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Budget 2024 can polish India’s gold & diamond industry to shine for the world, ET Retail


<p>Representative image.</p>
Representative image.

Budget expectations: According to a report by the World Gold Council, India is the second largest consumer of gold jewellery in the world and the interim Budget with strategic moves can give the industry a shot in the arm.

The World Gold Council report said much of the Indian gold market was very traditional, reflecting important cultural and religious ties. This can be seen in the long-standing preference for 22-carat jewellery and the dominance of bridal jewellery. But the gold market is evolving, with changing tastes and designs. In recent years, for example, demand has grown for lightweight and studded jewellery. These stones and jewellery are considered as the power, success, and reputation for the Indian women thus providing them social and economic security, the value of which can never be undermined.

Budget boost for India – a jewellery factory of the world

India today is the factory for the world in jewellery segment and has potential to become the market for the world. The Gems and Jewellery industry has become one of the largest businesses in India, playing an important role in the Indian economy. If we consider the statistical data, it is seen that it contributes to almost 7% of the country’s total GDP, and 15.71% of India’s total merchandise exports.

The gems and jewellery industry accounted for $78.85 billion in 2023 and is expected to expand at a compound annual growth rate (CAGR) of 5.24% from 2023-2033. India’s gem and jewellery accounts for 3.5% of the world’s total exports with a 29.0% share followed by silver cut diamonds and synthetic stones with 22% and 32.7%,respectively. As one of the largest exporters of gems and jewellery, the said industry is contributing a major chunk of the country’s total foreign exchange reserves and provides employment to over 4.64 million workers in both organised and unorganised sectors.

Budget expectations for gold & diamond industry

We must think of making India, a Global Jewellery Hub for the world, and to ensure that we can make our country the jewellery hub for the world, there are 4-5 aspects that needs to be looked at and Budget can provide the necessary impetus:

1) First of all, an infrastructure boost by the Budget can ensure that raw materials are available at the most competitive prices. This can be possible if Gift City allows the international gold suppliers to supply to the Indian manufacturers at a competitive price. More importantly, what will be needed is the availability of gold in the form of gold loan at very competitive pricing. This move will allow gold companies to make the business more competitive.

2) While we have the inherent ability to manufacture for the world, Budget needs to ensure a continuous focus on skill development. Artisans need to update themselves with the international standards of manufacturing. And if any machinery is procured, like the way we have been buying in SEZs in which we get certain duty benefits, we should be able to import such machinery at lower duties and get government support and subsidies. Budget measures will thus ensure India’s capacity of manufacturing is fully utilised even in the lean seasons of the world market demand.

3) Budget can also look into providing special financing to help Indian brands and manufacturers to establish businesses outside. That would help to further take the brand ‘Made in India’ to the global stage.

4) Finally, being one of the largest exporters of gems and jewellery, the industry is contributing to a major portion of the country’s total foreign exchange reserves. If the Budget can support manufacturers in terms of cost of capital or capex, then that will play a big role and provide a boost for various players to take steps to improve their reach across the world. Brands can thus reach out not only to the Indian diaspora but across other communities. The government via budgetary steps must support the industry with new technologies – be it AI, Lab grown diamonds or latest machinery.

Budget strategies to boost gold industry

Along with the infrastructure support, the marketing support to reach global customers will be a very critical factor in ensuring the dollars keep flowing in and the Budget can pave the way for that. Also attracting various international brands to invest in our country through very easy mechanisms and capital routes is another key task for the Budget. This will ensure everyone is comfortable to invest in India when the sector is becoming more and more compliant, more and more transparent, more and more organised. These steps and support in the budget can motivate the entrepreneurs of this sector and their businesses can eventually to attract capital into the country.

We know we are amongst the top consumers of gold jewelry, but it is not just about consumption, it is also about manufacturing and serving the whole world with the products that we are making. So, infrastructure, skill development, financial support and the marketing boost that we can do as a sector for the whole world will make India a global hub for the world.

  • Published On Jan 18, 2024 at 01:01 PM IST

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