The gems and jewellery sector in South Gujarat stands as one of India’s most dynamic and economically significant industrial ecosystems. Mixing traditional craftsmanship with cutting-edge technology, the region has a dominant position in the global diamond and jewellery value chain. Its strength lies not only in scale but also in its ability to continuously adapt to shifting market trends, evolving consumer preferences, and technological advancements.
At the centre of this ecosystem is Surat, a city that has become synonymous with diamond processing worldwide. Over the decades, South Gujarat has transformed from a regional manufacturing base into a global powerhouse, driving India’s leadership in the gems and jewellery industry. Today, the region is not just sustaining its legacy but actively redefining the future of the sector through innovation, diversification, and global integration.
India’s Gems and Jewellery Sector
India’s gems and jewellery industry is the foundation of the national economy, contributing approximately 7% to GDP and accounting for nearly 15% of the country’s total merchandise exports. The sector plays a crucial role in generating foreign exchange and supporting large-scale employment across the value chain.
Diamonds form the backbone of this industry, accounting for around 54% of the total export basket. India is the world’s leading exporter of cut and polished diamonds, a position it has maintained thanks to its unmatched expertise in labour-intensive processes such as cutting, polishing, and finishing. The industry employs nearly one million people, making it one of the largest job creators in the manufacturing sector.
A significant portion of this activity is concentrated in western India, particularly in Gujarat, where South Gujarat has emerged as the epicentre of diamond processing. With a highly skilled workforce and access to advanced technology, the region continues to anchor India’s global competitiveness in this sector.
Surat: The Global Centre of Diamond Processing
At the heart of South Gujarat’s dominance lies Surat, widely regarded as the diamond capital of the world. By volume, nearly 75% to 90% of the world’s diamonds are cut and polished in this single city, making it one of the most critical nodes in the global jewellery supply chain.
Surat’s success is built on a powerful combination of factors: a deeply skilled workforce, cost-effective manufacturing, strong entrepreneurial networks, and a highly efficient supply chain that seamlessly connects rough diamond imports to polished exports. The city accounts for over $20 billion in diamond exports annually, underscoring its importance in global trade.
The ecosystem in Surat is vast and highly interconnected. It comprises more than 5,000 diamond processing units, the majority of which are micro, small, and medium-sized enterprises (MSMEs). These units collectively employ between 700,000 and 800,000 workers, many of whom possess specialised skills refined over generations.
Technological advancement is another defining feature of Surat’s industry. The city boasts one of the highest concentrations of computerised diamond-planning systems and laser-cutting machines in the world. Many factories operate with hundreds of laser machines under a single roof, enabling precision, efficiency, and consistency at an unparalleled scale. This integration of skill and technology has allowed Surat to maintain its competitive edge even as global market conditions evolve.
Infrastructure and Institutional Strength
One of the key pillars supporting South Gujarat’s gems and jewellery sector is its robust infrastructure and institutional ecosystem. The Surat Diamond Bourse exemplifies this strength. As one of the largest office complexes globally, it serves as a centralised hub for diamond trading, housing thousands of traders, exporters, and service providers. This enhances operational efficiency, promotes transparency, and strengthens global connectivity.
Complementing this is the Surat Special Economic Zone, which plays a critical role in facilitating export-oriented manufacturing. By offering streamlined procedures, policy incentives, and a business-friendly environment, the SEZ has significantly boosted the region’s export capabilities. Institutional support is further strengthened by organisations such as the Indian Diamond Institute. The institute contributes to skill development, research, and certification, ensuring that the workforce remains aligned with global standards. Industry associations and trade bodies also play a crucial role in promoting exports, organising international exhibitions, and fostering collaboration within the ecosystem.
The Rise of Lab-Grown Diamonds
A major transformation underway in South Gujarat is the rapid growth of lab-grown diamonds (LGDs). These diamonds, created through advanced technological processes, are chemically and physically identical to natural diamonds but are typically 30–40% more affordable.
Surat has quickly established itself as a global hub for LGD production, accounting for over 70% of India’s output in this segment. India, in turn, contributes approximately 15% of global LGD exports, reflecting its growing prominence in this emerging market.
