for final consumption and
gross savings. Between the period FY14 to FY24, per capita GNDI at current prices registered a CAGR of 8.88%. More
disposable income drives more consumption, thereby driving economic growth.

Rising income is the most powerful long-term driver of Indian gold demand because the economy is complimented by a
high demographic dividend. The middle-income group in India has the highest level of gold consumption. The wealthy
consume the most per capita, but the middle class consumes the most total volume.

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Chart 32: Trend of Per Capita Gross National Disposable Income (Current Price)

2,50,000
CAGR 2,14,951
1,98,125
2,00,000 (FY14-FY24)
8.88% 1,74,816
1,52,504 1,48,408
1,44,620
1,50,000 1,31,743
1,20,052
1,09,315
1,00,439
1,00,000 91,843

50,000

-
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 [PE]
[FRE]

Per Capita Gross National Disposable Income

Note: FRE – First Revised Estimates, PE – Provisional Estimate.

Source: MOSPI

Although there is a growing propensity to consume gold as income rises, the proportion of gold in one's portfolio does
not rise at the same rate. A fall in household savings rates, availability of different investment avenues, and agricultural
earnings can be hurdles to Indian demand.

Exposure to Global Trends:

Global trends frequently blend various cultural elements and styles. Jewellery brands that integrate these diverse
influences can attract a wider international audience, creating new demand and broadening their market reach. Social
media and influencers are crucial in shaping and amplifying these global trends. Jewellery brands that utilize these
platforms to highlight trend-focused collections can generate excitement, boost online engagement, and drive consumer
interest.

Preference for Branded Jewellery:

In the competitive Indian market, branded jewellery has found a significant place. Since branded jewellery has become
the new trend in the industry, it has created its place in the hearts of customers over the last few years. With attentive and
helpful attendants and well-displayed merchandise, shopping for jewellery has transformed. In the new market, everyone
is a prospective customer. The most significant aspect of branded jewellery, however, is the perception of its excellence
because a brand is synonymous with quality.

Easy availability of Gold Loan:

The emerging gold investment avenue in India at present is a monthly investment scheme run by organised jewellers.
This works as a monthly gold-saving scheme where consumers deposit a specific amount of money with the jeweller for
11 months, with the jeweller then paying the consumer one-month equivalent of their deposit as interest. At the end of
the year, the consumer chooses to buy gold jewellery or minted products with accumulated savings and interest. Some
schemes provide the benefit of lower making charges also. One of the major benefits of this scheme is that the consumer
gets to make the payment in instalments over time instead of lumpsum payment during the purchase.

A trusted source of gold and innovative designs:

Indian jewellery buyers are increasingly brand conscious and their tastes are becoming more refined. With access to a
broad array of international and national premium brands, they now expect greater transparency and high-quality
standards from their jewellers. They want clarity on pricing, including the costs of materials like gold and silver, as well
as production fees, and seek assurance about the quality of the final product, which is best managed by organized
retailers. These established players maintain transparency by adhering to rigorous quality standards and providing clear

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pricing. The rise in demand for affordable jewellery has led to innovative designs and the use of unconventional materials
such as plated metals, stainless steel, and cubic zirconia.

4.11 Outlook for the Gems & Jewellery Industry in India

The gems & jewellery industry’s performance has been weak in the first half of CY24. However, the demand is expected
to improve in the second half, led by purchasing during the festivals. The demand is expected to further revive in
subsequent years driven by the moderation of inflation and alleviation of global geopolitical issues. Also, the domestic
growth is likely to be driven by resilience in demand, particularly during the festive and wedding seasons and expansion
by organized jewellery retailers across pan-India.

Diamonds Segment:

India is the world’s largest centre for cutting and polishing diamonds with most players concentrated in the two cities of
Gujarat, Surat and Navsari. With a global share of more than 90% in the processing of rough diamonds, Cut & Polished
Diamonds (CPD) accounted for 58% of the overall gems and jewellery exports from India. The CPD industry caters to
demand from the US, Hong Kong, and the Middle East.

Majorly, India imports rough diamonds and exports cut and polished diamonds. The import prices per carat have been
increasing, putting pressure on imports since FY21 but in FY24 the prices have declined as compared to FY23 and
remained stable in H1FY25. On the other hand, in value terms, the exports of CPD also declined by 27.6% y-o-y in FY24.
The exports declined due to weak demand from countries like China and the US. Further, there are also challenges faced
by the Indian CPD players due to G7 sanctions on Russian-origin diamonds.
Gold Jewellery Segment:

Most of the demand for gold jewellery comes from the domestic market. The demand for gold jewellery in India is still
primarily driven by weddings and festivals, with bridal jewellery alone accounting for at least half of the market. Long-
term trends in economic growth, wage growth, wealth division, and urbanization rate will all influence the demand for
gold jewellery in India.

Gold demand in rural communities usually picks up after the harvest season. Harvesting of Kharif crops runs from
September until November and about 70% of Indian agricultural production takes place during the Kharif season. During
the festivals of Diwali and Akshaya Tritiya, it is considered extremely auspicious to buy gold. Dhanteras (the first day of
Diwali) usually falls during October or November, and Akshaya Tritiya between late April and early May. On average
around 40-60 tonnes of gold in sold in India during these two auspicious festivals alone. The continued momentum in
demand for gold jewellery, coupled with an increased footprint of organized jewellery retailers, is expected to result in
healthy growth of the industry in the medium term.

Moreover, India remains one of the leading exporters of gold jewellery. In May 2022, it was announced that 90% of
Indian products will be eligible for duty-free entry into the UAE under the Comprehensive Economic Partnership
Agreement (CEPA). As products sold there are shipped to other nations, this will have a significant impact on
international trade in the medium term. The impact can already be seen in the import-export of gold jewellery.

However, higher food and fuel inflation, rising gold prices are likely to have an impact on discretionary spending by
consumers. Recently gold prices reached an all-time high of around USD 2,352 troy per ounce. Further, with the
weakening of the rupee, gold would become costlier in India affecting the demand. The rural demand may also be
impacted in case the rainfall impacts crop sowing during the season.

5. Gems and Jewellery Retailing Market in India

5.1. Overview

India’s retail gems and jewellery market is experiencing significant growth, driven by changing consumer behaviours
that combine traditional preferences with modern trends. This market holds deep cultural and economic importance,
particularly as gold jewellery is viewed both as an investment and a symbol of status. While local, unorganized jewellers
still dominate much of the industry, there is a strong trend towards organized and branded retailers. Consumers are
increasingly prioritizing trust, authenticity, and certified products.

A major trend is a growing demand for branded and certified jewellery, particularly among younger buyers who value
authenticity and reliability. As a result, organized players are expanding, especially in tier-II and tier-III cities, where
rising disposable incomes and urbanization are enhancing consumer interest in luxury and semi-luxury items.
Additionally, younger demographics are driving the demand for lightweight, daily-wear jewellery that is versatile enough

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for both casual and formal occasions, marking a shift away from the heavy, traditional pieces that used to dominate the
market.

The jewellery retail market is undergoing significant digital transformation, with retailers increasingly adopting online
platforms and digital payment options. E-commerce has expanded the reach of jewellery retail, providing a secure and
convenient shopping experience to a broader audience across the country, including previously underserved regions. The
rise of digital adoption enables virtual consultations, online personalization options, and improved customer service,
which are becoming key differentiators in the market. Furthermore, customization and personalized designs are gaining
popularity, allowing consumers to express their unique tastes through jewellery. This trend enhances the appeal of
branded jewellery retailers that offer these services.

