The Gems and Jewellery Industry in India Explained

India’s relationship with gold, diamonds and coloured gemstones is thousands of years old, and today the gems and jewellery industry is one of the country’s most important export sectors and one of its largest employers. From the diamond-polishing workshops of Surat to the goldsmiths of Kolkata, Jaipur and Thrissur, the sector links traditional craftsmanship with global trade. It is also one of the few industries in which India imports most of its raw material, adds value through skilled labour, and then exports the finished product to markets around the world.

The industry is unusual in its structure. A large part of it is made up of small family-run workshops, some employing only a handful of artisans, yet it also includes some of the best-known corporate jewellery brands and a network of trading houses that handle diamonds worth enormous sums every day. This article explains what the sector includes, why Surat and Mumbai matter so much, which institutions support it, how hallmarking protects consumers, and the challenges it now faces, from lab-grown diamonds to the lessons of a major banking fraud.

Quick Facts

A Long History of Gems and Craft

India is among the oldest sources of diamonds in the world. Before the discovery of diamond fields in Brazil in the eighteenth century and South Africa in the nineteenth, India was the principal supplier. The mines around Golconda in the Deccan produced stones that became legendary, among them the Koh-i-Noor and the Hope diamond. Ancient Sanskrit texts describe the grading of gems, and the jewellery of the Mughal and southern courts shows techniques that remain in use.

Regional traditions of craftsmanship flourished. Kundan and Jadau work in Rajasthan, which sets uncut diamonds and gems in gold foil, temple jewellery in the south, filigree from Cuttack in Odisha, Meenakari enamel work and the elaborate bridal sets of different communities all survive. After Independence, diamond cutting developed in Gujarat, where traders and artisans from Palanpur and Saurashtra moved into the work, first in Mumbai and then, in large numbers, in Surat.

From Mining to Manufacturing

India’s own diamond output is small today, with Panna in Madhya Pradesh being the main producing area. The modern industry therefore grew not on mining but on processing: importing rough stones, cutting and polishing them in India, and exporting finished diamonds. This manufacturing-led model is the key to understanding the sector.

The Main Segments of the Industry

The industry is commonly divided into several product categories, each with its own supply chain and centres of production.

• Cut and polished diamonds: The largest export segment by value, concentrated in Gujarat, especially Surat, with trading operations in Mumbai.
• Gold jewellery: Made across the country and also exported in significant quantities, with the domestic market being huge because of weddings, festivals and savings habits.
• Coloured gemstones: Rubies, emeralds, sapphires and semi-precious stones, with Jaipur as the traditional centre of cutting and trade.
• Silver jewellery and articles: Produced in clusters in Rajasthan and elsewhere, for both domestic use and export.
• Pearls and synthetic or lab-grown stones: Hyderabad has long been associated with pearl processing, while synthetic stones are an emerging area.

Domestic demand and export demand differ. A large share of the gold jewellery sold in India is for the domestic market, whereas the majority of diamonds that are cut and polished go to foreign markets.

Surat: The Diamond-Cutting Capital

Surat, on the Tapi river in Gujarat, is the centre of the world’s diamond-polishing industry. It is commonly said that around nine out of ten diamonds in the world are cut and polished in Surat, a statistic that refers to the number of stones rather than their value, because most of these are small diamonds and larger stones are often cut elsewhere. The city has tens of thousands of units, many of them small workshops, and employs a very large workforce drawn from the Saurashtra region and other parts of the country.

The work is divided into highly specialised stages: planning and marking to maximise yield from the rough stone, cleaving or sawing, bruting to give the stone its basic shape, polishing of facets and final inspection. Technology, including laser sawing and computer-assisted planning, has improved yields and precision, but human skill remains essential, particularly in grading and in cutting difficult stones.

Surat Diamond Bourse

Surat now has its own trading platform, the Surat Diamond Bourse, inaugurated in December 2023. The huge complex was designed to bring manufacturing, trading and export services together in one place and ranks among the largest office complexes in the world by built-up area. It reflects the ambition to move up from processing to direct international trade.

Mumbai, the Bharat Diamond Bourse and SEEPZ

If Surat is the factory floor, Mumbai is the trading floor. Zaveri Bazaar, near Kalbadevi, has been the traditional marketplace for gold and jewellery in the city for generations. Diamond merchants, many from Gujarati and Jain trading communities, built the city into a global centre for rough and polished trade, with offices that dealt with partners in Antwerp, Dubai, Hong Kong, New York and Tel Aviv.

The Bharat Diamond Bourse in the Bandra Kurla Complex, opened in the first decade of this century, brought many of these firms together under one roof, with trading halls, vaults, customs and banking services. It is one of the world’s biggest diamond bourses by area. It has helped Mumbai retain its position as the hub where deals are struck, even though much of the actual cutting is done elsewhere.