The rise of lab-grown diamonds is being driven by multiple factors, including increasing consumer awareness, demand for sustainable and ethically sourced products, and affordability. Younger consumers, in particular, are showing a strong preference for LGDs, viewing them as a modern and responsible alternative to traditional diamonds. For manufacturers in South Gujarat, this shift presents a significant opportunity. By leveraging existing expertise and infrastructure, the region is well-positioned to lead the next phase of growth in the global diamond industry. The transition towards LGDs is not just a response to changing demand but also a strategic move towards innovation and diversification.
Regional Strengths: A Competitive Advantage
South Gujarat’s dominance in the gems and jewellery sector is underpinned by several key competitive advantages. The availability of a highly skilled workforce ensures consistent quality and productivity, while the presence of a dense MSME network fosters flexibility, innovation, and resilience.
The region’s export-oriented ecosystem is deeply integrated with global markets, maintaining strong trade relationships with key destinations such as the United States, the United Arab Emirates, Hong Kong, and Belgium. This global connectivity ensures steady demand and facilitates seamless trade flows. Additionally, access to efficient logistics and port infrastructure strengthens the region’s ability to import raw materials and export finished products with minimal delays. Together, these factors create a robust and highly competitive industrial cluster.
Economic Impact and Employment Generation
The gems and jewellery sector is a major contributor to economic activity in South Gujarat. In Surat alone, the industry supports hundreds of thousands of jobs, making it one of the largest employment generators in the region.
Beyond direct employment, the sector creates a wide range of indirect opportunities across logistics, packaging, certification, retail, and ancillary services. This multiplier effect amplifies its impact on regional development and economic stability. The industry also plays a vital role in supporting livelihoods for migrant workers and small entrepreneurs, contributing to inclusive economic growth. Its ability to generate employment at scale while maintaining global competitiveness makes it a critical pillar of the regional economy.
Challenges in a Changing Global Landscape
Despite its many strengths, South Gujarat’s gems and jewellery sector faces several challenges that could influence its future trajectory. One of the primary concerns is its dependence on global demand, particularly from the United States, which remains the largest market for diamonds and jewellery.
Fluctuations in global economic conditions or shifts in consumer preferences can directly impact export performance. Price volatility in raw materials, including rough diamonds and gold, also poses risks for manufacturers, especially MSMEs with limited financial resilience.
The rapid rise of lab-grown diamonds, while presenting opportunities, is also disrupting traditional business models. Companies must adapt quickly to remain competitive. Additionally, there is a growing need to move up the value chain. While the region excels in manufacturing, it captures a relatively smaller share of value compared to global brands that dominate design, branding, and retail.
Unlocking Future Growth Opportunities
Looking ahead, South Gujarat’s gems and jewellery sector is well-positioned to capitalise on a range of emerging opportunities. The continued growth of lab-grown diamonds offers a pathway to innovation and sustainability, aligning with global trends towards ethical consumption.
Digital transformation is opening new avenues for growth, enabling manufacturers to reach international customers through e-commerce platforms and direct-to-consumer channels. This is particularly beneficial for MSMEs seeking to build their own brands and expand their global footprint.
Infrastructure development, including the expansion of trading hubs and manufacturing facilities, is expected to further enhance the region’s competitiveness. Government initiatives aimed at supporting MSMEs, promoting exports, and improving ease of doing business will also play a crucial role in driving future growth.
Investment Potential
For investors, South Gujarat offers a compelling proposition. The region combines a mature and globally integrated manufacturing ecosystem with strong export capabilities. Investments here benefit from established infrastructure, access to skilled labour, and deep integration with global markets.
The presence of large-scale industrial clusters, coupled with strong institutional support, reduces operational risks and enhances scalability. As the sector evolves and diversifies, opportunities are emerging not only in manufacturing but also in areas such as technology, branding, and value-added services.
Conclusion
The gems and jewellery sector in South Gujarat stands at a pivotal juncture. With Surat continuing to dominate global diamond processing and leading the rise of lab-grown diamonds, the region remains central to India’s ambitions in the global market. Its unique combination of scale, skill, infrastructure, and innovation positions it as both a manufacturing powerhouse and a future-ready ecosystem. As the industry adapts to changing global dynamics and moves up the value chain, South Gujarat is poised not only to sustain its leadership but to redefine it on a global stage.