Chart 33: Retail Gems and Jewellery Market Size in India (CY19-CY24P)

7,000 6,531 6,384

5,912
6,000 5,174
5,000 4,356 4,414
In Rs billion

4,000
3,000
2,000
1,000
-
CY19 CY20 CY21 CY22 CY23 CY24P

Source: IMARC Group, CareEdge Research

5.2. Share of Organized Players in the Indian Gems and Jewellery Industry

In contrast to other countries, India's jewellery sector has an unorganized artisan (karigar) driven, traditional skill-based
(handcrafted) manufacturing value chain, employing lakhs of workers. The gems and jewellery industry accounts for
around 6-7% of India's GDP. The interest in jewellery in India extends back 5,000 years. With over 90% of jewellers
being family-owned firms, this industry is severely fragmented and unorganized.

While the unorganized segment continues to dominate the jewellery retail industry, with the advent of large retailing
chains, the industry is gradually witnessing the transformation from being unorganized to an organized one.

Chart 34: Organized Retail Jewellery Market Landscape in India by Market Share (CY23 Vs CY29P)

CY23 - Rs 5,912 billion CY29P - Rs 10,792 billion

40.35%
35.20%
V
(Rs. 2,081 billion)
s (Rs. 6,437
billion)

59.7%
64.80% (Rs. 4,354 billion)
(Rs. 3,831 billion)

Organized Unorganized Organized Unorganized

Source: IMARC Group, CareEdge Research

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5.3. Retail Jewellery Market in India by Region, Type and Trends

Chart 35: Retail Jewellery Market Break-Up by Region (In %) (CY23)

13.5%

39.5%
21.2%

25.8%

South West & Central North East

Source: IMARC Group, CareEdge Research

5.3.1 East India Retail Jewellery Market

Chart 36: East India Retail Jewellery Market (CY19-CY24P)

1,000 897
849
798
800 748
619 617
600
In Rs Billion

400

200

-
CY19 CY20 CY21 CY22 CY23 CY24P

Source: IMARC Group, CareEdge Research

Note: The above data includes East India and North-East India

In CY24P, the East India market reached a value of Rs. 849 billion, growing at a CAGR of 2.6%% during CY19–CY24P.
The retail jewellery market in East India is driven by its rich tradition of artisanry and cultural affinity for intricate
designs. The region’s distinctive styles, such as filigree work from Odisha and temple jewellery from West Bengal,
continue to attract consumers who value heritage pieces.

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5.3.2 North India Retail Jewellery Market

Chart 37: North India Retail Jewellery Market (CY19-CY24P)

1,600
1,381 1,356
1,400 1,253
1,200 1,085
1,000 916 931
In Rs Billion

800
600
400
200
-
CY19 CY20 CY21 CY22 CY23 CY24P

Source: IMARC Group, CareEdge Research

In CY24P, the North India market is projected to reach a value of Rs. 1,356 billion, growing at a CAGR of 4.6% during
CY19–CY24P. The retail jewellery market in North India is shaped by a deep-rooted tradition of ornate and luxurious
designs, often influenced by historical Mughal and Rajputana aesthetics. The demand for bridal jewellery remains
particularly strong, driven by the region's elaborate wedding culture.

5.3.3 West and Central India Retail Jewellery Market

Chart 38: West and Central India Retail Jewellery Market (CY19-CY24P)

1,800 1,697 1,638

1,600 1,525
1,372
1,400
1,147 1,155
1,200
In Rs billion

1,000
800
600
400
200
-
CY19 CY20 CY21 CY22 CY23 CY24P

Source: IMARC Group, CareEdge Research

In CY24P, the West and Central India market is projected to reach a value of Rs. 1,638 billion, growing at a CAGR of
3.6% during CY19–CY24P. The retail jewellery market in West and Central India is witnessing notable trends driven by
a blend of traditional and contemporary preferences. The region is known for its rich heritage in intricate jewellery
designs, such as Kundan, Jadau, and Meenakari, which continue to attract consumers looking for unique artisanry. The
market is also influenced by a surge in demand for statement pieces that are versatile for both modern and traditional
attire.

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5.3.4 South India Retail Jewellery Market

Chart 39: South India Retail Jewellery Market (CY19-CY24P)

3,000
2,557 2,541
2,500 2,335
1,970
2,000
1,713
In Rs Billion

1,674

1,500

1,000

500

-
CY19 CY20 CY21 CY22 CY23 CY24P

Source: IMARC Group, CareEdge Research

In CY24P, South India the market is projected to reach a value of Rs. 2,541 billion, growing at a CAGR of 5.2% during
CY19–CY24P. The retail jewellery market in South India is driven by a deep-rooted cultural significance attached to
gold and other precious jewellery. Festivals, weddings, and traditional ceremonies continue to fuel consistent demand,
with consumers often viewing jewellery not just as an accessory but as an essential part of cultural heritage and a form
of investment. The trend of lightweight, daily-wear jewellery is gaining momentum, especially among younger buyers
who seek modern designs that are practical for everyday use.

5.4. Factors Adding Growth of the Organized Retail Jewellery Market

Strategic Presence and Consumer Reach: The organized retail jewellery market in India benefits from widespread
demand across both urban and rural areas, where jewellery holds deep cultural and traditional significance. Urbanization
and rising disposable incomes have fueled growth in Tier-II and Tier-III cities, presenting significant opportunities for
market expansion. Moreover, the adoption of digital transformation strategies, including e-commerce platforms and
omnichannel models, has enabled retailers to reach remote and underserved areas. This seamless connectivity and access
to a broader consumer base have amplified the growth of organized players

Efficient Inventory Management: The use of advanced technologies such as RFID tagging and AI-powered tools has
revolutionized inventory management in the organized jewellery sector. These systems optimize stock levels, minimize
wastage, and enhance demand forecasting accuracy. Retailers also benefit from customizable inventory strategies that
cater to regional preferences and seasonal fluctuations in demand. Furthermore, efficient inventory rotation not only
ensures cost savings but also improves liquidity, providing a competitive edge to organized retailers.

Cost-Effective Raw Material Sourcing: India’s position as a major consumer and importer of gold offers organized
jewellers’ access to competitive global supply chain networks. Additionally, domestic resources, including gold refineries
and diamond processing hubs like Surat, ensure a steady supply of high-quality raw materials. The government’s
supportive policies, such as duty benefits for exports and other trade incentives, further reduce raw material costs for
organized players, enhancing their profitability and market appeal.

Expansion of Branded Retail Chains and Showrooms: The organized market has grown rapidly with the expansion
of branded jewellery chains like Tanishq, Kalyan Jewellers, Malabar Gold & Diamonds, and others. These brands have
strategically opened showrooms in metropolitan as well as tier-II and tier-III cities, making high-quality, certified
jewellery accessible to a larger segment of the population. The appeal of a consistent and sophisticated shopping
experience, complete with customer service, loyalty programs, and flexible payment options, has driven more consumers
to opt for organized retail stores over traditional, smaller jewellers.

Adoption of Technology and Online Sales Channels: The integration of technology has been a significant factor in
propelling the organized jewellery market. Brands have embraced digital transformation, employing advanced tools such
as augmented reality (AR) for virtual try-ons, AI for personalized shopping experiences, and secure e-commerce
platforms that allow customers to browse and buy jewellery online. The convenience of online shopping, coupled with

157
features like doorstep delivery and easy returns, has expanded the reach of organized jewellery retailers and attracted
tech-savvy consumers.