SEEPZ

The Santacruz Electronics Export Processing Zone, founded in 1973 as one of India’s earliest export processing zones, now functions as a special economic zone. Although the name speaks of electronics, SEEPZ has become one of the country’s most significant centres for gem and jewellery manufacturing and export. Units operating inside enjoy the fiscal and procedural facilities of the special economic zone regime, including duty-free imports of inputs and a streamlined customs process.

GJEPC and the Institutional Framework

The Gem and Jewellery Export Promotion Council was set up in 1966 under the Ministry of Commerce and Industry to promote exports of gems and jewellery. It is one of the country’s export promotion councils, with members drawn from exporters across the sector. Its activities include organising international trade fairs, sending trade delegations abroad, running training and certification programmes, advocating policy changes and certifying origin.

The council organises the India International Jewellery Show, which brings together manufacturers and buyers, and it has sponsored the Indian Institute of Gems and Jewellery for training in design, manufacturing and grading. It also helps administer the rules under which India participates in the Kimberley Process Certification Scheme, the international system created in 2003 to prevent the trade in conflict diamonds. Rough diamond shipments in and out of India must be accompanied by a certificate under the scheme.

Other Government Bodies

• The Ministry of Commerce and Industry sets the Foreign Trade Policy and incentives.
• The Directorate General of Foreign Trade regulates imports and exports.
• The Bureau of Indian Standards oversees hallmarking.
• Customs authorities administer duty and bonded-trade facilities.

Gold Jewellery and Hallmarking

India is among the largest consumers of gold, and a large share of it takes the form of jewellery. Purchases are closely linked to weddings, festivals such as Akshaya Tritiya and Dhanteras, and the traditional role of gold as a store of value. The industry spans the unorganised sector of local goldsmiths to organised national chains with standard pricing and certified products.

Consumer trust has long been a concern because of questions about purity. The Bureau of Indian Standards runs the hallmarking scheme, under which gold jewellery is tested and marked at assaying and hallmarking centres. Hallmarking became mandatory in phases starting June 2021, initially in a set of districts and then expanding to cover many more, with a defined set of purity grades such as 14, 18, 22 carats and others recognised under the standard. A Hallmark Unique Identification number, a six-character alphanumeric code, was introduced to make each piece traceable.

What a Hallmark Shows

• The Bureau of Indian Standards mark.
• The purity grade of the gold, in carats and fineness.
• The unique identification number linked to the jeweller and the assaying centre.

Hallmarking has increased transparency, though it has also placed compliance costs on small jewellers.

Exports and Trade Partners

Gems and jewellery have been among India’s top export categories for decades, contributing a notable share of merchandise exports, in the range of several per cent. Cut and polished diamonds typically form the largest part, followed by gold jewellery, coloured gemstones, silver jewellery and others. The sector is import-intensive, since rough diamonds and gold are imported, so its net foreign exchange contribution is smaller than the gross export figures suggest.

Major destination markets have included the United States, the United Arab Emirates, Hong Kong and several European countries. Free trade agreements such as the India-UAE Comprehensive Economic Partnership Agreement of 2022 have given preferential access for jewellery to some markets, and trade talks with other partners have also treated the sector as a priority.

Employment and Social Importance

The sector is labour-intensive, employing several million people in cutting, polishing, design, setting, retail and trade. Much of the work is done by skilled artisans, often in the unorganised sector. The diamond workforce of Surat alone is very large, drawing migrants from across Gujarat and beyond. Gold jewellery provides livelihoods in clusters in Kolkata, Mumbai, Thrissur, Coimbatore, Rajkot and Jaipur, and the sector is also important for women in some tasks such as stringing, finishing and quality checking.

This employment base makes the industry politically and socially significant. Downturns, such as those that follow global slumps in demand, lead to layoffs, shorter working weeks and distress among small workshop owners. Governments have responded at times with relief measures for exporters, skill programmes and efforts to improve working conditions and social security for artisans.

Challenges Facing the Industry

The industry faces a set of structural and cyclical challenges that shape its future.

Dependence on Imported Raw Material

India imports nearly all of its rough diamonds and gold. Changes in supply, price, import duties and sanctions can quickly alter costs and margins. International measures concerning rough diamonds of certain origins, together with demands for traceability, have required Indian firms to adjust their sourcing and documentation.

Bank Fraud and Credit Exposure

The sector depends on trade finance, and the exposure of banks to it became a national concern after the 2018 fraud at a large public sector bank, in which fraudulent letters of undertaking were used to obtain overseas credit. The episode led to tighter scrutiny of such instruments, stricter controls on interbank guarantees for imports, and more cautious lending to the sector. Banks and regulators have since reinforced due diligence, while the industry has worked to restore its reputation.

Lab-Grown Diamonds

Diamonds created in laboratories, through chemical vapour deposition or high-pressure, high-temperature methods, are chemically identical to natural stones but far cheaper. Their rise has reshaped the global market, putting pressure on prices of natural diamonds, especially smaller sizes. India is both a producer and a processor of lab-grown stones. The government announced support for research and for the manufacture of seed material in recent budgets, and Surat has quickly built capacity. At the same time, the industry is working through issues of disclosure, grading standards and consumer perception.

