India's declining share in global gems and jewellery trade despite rising export volumes reflects deeper structural issues. Analyze.

NITI Aayog's seventh Trade Watch Quarterly (Q3 FY2025-26) records India's share in global gems and jewellery (G&J) trade falling from 6.1% (2015) to 2.9% (2024) including raw gold, and from 12% to 7.8% excluding it [1]. Rising shipments alongside a shrinking share indicate a loss of value capture, not merely a cyclical slowdown.

Volume growth without value capture

• India dominates the cutting and polishing stage — Surat is the world's largest diamond processing hub [1] — but this is the thin middle of the value chain.
• Mining at one end and branded retail at the other retain the bulk of margins; higher throughput therefore adds turnover, not value share.

Technological disruption

• Lab-grown diamonds, flagged as an emerging segment [1], are supply-elastic and price-deflating. Identical or greater physical output can yield fewer dollars, mechanically compressing a value-measured share.

Structural narrowness of the sector

• Heavy dependence on imported rough leaves domestic value addition low and margins exposed to input-price swings.
• Concentration in a few destination markets magnifies external shocks: the third edition of the series showed how shifts in US tariff structures directly alter India's export competitiveness [2].

Macro context

• G&J weakness sits within a wider goods-side problem — in Q3 FY2025-26 merchandise exports grew 1.6% while imports grew 7.9% [1].
• Yet this need not signal external fragility: RBI data show a $61.0 bn goods deficit largely offset by $40.0 bn net services receipts and $28.1 bn remittances, holding the current account deficit to 1.0% of GDP [3].

The decline is thus explained less by competitiveness in processing than by India's position within the global value chain, compounded by technology-driven price erosion. Moving up through design, branding, certification and hallmarking-backed quality assurance, diversifying markets, and building a lab-grown diamond ecosystem can convert volume leadership into value leadership — realising the Foreign Trade Policy's goal of durable export competitiveness.