Government Policies and Regulations: Supportive government policies, such as mandatory gold hallmarking and the
implementation of the Goods and Services Tax (GST), have further strengthened the organized sector. These regulations
have promoted transparency, uniformity in pricing, and quality assurance, encouraging consumers to shift from
unorganized local shops to organized, certified jewellery retailers. This regulatory framework enhances consumer trust
and contributes to the sustained growth of the market.

Impact of Migratory Population on Organized Jewellers- The rise in the migratory population is likely to benefit
organized jewellers, as these consumers typically do not have strong relationships with local jewellers. They are likely
to be more inclined towards organized stores that offer contemporary designs and a wider range of options, making them
an attractive customer segment for established brands.

5.5. SWOT Analysis of Organized Jewellers in India

Strengths Weaknesses
Rich heritage and cultural importance: Jewellery is deeply High dependency on imports for raw materials: India relies
intertwined with Indian traditions, festivals, and weddings, heavily on imported gold and rough diamonds, exposing
driving consistent domestic demand. the market to international price fluctuations.

Skilled artisans and craftsmanship: India is renowned for A fragmented market dominated by unorganized players:
its intricate jewellery designs and skilled artisans, A significant portion of the market is unorganized, leading
providing a competitive edge in global markets. to challenges in quality control and scalability.

Major global exporter of polished diamonds: India Frequent price volatility of gold and diamonds:
contributes over 75% of the world’s polished diamonds by Fluctuations in global commodity prices directly affect the
volume, solidifying its role as a global leader. cost structure and consumer pricing.

Diverse product range catering to all segments: Offers Limited innovation in designs and technology adoption:
products from traditional gold ornaments to modern Slow adaptation to modern trends and digital tools affects
diamond and platinum jewellery, catering to diverse tastes the appeal to younger consumers.
Opportunities Threats
Expansion in e-commerce platforms: Online sales channels Economic slowdowns reducing consumer spending:
are growing, providing consumers with greater Economic downturns can significantly impact
convenience and access to a wide range of jewellery. discretionary spending, affecting jewellery sales.

Growing international demand for Indian jewellery: Increasing cost of raw materials: Price hikes in gold,
Unique designs and craftsmanship are attracting more diamonds, and other materials can shrink margins and
global buyers, presenting export growth opportunities. impact affordability for consumers.

Potential in eco-friendly and lab-grown jewellery: Regulatory changes impacting market stability: Shifts in
Increasing consumer preference for sustainable products government policies, such as restrictions on gold imports,
offers new market opportunities. can disrupt market operations.

Untapped market in tier-2 and tier-3 cities: Rising Substitution by artificial or imitation jewellery: Growing
aspirations and incomes in smaller cities create the affordability and availability of imitation jewellery may
potential for jewellery businesses to expand regionally divert consumers from precious jewellery

6. Bridal Jewellery Segment

6.1. Overview

The bridal jewellery segment in India is a significant part of the overall jewellery market, showcasing the country’s rich
cultural heritage and the importance of weddings in Indian society. Weddings are major life events in India, with families
typically allocating around 23-24% of their total wedding budget to jewellery purchases. Bridal Jewellery typically
includes a variety of elegant pieces that enhance the bride’s overall look, such as Necklaces & Chains, Earrings, Haram,
Chokers, and Maangtikka. This jewellery is not only regarded as adornment but also serves as a form of financial security.
In North India, brides tend to prefer heavy gold jewellery and kundan-polki sets, while those in South India favour
traditional gold temple jewellery. These preferences reflect the varied cultural heritage of each region.

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India's bridal jewellery market is primarily centred around gold, making it one of the largest consumers of gold jewellery
in the world. In 2023, the country's demand for gold jewellery reached approximately 562 tonnes, with a substantial
portion attributed to bridal collections. The market also includes a variety of traditional styles such as kundan, polki,
jadau, and temple jewellery, reflecting the diverse regional traditions across different states. For instance, South Indian
brides typically prefer temple jewellery, while North Indian brides often choose kundan and polki pieces. Additionally,
diamond jewellery is gaining popularity among urban and affluent families, leading to increased demand for diamond-
studded wedding pieces, especially in metropolitan areas.
• Chart 40: India Wedding Market: Breakup by Wedding Expenditure (in %), CY23

Catering & Venues

12.5%
Jewellery
3.0%
29.4%
4.3% Apparels

Decorations
10.2%

Gifts

Photography and
18.3% 22.3% Videography
Others

Source: IMARC Group, Industry Sources, CareEdge Estimates

In CY23, the distribution of wedding expenditures in India highlights the significant allocation of funds across various
categories. Catering and venues dominate the market, accounting for 29.4% of total spending, reflecting the high priority
placed on food and location for wedding celebrations.

Jewellery follows as the second-largest expenditure, comprising 22.3%, underscoring the importance of bridal
adornments in Indian weddings. Jewellery holds a vital place in Indian weddings, with 22.3% of expenditures dedicated
to it, reflecting its deep cultural and symbolic significance. The mangalsutra, a sacred necklace symbolizing marital
bonds, is central in Hindu weddings, especially in South India, where elaborate designs featuring diamonds and intricate
gold work are increasingly popular.

Besides the mangalsutra, essential pieces like bangles, necklaces, earrings, and rings are part of the bridal ensemble,
varying by region. North Indian brides favour heavy gold jewellery, while South Indian brides often wear temple
jewellery with uncut gemstones. In Western India, the nath (nose ring) and kamarband (waistband) are prominent, and
Eastern Indian brides often choose gold pieces with nature-inspired motifs. This investment in jewellery, blending
aesthetics with emotional and cultural value, underscores its importance as a symbol of tradition, wealth, and heritage
across India.

6.2. Segments of the Indian Jewellery Industry

Weddings and festivals are the two main occasions for buying jewellery in India. The Indian jewellery market can be
segmented by region into North, South, East, and West. The South region leads the market, followed by the West.

Southern India is notable for its significant consumption of gold and diamond jewellery, whereas Western India is
renowned for its export of cut and polished diamonds. The South's dominant position in the Indian Gems and Jewellery
Market stems from its rich historical heritage, skilled artisanry, cultural importance, and vibrant jewellery industry. In
contrast, Western India favours a mix of traditional and modern styles and has a strong market for high-end and designer
pieces.

North India tends to prefer traditional designs, especially gold jewellery and heavy pieces for weddings and festivals.
Meanwhile, East India is characterized by a preference for traditional and distinctive designs, focusing on both gold and

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silver jewellery. South India accounts for 41% of the total jewellery demand followed by West & Central India with
24.6%, North India with 19.1% and East India with 15.2%.

Chart 41: Indian Jewellery Market Break-up by Region (% Share) in CY23

15.2%

41.1%
19.1%

24.6%

South India West & Central India North India East India

Source: IMARC Group, Industry Sources, CareEdge Estimates

Rural and semi-urban regions contribute about 60% of the gold jewellery consumption while urban areas account for
40%. The share of rural and semi-urban regions is higher on account of the larger share of the population residing in these
regions. Further, jewellery is a primary form of investment in these areas and is preferred over conventional investments
through banks due to limited literacy and banking networks.

