According to an analysis by Dr Rashmi Arora, Economist, Gem and Jewellery Export Promotion Council (GJEPC), the Survey framesthe G&J sector as a strategically important industry with significant macro-economic influence
New Delhi: The Economic Survey 2025-26 – the definitive ‘report card’ of the Indian economy tabled in Parliament by Union Finance Minister Nirmala Sitharaman – has positioned India’s gems and jewellery (G&J) sector as a strategically important industry with significant macro-economic influence, according to an analysis of the Survey by Dr Rashmi Arora, Economist, Gem and Jewellery Export Promotion Council (GJEPC).The Survey under scored the industry’s role in maintaining financial stability, stabilizing exports, inflation dynamics and household savings, while also highlighting structural challenges that warrant calibrated policy support.
Set against a resilient macro-economic backdrop, the Survey notes that India’s economy expanded by 6.5% in FY25 and is projected to grow at 7.4% in FY26, reaffirming its position as the fastest-growing major economy. Strong domestic demand, a recovering investment cycle and broad-based growth across manufacturing and services form the foundation of this outlook. Within this growth narrative, gold — the backbone of the G&J sector — emerges as a critical economic variable influencing credit flows, trade balances and inflation.
In the chapter on monetary management and financial intermediation, the Survey highlights gold’s growing importance as a financial asset. Loans against gold jewellery surged by 125.3% year-on-year in November 2025, reflecting both elevated gold prices and increased reliance on gold-backed credit by households. Revised lending norms that allow voluntary pledging of gold and silver jewellery as collateral for small business loans are expected to improve MSME access to formal finance, especially for enterprises lacking traditional assets. However, the Survey also flags data visibility gaps for microfinance institutions, which could complicate assessments of borrower leverage in gold-backed lending.
The External Sector chapter gives extensive attention to the G&J industry due to its dual impact on exports and imports. While India’s overall merchandise exports remained stable at $ 437.7 billion amid global volatility, gems and jewellery shipments experienced sharp fluctuations, driven by swings in global demand, price movements in gold and diamonds, and geopolitical uncertainties. The Survey notes that softness in total exports was largely attributable to petroleum and G&J volatility, even as non-petroleum, non-G&J exports grew 7.5% year-on-year, indicating underlying resilience in India’s export engine.
A key positive highlighted is export diversification within the G&J sector. As shipments to the US declined sharply — with the US share dropping from 33.7% to 18.7% during April–November FY26 — exporters successfully redirected volumes to alternative markets. Strong growth was recorded in destinations such as the UAE and Hong Kong, supported by trade agreements including the India–UAE CEPA, while emerging markets like Bahrain, Saudi Arabia, France, Canada, China and Mexico also posted significant gains. This diversification helped stabilise overall exports despite tariff pressures and global uncertainty.
On the import side, the Survey flags gold as a persistent contributor to trade and current account deficits. Merchandise imports rose 6.3% in FY25 to $ 721.2 billion, with petroleum crude and gold together accounting for over one-third of the total. Gold imports alone surged 27.4% year-on-year, driven by a sharp rise in global prices and strong domestic consumption, widening the merchandise trade deficit to $ 283.5 billion. The Survey notes that sustained gold demand, even at elevated prices, continues to exert pressure on the current account.
The inflation chapter identifies precious metals as a key factor behind sticky core inflation in 2025. Gold and silver prices rose sharply as investors sought safe-haven assets amid global uncertainty, creating a significant wedge in core inflation readings. When precious metals are excluded, core inflation drops sharply, indicating that gold and silver were the primary contributors to perceived inflation persistence.
At the same time, the Survey points to mixed signals on financing for the sector. Bank credit to gems and jewellery grew just 1.01% in FY25, a sharp slowdown from the previous four-year average, even as MSME lending frameworks were expanded to include jewellery-backed loans. The absence of the G&J sector from the Production Linked Incentive (PLI) scheme was also noted, especially as PLI-supported sectors recorded strong export growth and deeper global integration.
Overall, the Economic Survey frames the gems and jewellery sector as both an enabler and a constraint — a financial stabilizer that strengthens reserves, supports credit and diversifies exports, but also a contributor to trade and inflation pressures. The Survey underscores the need for balanced policy measures focused on competitiveness, formalisation, credit flow and global integration to sustain the sector’s long-term contribution to India’s economic growth.
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