Global Demand and Competition

Demand for diamonds depends on consumption in major markets such as the United States and China, which can swing with economic conditions. Competing centres such as Antwerp, Dubai and Hong Kong, and cutting operations in other countries, add to the pressure.

Policy Support and the Road Ahead

Policy has sought to strengthen the sector’s competitiveness. Measures include the special economic zone regime, duty structures that favour the import of rough diamonds and the export of finished goods, support for design and technology institutes, and plans for common facilities and jewellery parks. The introduction of the Goods and Services Tax simplified indirect taxation, though the treatment of gold and jewellery within it has been closely watched by traders.

Looking forward, the main questions are how well the industry adapts to changing consumer tastes, ethical sourcing and traceability expectations, the spread of lab-grown stones, and the move toward more organised and transparent retail. Investment in design, branding and digital retail is helping Indian jewellers reach younger buyers and overseas customers. Whether India can progress from being the world’s cutting workshop to being a trend-setting design and brand centre is a central strategic aim for exporters and policymakers.

Conclusion

The gems and jewellery industry stands at the intersection of tradition, trade and technology. It converts imported raw materials into some of the world’s finest polished stones and jewellery, supports millions of livelihoods, and contributes significantly to exports. Institutions such as the GJEPC, hubs such as Surat, the Bharat Diamond Bourse and SEEPZ, and the hallmarking regime provide its framework. Its challenges, from bank-fraud fallout to the rise of lab-grown diamonds, are real, but its skills, networks and heritage give it a strong base from which to adapt. 5 October 2026

Frequently Asked Questions

Why is Surat famous for diamonds?

Surat is the world’s main diamond cutting and polishing centre, processing the large majority of the world’s diamonds by number of stones. Its network of workshops and skilled artisans, built over decades, makes it the manufacturing heart of the industry.

What does the GJEPC do?

The Gem and Jewellery Export Promotion Council, established in 1966 under the Ministry of Commerce and Industry, promotes exports of gems and jewellery. It organises trade shows, supports training, represents the industry before the government and helps implement the Kimberley Process certification.

What is SEEPZ?

SEEPZ is the Santacruz Electronics Export Processing Zone in Mumbai, established in 1973. It operates as a special economic zone and has become one of the main centres for gem and jewellery manufacturing and export, offering duty-free imports of inputs and simplified procedures.

What is hallmarking of gold jewellery?

Hallmarking is a purity-certification system run by the Bureau of Indian Standards. Gold jewellery is tested at recognised centres and marked with the BIS logo, the purity grade and a unique identification number. It has been mandatory in phases since June 2021.

How do lab-grown diamonds affect the Indian industry?

Lab-grown diamonds are cheaper than natural ones and have grown quickly as a market segment. They put pressure on natural diamond prices but also create opportunities for Indian manufacturers, particularly in Surat, which has expanded capacity to cut and polish them.

Does India mine its own diamonds?

India’s own diamond production is small, mainly from Panna in Madhya Pradesh. Most rough diamonds processed in Surat are imported, then cut, polished and exported, which is why the industry is described as a processing and trading sector rather than a mining one.

{“@context”:”https://schema.org”,”@graph”:[{“@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”Why is Surat famous for diamonds?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Surat is the world’s main diamond cutting and polishing centre, processing the large majority of the world’s diamonds by number of stones. Its network of workshops and skilled artisans, built over decades, makes it the manufacturing heart of the industry.”}},{“@type”:”Question”,”name”:”What does the GJEPC do?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The Gem and Jewellery Export Promotion Council, established in 1966 under the Ministry of Commerce and Industry, promotes exports of gems and jewellery. It organises trade shows, supports training, represents the industry before the government and helps implement the Kimberley Process certification.”}},{“@type”:”Question”,”name”:”What is SEEPZ?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”SEEPZ is the Santacruz Electronics Export Processing Zone in Mumbai, established in 1973. It operates as a special economic zone and has become one of the main centres for gem and jewellery manufacturing and export, offering duty-free imports of inputs and simplified procedures.”}},{“@type”:”Question”,”name”:”What is hallmarking of gold jewellery?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Hallmarking is a purity-certification system run by the Bureau of Indian Standards. Gold jewellery is tested at recognised centres and marked with the BIS logo, the purity grade and a unique identification number. It has been mandatory in phases since June 2021.”}},{“@type”:”Question”,”name”:”How do lab-grown diamonds affect the Indian industry?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Lab-grown diamonds are cheaper than natural ones and have grown quickly as a market segment. They put pressure on natural diamond prices but also create opportunities for Indian manufacturers, particularly in Surat, which has expanded capacity to cut and polish them.”}},{“@type”:”Question”,”name”:”Does India mine its own diamonds?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”India’s own diamond production is small, mainly from Panna in Madhya Pradesh. Most rough diamonds processed in Surat are imported, then cut, polished and exported, which is why the industry is described as a processing and trading sector rather than a mining one.”}}]}]}