Based on the type, the gold jewellery industry can be segmented into:

• Bridal gold wear

• Daily & fashion gold wear

Table 5: Jewellery Demand Segmentation Based on Wearing Type

Market share (%) Weight Range Purity

Bridal Wear 50%-60% 30-250 gm 18 & 22 carats
Daily & Fashion Wear 40%-50% 5-30 gm 14 & 18 carats

Source: Industry sources; CareEdge Research

6.2.1 Bridal Gold Wear

In Indian marriages, gold holds a lot of significance. Individuals of all ages wear exquisite gold jewellery on such
occasions. The bride is the focal point of the wedding and is adorned with a significant amount of gold jewellery. Gold
has a religious significance in India as many people believe that gold is an auspicious precious metal and provides wealth
and success.

The significance of this style of jewellery in India originates mostly from the premise that gold given to a lady for her
wedding is completely her property and thus an essential source of financial security. Jewellery gifts to the bride and
groom's close relatives as well as jewellery purchases made by wedding guests for their use make up an additional,
although much smaller, portion of the demand associated with weddings.

Given its significance in Indian weddings, bridal jewellery accounts for 50-60% of domestic jewellery consumption.
Bridal jewellery is typically heavier in weight compared to daily or fashion wear ranging from 30-250 gms depending
upon the type of jewellery. Further, they are available in 22-carat and 18-carat variants.

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Bridal jewellery varies in weight and design across regions of the Indian subcontinent as different community brides
wear distinctive designs for their weddings. The gross weight of gold jewellery worn by brides in southern states such as
Kerala is significantly higher than the weight of gold jewellery worn by brides from northern and western states.

This typically stems from cultural preferences and functions as the per capita income of the state. South Indian bridal
jewellery is dominated by plain gold jewellery while there is a higher preference for studded jewellery in northern states.
On an overall basis, plain gold jewellery accounts for 85% of the total bridal jewellery.

Table 6: State-wise Bridal Jewellery Products

State Large Sets Small Chains Bangles Earrings Others Gross

Necklaces weight in
gms
Punjab Diamond Mangal Kundan Vala Maang Teeka, 190
Haar Sutra Kangan Nathni,
Bajo does Kado
Rajasthan/ Rani Haar Thewa Bangdi, Kada, Kundan Rakhdi, Hath 190
Marwar Rajputi Butti Phool,
Bandgi Baju Band, Anguthi
Bengal Sita Haar Gola Chik Plai Bala, Jhumkaa Kamar Chavi, 210
Mugh Tikloy,
Bala, chitra Kamar Band
Bala
Gujarat Chandan Mangal Bangdi, Kundan Nath, Baju Band, 180
Haar Sutra Kundan Butti Damani, Pocha
Bangdi
Maharashtra Chapla Tushi Mangal Tode, Patli Jhumke Aangathi, Haath 250
Haar, Sutra Pan,
Laxmi Nath, Baju Band
Haar
Karnataka Akki Sara, Mangal Lakshmi Bale, Jhimki Bandhi, Odiyanam, 280
Malliga Sutra, Coorgi Bale, Kemp Ungila
Sara Mohan Kembina bale
Sara
Kerala Kazuthulia, Kingini Kurumul Kolkata Jhimki Toe Ring, Minnu 320
Kasu Mala, aka Mala, Bangle,
Mala, Manga Mala Patthaka Machine Cut
Lakshmi m Bangle,
Mala, Thoda Bangles
Mulla
Motu
Tamil Nadu Lakshmi Vella Kal Mangal Muthu Kempu Kal Ottiyanam, 300
Haram, Mookhuthi Sutra Valayal, Jhimkki Nethichutty, Jadai
Muthu Lakhsmi Billai
Haram Valayal,
Kemu Valayal
Andhra Nakshi Kandabarana Sutaru Kanjan, Buttalu Aravanki, Nakshi 300
Pradesh Haram m Golusu Gajalu Vaddanam, Jada

Source: CareEdge Research, Industry Sources

6.2.2 Daily and Fashion Wear

Daily and Fashion wear jewellery accounts for 40-50% of the domestic gold jewellery consumption. These are typically
lighter jewellery ranging from 5-30 gms in weight. Daily and fashion wear jewellery has grown in popularity in recent
years as customer preference for more affordable and useful options for their everyday jewellery needs has increased. To
meet the demand from younger customers, especially those who desire to wear gold jewellery that suits their Western-
style clothing, manufacturers are increasingly concentrating on manufacturing lightweight ornaments. This trend has
resulted in the rise of minimalist designs, which have basic shapes and clean lines and are frequently made with less gold.

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Millennial demand, rising internet usage, and increasing smartphone penetration have contributed to the recent rapid rise
of the Indian online jewellery business focused primarily on daily and fashion wear jewellery. Consumers between the
ages of 18 and 45 account for many sales. Despite an increase in online jewellery sales, the typical ticket weights are
between 5 and 10 grams. Online buyers typically buy 18-carat gold jewellery that is lightweight and suitable for everyday
wear.

Young shoppers are interested in contemporary styles that go well with Western attire. Also, big chain stores are focusing
increasingly on daily wear and fast-moving jewellery (such as chains and rings). Manufacturers and designers are
developing product lines expressly for this market as they become more aware of changing consumer preferences.

7 Gold Jewellery Wholesale Market in India

7.1. Indian Gold Jewellery Wholesale Market Size

India has one of the world's largest wholesale markets for gold jewellery. This market growth is driven by deep cultural
significance and high consumer demand. It is made up of many small- and medium-sized enterprises (SMEs) as well as
large players and key hubs include Mumbai, Surat, and Chennai. These hubs are where goldsmiths and wholesalers
operate extensive networks of artisans and retailers.

The growth of the wholesale gold jewellery market is closely tied to the expansion of retail jewellers across India. As
organized retail continues to spread into tier 2 and 3 cities, particularly with the rise of branded jewellery stores, there is
a growing demand for wholesalers to supply these outlets. Rapid urbanization and increasing disposable incomes further
contribute to the wholesale market's growth, as the demand for gold jewellery increases in both traditional and
contemporary designs. Additionally, wholesalers benefit from supplying customized and bulk orders to retailers,
leveraging economies of scale to offer competitive pricing. However, there are challenges, such as fluctuating gold prices,
regulatory changes, and a shift in consumer preference towards lighter and more contemporary designs.

Digitalization and e-commerce are changing the wholesale market, making prices more transparent and increasing its
reach. Moreover, demand for traditional, handcrafted gold jewellery increases during festivals and weddings, further
driving the market.

• Chart 42: Indian Gold Jewellery Wholesale Market Size, CY2020–29P

4,500 4,252
3,928
4,000 3,631
3,358
3,500 3,109
2,880
3,000 2,576
Rs. In Billion

2,500
2,030
2,000
1,536
1,500 1,217
1,000
500
0
CY20 CY21 CY22 CY23 CY24P CY25P CY26P CY27P CY28P CY29P

Source: IMARC Group, CareEdge Research Analysis

In CY23, the wholesale gold jewellery market reached a value of Rs. 2,576 billion in CY23, representing a CAGR of
28.4% from CY20 to CY23. The strong domestic demand is one of the main factors propelling the wholesale gold
jewellery market’s growth in India. Gold jewellery holds great cultural and traditional value in Indian society, which
guarantees a consistent demand for it throughout the country. Wholesalers supply the large demand for gold jewellery
during festivals, weddings, and other important occasions, which is met by retailers and local jewellers. The wholesale
industry growth is driven by the constant need to restock inventory to meet consumer demand.

India is a prominent global exporter of gold jewellery. The wholesale sector is greatly boosted by the demand for Indian
gold jewellery in foreign markets. The demand for both traditional and modern Indian gold jewellery is significant in
nations like the United States, the United Arab Emirates, and the United Kingdom, where there is a sizable Indian

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diaspora. The strong export demand continues to provide growth opportunities for the wholesale sector, especially as
Indian jewellery gains more prominence globally.

7.2. India Wholesale Gold Jewellery Market by Manufacturers

India's wholesale gold jewellery market is split between organized and unorganized sectors. The unorganized sector
dominates, comprising numerous small manufacturers and artisans across regions like Mumbai, Jaipur, and Kolkata.
These players often rely on traditional methods, producing intricate, handcrafted jewellery that caters to regional
preferences. They have deep-rooted networks with local retailers, but face challenges such as limited access to capital
and exposure to price volatility. In contrast, the organized sector, though smaller, is growing rapidly, led by established
brands like Kalyan Jewellers, Malabar Gold & Diamonds and Joyalukkas, and Titan’s Tanishq.

Market formalisation, driven by factors such as compulsory hallmarking, GST compliance, and consumer demand for
transparency, has adversely impacted unorganized retailers, leading to market consolidation. Key players in the organized
sector have seized this opportunity by expanding their retail footprints both domestically and internationally. For instance,
from FY22 to FY24, Titan opened approximately 350 new retail stores, Senco Gold added 32 stores, and Kalyan Jewellers
established 93 new outlets. As a result, the penetration of organized jewellery retailers has significantly improved between
CY20 and CY23. Looking ahead, leading brands are poised to solidify their dominance further. They plan to add an
estimated 400-440 new retail outlets across domestic and global markets in the near to mid-term. Initiatives like
hallmarking, GST compliance, and traceability have adversely impacted unorganized retailers, driving market
consolidation.

Chart 43: India: Wholesale Gold Jewellery Market: Breakup by Manufacturing Type (in %), CY23

10.9%

89.1%

Organized Manufacturer Unorganized Manufacturer

Source: IMARC Group, CareEdge Research

Organized Manufacturers

The organized wholesale gold jewellery market in India is dominated by large players, such as organized jewellery chains,
branded jewellery manufacturers, and distributors. These entities often have multiple outlets across major cities and
leverage economies of scale in procurement, manufacturing, and distribution.

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Chart 44: India: Wholesale Gold Jewellery Market (Organized Manufacturers): Sales Value (in Rs. Billion),
CY2020–29P

600
489
500 448
410
Rs. In Billion

400 376
345
317
281
300
215
200 157
121
100

0
CY20 CY21 CY22 CY23 CY24P CY25P CY26P CY27P CY28P CY29P
Source: IMARC Group, CareEdge Research Analysis

In CY23, organized manufacturers accounted for a share of 10.9% in the wholesale gold jewellery market, in India. The
market reached a value of Rs. 281 billion in CY23, growing at a CAGR of 32.5% from CY20 to CY23. This is primarily
driven by the shift from the unorganized to the organized sector. This shift can be attributed to several structural factors
rather than just organic demand growth. One of the key reasons for this transformation is the implementation of the Goods
and Services Tax (GST), which has brought greater transparency and accountability to the industry. Additionally,
organized players benefit from economies of scale and better financial backing, allowing them to offer competitive
pricing and a wider range of designs. There is a clear trend among Indian consumers toward favouring branded and
certified jewellery. Organized wholesale markets are responding to this demand by providing a diverse array of branded
products that prioritize quality, craftsmanship, and innovative design.

Unorganized Manufacturers

The unorganized wholesale gold jewellery market in India plays a significant role, especially in rural areas and smaller
towns. This market is characterized by local artisans, small-scale jewellers, and traditional business practices, often
lacking formal documentation and standardization. It offers a wide variety of designs and customization at competitive
prices, catering to diverse consumer preferences. However, challenges include inconsistent quality, lack of transparency,
and limited access to modern technology. Despite government efforts to formalize the sector, the unorganized market
remains a vital part of India's gold jewellery industry.

Chart 45: India: Wholesale Gold Jewellery Market (Unorganized Manufacturers): Sales Value (in Rs. Billion),
CY2020–29P

4,000 3,764
3,480
3,500 3,220
2,982
3,000
Rs. In Billion

2,763
2,563
2,500 2,295

2,000 1,815
1,378
1,500
1,096
1,000

500

0
CY20 CY21 CY22 CY23 CY24P CY25P CY26P CY27P CY28P CY29P
Source: IMARC Group, CareEdge Research Analysis

In CY23, unorganized manufacturers accounted for a share of 89.1% of the Wholesale Gold Jewellery Market, in India.
The market reached a value of Rs. 2,295.1 billion in CY23, growing at a CAGR of 27.9% during CY20–CY23.

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A significant driver of this growth is consumer price sensitivity. The unorganized sector often offers jewellery at lower
prices than organized retailers, which is partly due to their ability to sell without issuing tax bills. This pricing advantage
broadens access, particularly in rural and semi-urban areas. Additionally, the unorganized sector excels in customization,
providing flexibility in jewellery designs. Customers frequently seek personalized pieces tailored to their preferences,
including design, metal choice, gemstones, and budget considerations.

Small-scale jewelers in the unorganized sector excel in catering to local market preferences and personalized customer
needs, addressing niche demands often overlooked by larger retailers. Many consumers prefer these local jewelers for
their trusted relationships and personalized service, which often surpass the advantages offered by larger, more
impersonal stores.

7.3. Indian Wholesale Gold Jewellery Market Breakup by Wearing

The Indian wholesale jewellery market is segmented based on the type of wear, which includes bridal wear, occasional
wear, and daily wear.

Chart 46: Indian Wholesale Gold Jewellery Market Breakup by Wearing (in %), CY23

10.6%

34.2% 55.2%

Bridal Wear Occasional Wear Daily Wear

Source: IMARC Group, CareEdge Research Analysis

• Bridal Wear

The Indian bridal jewellery market is a dominant segment, driven by cultural traditions and the significance of weddings.
Bridal jewellery typically features heavy, ornate designs using gold, diamonds, Kundan, and Polki. This segment sees
the highest demand in regions like North and South India, particularly during the wedding season. In CY23, the
distribution of wedding expenditures in India highlights the significant allocation of funds across various categories.
Jewellery holds a vital place in Indian weddings, with 23–25% of expenditures dedicated to it, reflecting its deep cultural
and symbolic significance. Key trends include an increase in destination weddings and a preference for heritage designs,
which continues to make bridal jewellery a crucial part of the wholesale jewellery market in India.

• Occasional Wear

The occasional wear segment in the Indian jewellery market caters to festivals, family functions, and special events. This
segment is characterized by demand for semi-precious stones, contemporary designs, and versatile pieces that balance
tradition with modern aesthetics. Cities like Mumbai, Delhi, and Bangalore drive significant sales during festive seasons,
particularly Diwali. The market is evolving with younger consumers preferring lightweight and affordable options,
making occasional wear a growing area in the wholesale jewellery sector.

• Daily Wear

Daily wear jewellery in India is gaining traction, particularly in urban and semi-urban areas. This segment focuses on
minimalistic, lightweight, and durable designs suitable for everyday use, such as simple gold chains, rings, and earrings.
With the rise of working professionals, there is a steady demand for affordable yet stylish pieces. Regions like
Maharashtra, Gujarat, and West Bengal show consistent demand due to their large urban populations and high

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concentration of working professionals. Maharashtra, particularly Mumbai, is a major economic hub with a diverse
workforce. Gujarat, with its thriving business community and growing urbanization, has a significant market for daily
wear jewellery. West Bengal, especially Kolkata, has a rich cultural heritage and a substantial population that contributes
to the steady demand for daily wear pieces. Though smaller than bridal or occasional wear, the daily wear segment is a
growing component of the wholesale jewellery market.

7.4. Indian Wholesale Gold Jewellery Market Breakup by Product Type

The Indian wholesale jewellery market is segmented based on product type, which includes neckwear, rings, earrings,
chains, and bangles/bracelets.

Chart 47: Indian Wholesale Gold Jewellery Market Breakup by Wearing (in %), CY23

5.2%
5.9%

11.7% 33.2%

18.2%

25.8%

Bangles Chains Neckwear Rings Earrings Others

Source: IMARC Group, CareEdge Research Analysis

• Neck Wear

The neck wear segment, including necklaces, chokers, and pendants, is a cornerstone of the Indian wholesale jewellery
market. It is highly diverse, with demand ranging from heavy, ornate designs in gold and diamonds for weddings to
lightweight, everyday wear pieces. Traditional styles like Kundan and Temple jewellery remain popular, especially in
South India. The segment sees peak demand during the wedding and festive seasons, with a growing trend towards
customizable designs that blend traditional motifs with modern aesthetics.

• Rings

Rings are a versatile and highly popular product in the Indian wholesale jewellery market. This segment includes
everything from elaborate bridal rings, often adorned with diamonds and precious stones, to simple, everyday gold bands.
Engagement rings are a significant driver, with a strong preference for solitaire diamonds. Rings also serve as popular
gifting options during festivals and special occasions. The demand for innovative designs, including stackable and multi-
finger rings, is on the rise, particularly among younger consumers.

• Earrings

Earrings are a key segment in the Indian jewellery market, catering to various occasions, from daily wear to weddings.
The range includes studs, hoops, jhumkas, and chandbalis, with gold and diamonds being the most sought-after materials.
Demand for lightweight and versatile designs is growing, especially among urban consumers. Earrings are also a popular
gifting choice, driving consistent sales throughout the year. Regions like Maharashtra and Gujarat show strong demand
for both traditional and contemporary styles, making this segment a staple in the wholesale market.

• Chains

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Chains are a fundamental part of the Indian wholesale jewellery market, favored for their simplicity and versatility. Gold
chains dominate this segment, available in a variety of styles such as plain, beaded, and rope designs. Chains are popular
as everyday wear, particularly among men and working professionals. They also serve as a common gifting item,
especially during festivals and family occasions. The market for lightweight and durable chains is expanding, with
increasing demand from urban and semi-urban areas.

• Bangles/Bracelets

The bangles and bracelets is the largest market segment. Bangles and bracelets hold a special place in Indian jewellery,
symbolizing tradition and elegance. This segment includes a wide range of products, from heavy, ornate bridal bangles
to sleek, contemporary bracelets. Gold bangles are particularly popular in South India, while diamond-studded bracelets
are gaining traction among younger consumers. The demand peaks during wedding seasons and festivals like Diwali and
Raksha Bandhan. The trend towards mixing traditional designs with modern styles is driving innovation in this segment
within the wholesale market.

7.5. Outlook of the Gold Jewellery Wholesale Market in India

The Indian gold jewellery wholesale market is poised for steady growth, driven by robust demand across various
segments. Bridal jewellery remains a significant contributor, bolstered by cultural traditions and the rising trend of lavish
weddings. Additionally, increasing urbanization and rising disposable incomes are fueling demand for occasional and
daily wear gold jewellery. The market is also witnessing a shift towards lightweight and contemporary designs, catering
to younger consumers seeking both style and affordability.

However, challenges, such as fluctuating gold prices and stringent government regulations on gold imports, may impact
market dynamics. Despite these challenges, the long-term outlook remains positive, with innovations in design and
growing consumer preference for certified and branded gold jewellery expected to drive growth. The adoption of digital
platforms for wholesale transactions is further enhancing market accessibility, positioning the Indian gold jewellery
wholesale market for continued expansion.

Outlook on the Organized and Unorganized Segments

• Organized Segment

The organized jewellery segment in India is on a strong growth trajectory. Driven by increased consumer awareness
about quality and certification, this segment is rapidly gaining market share. The implementation of government
regulations, such as mandatory hallmarking of gold jewellery and the Goods and Services Tax (GST), has provided an
additional boost to organized players, who are better equipped to meet these requirements. Major brands like Tanishq,
Kalyan Jewellers, and Malabar Gold & Diamonds are expanding aggressively, particularly in tier II and III cities, to tap
into the growing demand for branded, certified jewellery.

Furthermore, the adoption of digital platforms, omni-channel retail strategies, and personalized customer experiences are
enhancing the appeal of organized players.

• Unorganized Segment

The unorganized segment will continue to dominate the market due to deep-rooted cultural ties, strong customer
relationships, and the trust placed in local jewellers. However, increasing competition from organized players, rising
consumer preference for branded products, and government regulations aimed at formalizing the sector are driving
gradual shifts. The implementation of hallmarking standards and GST has begun to erode the cost advantage traditionally
enjoyed by unorganized jewellers. Yet, their flexibility in pricing, extensive product variety, and strong presence in rural
areas will allow them to retain a significant share. Local jewellers often offer flexible payment options, such as allowing
delivery first with payment in installments, which enhances their appeal.

The segment's future will hinge on its ability to adapt to evolving consumer expectations and regulatory changes while
maintaining its traditional strengths.

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8. Regulatory Process and Framework for the Gems & Jewellery Industry in India

8.1 FDI Norms

The gems & jewellery industry is the second-largest Foreign Exchange Earner (FEE) in the Indian economy. India is
known as the hub of global jewellery due to its low costs, availability of skilled labour, and other benefits like policy
support etc. Various government policies support the industry. Currently, 100% Foreign Direct Investment (FDI) is
permitted in the sector under the automatic route.

This sector has become a focus area for promoting exports. The government has taken various initiatives for investment
promotion and technology upgradation. The country is looking forward to building a ‘Brand India’ in the global market
because of its growth prospects.

The Government of India’s decision to bring FDI into the retail market expedited the growth in the organized jewellery
sector. This facilitated substantial job opportunities in various departments like logistics, repackaging centres, distribution
channels, housekeeping, security, etc. FDI has been one of the key drivers in uplifting the jewellery sector and
contributing towards the overall development of the economy.

8.2 Goods & Services Tax (GST)

Before the introduction of the GST regime, gold attracted a 2% tax, consisting of service tax and a value-added tax (VAT)
of 1% each. The tax rate levied on gold sales increased from 2% to 3% due to the introduction of GST and had a critical
impact on the jewellery industry. An additional 5% GST is applicable on the making charges of gold jewellery in India.
GST of 1.5% is levied on cut and polished diamonds. Implementation of GST benefited interstate business transactions
as different states operated varying tax structures before the GST, which subsumed into a single tax rate post-GST rollout.
It has also simplified the purchase of bullion. Further, the implementation of GST has improved transparency and
accountability, especially in the organized sector.

8.3 Gold Imports by the RBI

Given that gold is thought to be a reliable inflation safeguard, and that global inflation is on the rise, central banks have
become a major source of gold demand. The RBI purchases gold frequently for its reserves intending to diversify the
assets under which the country’s foreign exchange reserves are held. This is used as a safe investment tool against
inflation and brings stability to the overall reserves of the central bank during that inflationary period. Gold is usually
bought in the form of gold bars. RBI’s gold reserves stood at 854.7 metric tonnes as of September 2024.

8.4 Authorized Banks for Purchase of Gold

Individuals can buy gold from banks either in physical or digital form. Banks provide multiple schemes with options,
such as physical gold in the form of bars and coins, digital gold, sovereign gold bonds (SGBs), etc.

Table 7: Authorized Banks Permitted to Purchase Gold from Other Countries

Axis Bank Federal Bank

Industrial and Commerce Bank of China HDFC Bank
IndusInd Bank ICICI Bank
Punjab National Bank Indian Overseas Bank
Kotak Mahindra Bank Karur Vysya Bank
State Bank of India RBL Bank
Yes Bank Union Bank of India

Latest Budget Provisions for the Gems and Jewellery Industry in India

The 2024–25 Union Budget introduced several reforms to streamline the gold market, promoting transparency and growth
in the industry. Key measures include:

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▪ Reduction in import duty on gold and gold doré:

A notable cut of 9% in the import duty on gold and gold doré has been introduced. Total customs duty on gold was
reduced from 15% to 6%, while the duty on gold doré was slashed from 14.35% to 5.35%. This marks the sharpest duty
reduction since 2013, and duties had remained above 10% for over a decade. These changes are effective from 24 July
2024.

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Chart 48: Significant Cuts in Customs Duty on Gold

16.0% 15.0%
% of customs duty on gold

14.0% 12.9%
12.0% 10.8%
10.0%
10.0%
8.0%
8.0%
6.0% 6.0%
6.0%
4.0%
4.0%
2.0%
2.0%
0.0%

Source: Ministry of Finance, World Gold Council, CareEdge Research Analysis

▪ Changes in taxation on long-term capital gains for gold:

The holding period for long-term capital gains taxation on gold has been shortened from 36 months to 24 months.
Additionally, the rate for long-term capital gains tax has been reduced from 20% with indexation to 12.5% without
indexation. This change is applicable from 23 July 2024, providing significant tax relief for gold investors.

▪ Increasing Import Duty on Gold and Silver Findings

The import duty on gold and silver findings and coins of precious metals has increased to 15% from 10%. This includes
Basic Custom Duty (BCD) of 10% and 5% of AIDC (Agriculture Infrastructure Development Cess). Findings are items
like hooks, clips, pins, screws, etc., which are components of jewellery making. Further, the Finance Ministry has also
increased the import duty on precious metals to 14.35%.

8.5 Central Government's Gold Monetization Scheme

Gold Monetization Scheme (GMS) is a scheme, which was launched by the Central Government of India in November
2015 to make productive use of the gold kept idle at home or stored by households and institutions of the country in their
bank lockers. Another motive behind this scheme was to reduce the country’s dependency on gold imports. Individuals,
institutions, corporations, and temple trusts can deposit their gold for a short-, medium-, and long-term period with RBI-
designated banks under this scheme. This will help them earn interest at a rate of interest chosen by the Central
Government.

Revamped Gold Metal Loan (R-GML):

• Repayment of Gold Metal Loan (GML) in lots of 1kg

• Repayment of the gold loan under GML using locally sourced IGDS standard bullion

• Availability of GML to all jewellers with a valid working capital credit limit

All these amendments have been implemented to strengthen the Gold Monetization Scheme. To alleviate the financial
distress caused by COVID-19 among households, small businesses, and entrepreneurs, the RBI has provided a relaxation
by increasing the permissible loan-to-value ratio (LTV ratio indicates the percentage value of the property which can be
granted to a borrower by banks) to 90% from 75% for those availing loans against gold and jewellery for non-agricultural
purposes. At present, the government is reconsidering the scheme as not being effective and not attaining its goals.
Moreover, the cost of the scheme is said to outweigh its benefits.

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8.6 Training Initiatives by Government Agencies such as the Gems and Jewellery Skill Council of India

The Gems and Jewellery Skill Council of India (GJSCI) is a council body established in 2012 under the supervision of
the National Skill Development Corporation (NSDC) and is presently operating under the Ministry of Skill Development
& Entrepreneurship (MSDE). GJSCI is an institution that encourages skill development among the workforce in the
Indian gems & jewellery industry. They provide training for the processing of diamonds, coloured gemstones,
manufacturing of jewellery, and other areas such as wholesale, retail, and exports. They also undertake initiatives to
provide manufacturing setups with the latest technology and other resources for upgrading.

Its founding organizations are as follows:

1. The Gem & Jewellery Export Promotion Council (GJEPC): GJEPC, set up by the Ministry of Commerce,
Government of India in 1966, is the apex body that drives the growth of Indian exports in the gems & jewellery
industry. It eases interaction between the industry and the Ministry of Commerce & Industry, Ministry of Finance,
DGFT, Department of Commerce, and Department of Finance on issues related to trade. It holds integrity and
conducts the Kimberly Process Certification Scheme for diamonds. It also runs various training institutes, which
focus on manufacturing skills, design, and other technical skills required in the industry. GJEPC helped Micro,
Small & Medium Enterprises (MSMEs) by providing modern machines that are affordable. GJEPC addresses the
concerns and issues that are faced in the gems & jewellery industry. They identified the need for a new revamped
Gold Monetization Scheme, import duty reduction of gold, hallmarking etc. Recently, the organization arranged
numerous trade events and webinars for buyers and sellers across the globe which helped the industry in the recovery
process. A few of them include virtual IIJS, India Global Connect, virtual International Gems & Jewellery Show
(e-IGJS), etc.

2. All India Gem and Jewellery Domestic Council (GJC): It is a national trade federation established to promote
and advance the growth in the gems & jewellery industry. It ensures fair-trade practices conducted in the industry
and manages the efficiency of businesses. GJC constitutes various divisions such as wholesalers, retailers, allied,
gold, silver, platinum, diamonds, gemstones, machinery, etc. It is responsible for developing uniformity and
promoting transparency and compliance standards which contribute towards industrial growth and development.

3. The SEEPZ Gems & Jewellery Manufacturers' Association (SGJMA): SEEPZ was founded in 1989 and
represents the gems and jewellery units in the SEEPZ SEZ region. It is established by jewellery units in SEEPZ and
resolves problems arising in export production and growth.

4. The Jewellers Association, Jaipur: It was formed for the progress and growth of the gem & jewellery trade of
Jaipur. The Association conducts shows/exhibitions as well to enable exhibitors and buyers to interact directly.

8.7 Hallmarking of Jewellery in India

Bureau of Indian Standards (BIS) introduced the hallmarking scheme under the BIS Act, Rules, and Regulations for
jewellery in India in 2000 and the same was made mandatory with effect from June 2021. From July 1, 2021, all gold
jewellery products must be hallmarked with Hallmark Unique Identification (HUID) only. The hallmark consisted of 3
marks viz, BIS logo, purity of the article, and six-digit alphanumeric HUID. Each hallmarked article has a unique HUID
number which is traceable.

However, the old, hallmarked jewellery with four marks without HUID was also permitted to be sold by the jewellers
simultaneously with the 6-digit HUID mark. The hallmark on the jewellery indicates the quality of jewellery and it
protects the interest of consumers by having quality checks on jewellery.

BIS conducts random market surveillance on accredited jewellers at set intervals. This involves collecting hallmarked
gold jewellery from a licensee's retail store or manufacturing facility and having it examined for compliance at a BIS-
accredited hallmarking centre. BIS also has an advanced online digital solution in which the assaying and hallmarking
centre is automated.

8.8 KYC Compliance

KYC (Know Your Customer) compliance in the Indian jewellery industry, particularly regarding the purchase of precious
metals and stones, is governed by both local regulations and international standards, such as those set by the Financial
Action Task Force (FATF).

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Regulatory Framework:

• The Reserve Bank of India (RBI), the Ministry of Finance, and the Financial Intelligence Unit (FIU) oversee KYC
regulations in the jewellery sector.

• Under the Prevention of Money Laundering Act (PMLA), 2002, dealers in precious metals and stones (DPMS) are
required to perform KYC and Customer Due Diligence (CDD) primarily for cash transactions above INR 1 million.

Recent Clarification (Dec 28, 2020):

• The Department of Revenue (DoR) clarified that purchases below INR 0.2 million of gold, silver, jewellery, or
precious gems and stones do not require mandatory KYC documents such as PAN or Aadhaar.

• This clarification is aligned with FATF's international standards, which require KYC for transactions exceeding
USD/EUR 15,000 (approximately INR 1 million).

• Misinformation suggesting that KYC is mandatory for all transactions, even below INR 0.2 million, is incorrect.

Transaction Limits:

• For cash transactions above INR 0.2 million, KYC requirements under the Income Tax Act, 1961 (Section 269ST)
will apply, as cash transactions above this limit are not allowed. However, transactions below this threshold do not
require KYC.

• Only cash transactions above INR 1 million necessitate KYC compliance, per FATF recommendations.

Customer Identification:

• For eligible high-value transactions, jewellers must verify the customer's identity using government-issued ID cards,
such as PAN, Aadhar, passport, voter ID, or driver's license.

Record-Keeping and Monitoring:

• Jewelers must maintain records of all transactions, particularly those above INR 0.2 million, and ensure compliance
with anti-money laundering (AML) guidelines by monitoring suspicious activities.

Training and Risk Management:

• Jewellery businesses must train staff to recognize red flags, ensure transaction transparency, and follow KYC and
AML procedure.

9. Threats and Challenges for the Gems and Jewellery Industry

• Shortage of Skilled Labour:

One of the key challenges to scaling up operations in the jewellery industry is the scarcity of skilled labour. To have
access to a large talent pool, the supply of craftsmen/artisans that come through generations must be supplemented by
new talents who have been professionally taught. Moreover, the industry's on-the-job training strategy results in lengthier
training times and gaps in the availability of skilled labour and standardization, particularly in the fragmented sector.
This is compounded by infrastructural deficiencies, a lower need for institution-trained personnel in the fragmented
sector, and the industry's limited appeal to the younger generation of workers.

• Short-Lived Fashion and Design Preferences:

Exporters do not have enough design development centres or the resources to constantly innovate contemporary designs
to keep up with the changing trends among international purchasers. In an era of high diamond, gold, and silver prices,
global marketing necessitates changing fashion in the gems and jewellery segment. According to the market demand,
manufacturers can produce specific types of gems and jewellery products. However, because of the changing trend,
demand for certain types of products begins to decline and eventually ceases. The manufacturer's money is blocked in
the older designs, and this results in an inventory pile-up.

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• Dependency on Imports for Raw Materials:

The availability of raw materials is crucial to the gems and jewellery business. In India, a significant percentage of raw
materials are imported, as the domestic supply is limited. The raw material is converted into finished goods that are sold
in the domestic and international markets. India is a net importer of raw gold and meets over 90% of its gold requirement
through imports. The total gold imported (in value terms) by India was Rs. 3,773 billion in FY24 showing and 35%
increase y-o-y. Gold in India is majorly imported from Switzerland, the United Arab Emirates, South Africa, Peru, and
Australia, among other countries. Raw pearls, precious and semi-precious stones, and other items are imported from
UAE, Hong Kong, USA, Belgium, and Russia.

Rough diamonds account for more than half of all G&J imports (57%). The total rough diamond imports in FY24 stood
at Rs 1180.42 billion in value terms and 124.617 million carats in volume terms. India imports rough diamonds primarily
from the United Arab Emirates which accounts for 60% for FY24.

• Impact of Global Slowdown

The United States, the UAE, Hong Kong, Belgium, and Israel are key export destinations for the Indian G&J industry.
The United States accounted for about 30% of total exports of gems and jewellery in FY24. Persistent high inflation rates
and a slowdown in these economies will hurt the gems and jewellery exports from India.

• Working Capital Strain Due to High Gold Prices

High and volatile gold prices significantly impact the working capital requirements of India's gems and jewellery
industry. Jewellers, particularly smaller players, need to maintain large gold inventories to meet customer demand. As
gold prices rise, the cost of these inventories increases substantially.

Following the recent 9% reduction in import duty announced in the Union Budget, domestic gold prices experienced a
6% month-on-month decrease. However, year-to-date, domestic gold prices have still risen by 10% due to strong global
gold prices, central bank buying, and various market factors, including inflation and geopolitical risks.

These elevated prices put intense pressure on jewellers' working capital, as borrowing becomes more expensive, and
liquidity is constrained. Small and medium-sized jewellers are particularly affected by high borrowing costs. Increased
interest expenses add further financial strain, reducing operational flexibility and complicating cash flow management.
The Reserve Bank of India's gradual approach to gold purchasing has sustained demand for the metal, intensifying these
working capital pressures.

Although government policies aimed at boosting consumer demand, such as reducing import duties, have encouraged
sales and may alleviate some working capital needs by lowering inventory costs, jewellers still face challenges due to the
requirement to maintain high-value gold inventories. This situation ties up substantial capital and creates financial and
operational risks for jewellers.

• Hedging Practices and Price Volatility

In an environment of fluctuating gold prices, effective hedging is crucial for jewellers to manage financial risks. Many
jewellers utilize hedging strategies on platforms like the Multi Commodity Exchange (MCX) to protect themselves
against price volatility. However, the unpredictability of price swings complicates the matching of hedging positions with
actual market conditions. The year-to-date increase of 10% in domestic prices, compared to an 18% rise in global prices,
highlights the challenges jewellers encounter in accurately predicting price trends.

Hedging requires jewellers to effectively forecast costs, but if market prices deviate from these forecasts, it can lead to
mismatched hedging positions and potential financial losses. Smaller jewellers, in particular, face difficulties due to the
cost and technical demands of advanced hedging strategies. Adjustments in the treatment of long-term capital gains for
gold ETFs have attracted interest, as evidenced in July, providing jewellers with an alternative avenue for investment and
hedging. However, while these ETFs offer benefits, they often require significant resources and expertise, which may not
be accessible to all industry players.

With pro-gold policies in the Union Budget, jewellers anticipate a rise in domestic demand that could increase gold
consumption by up to 50 tonnes in the second half of 2024. This expected growth may lead to further volatility, making
effective hedging even more important. Despite government measures and available hedging platforms, many jewellers
remain exposed to the risks of price fluctuations, emphasizing the need for improved risk management practices and
potentially greater access to financial tools designed specifically for the jewellery sector.

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• Key Hurdles in the Indian Gems and Jewellery Industry's Evolution

The Indian gems and jewellery industry face significant challenges in maintaining product relevance and competitiveness
across various categories. Key restraints include the shift towards mass-produced, cost-effective alternatives that threaten
traditional craftsmanship, seasonal fluctuations in demand, and changing consumer preferences for minimalistic or
contemporary designs. Additionally, the industry struggles with a lack of innovation, competition from global brands,
and a fragmented supply chain. Furthermore, the rising preference for customizable, lab-grown, or non-traditional pieces
poses a threat to more traditional jewellery types. These factors combined limit the industry's ability to sustain consistent
demand and growth across various product lines.

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