Neogem India Ltd Management Discussions

Introduction

The Indian gems and jewellery industry is a major contributor to the countrys GDP, exports, and employment, making it a focus area for export promotion. It is the worlds largest diamond cutting and polishing center and is known for its skilled labor and low costs. The industry is experiencing growth due to rising global demand and government support, which includes policy reforms, investment in technology and skill development, and initiatives to boost exports and promote lab-grown diamonds.

Market Size

India s gold and diamond trade contributes about 7% to the country s Gross Domestic Product (GDP), with the Gems & Jewellery sector employing nearly five million people. Recognising its immense potential for growth and value addition, the Government has identified the sector as a focus area for export promotion. To strengthen Brand India in the global market, several initiatives have been introduced, including measures to promote investment, upgrade technology, and enhance skills. The Government has also permitted 100% FDI in the sector under the automatic route, allowing foreign investors and Indian companies to invest without prior approvals. Further, the India-United Kingdom (UK) Comprehensive Economic and Trade Agreement (CETA), signed in July 2025, has eliminated import duties of 2.5-4% on plain gold and diamond jewellery, giving Indian exporters a competitive edge and expected to more than double India s Gems & Jewellery exports to the UK to Rs. 21,183 crore (US$ 2.5 billion) by 2027.

Developments

Government initiatives and policies

Export promotion: The government is focusing on increasing exports by providing support to exporters, especially SMEs, through initiatives like the new export promotion mission. This includes better access to trade finance, assistance for international trade fairs, and support for branding.

Fiscal policy: Measures have been implemented to reduce import duties on certain items like cut and polished diamonds and gold to make exports more competitive. The government has also supported the domestic sector through schemes like the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs.

Infrastructure development: There is an increased focus on creating common production/processing centers, design centers, and testing facilities, with government assistance for up to 90% of the cost.

Industry growth and market trends

Lab-grown diamonds: The sector is witnessing a significant boom in the market for lab-grown diamonds, driven by their affordability and ethical appeal, with projections for continued growth.

Export performance: The gems and jewellery sector has shown strong export growth, becoming a key contributor to Indias overall exports. The western region, particularly Surat, is a major hub for this trade.

Domestic demand: Domestic consumption is growing, fueled by rising disposable incomes, urbanization, and lifestyle changes. There is a growing demand for both traditional and modern designs.

E-commerce: Online sales are gaining traction, offering consumers a more convenient and varied shopping experience, and this trend is expected to continue.

Consumer preferences

Personalization: There is a growing demand for personalized and custom-designed jewelry that tells a personal story, moving away from mass-produced pieces.

Modern aesthetics: Younger consumers are driving demand for contemporary and minimalist styles, while trends include the resurgence of bold, chunky chains and reinvented pearl designs.

Key Issues Faced by the Players

Financial and economic challenges

Financing and credit access: Many small and medium-sized enterprises (SMEs) struggle to secure bank credit due to high interest rates, collateral requirements, and a lack of trust after past financial scandals.

Import dependency: The industry heavily relies on imported raw materials, which creates vulnerability and impacts costs, especially with government regulations aimed at curbing gold imports.

Price volatility: Fluctuations in gold and silver prices significantly impact consumer demand, purchasing patterns, and the working capital needed by businesses.

Competition: India faces growing competition from countries like China, which benefits from lower labor costs and improving quality, potentially threatening Indias dominance in the cut and polished diamond market.

Structural and operational challenges

Unorganised sector: A large part of the industry is fragmented and family-owned, which limits access to resources and scale.

Regulatory burdens: Compliance with rules like GST and mandatory hallmarking adds complexity, cost, and delays, particularly for smaller players.

Technological gaps: Many units lack modern technology and design capabilities, leading to lower productivity and an inability to compete in premium markets.

Counterfeits and transparency: The prevalence of low-quality and counterfeit products erodes consumer trust, while the lack of robust certification and traceability for both natural and lab-grown diamonds is a growing issue.

Market and consumer challenges:

Changing trends: The industry must adapt to evolving global fashion trends, but innovation in designs and materials is lagging.

Imitation jewellery: The growing market for affordable and fashionable imitation jewellery poses a direct threat to the traditional market.

Consumer awareness: Consumers are increasingly demanding more information about product provenance, certification, and the distinction between natural and lab-grown stones.

Outlook

The outlook for Indias gems and jewellery sector is positive, with robust growth expected due to rising middle-class incomes, increasing demand for personalized and branded jewelry, and government support for exports and lab-grown diamonds. The market is projected to expand significantly, reaching an estimated $130 billion by 2030, fueled by domestic consumption and strong export performance, despite potential global economic headwinds. Key drivers include the increasing popularity of gold, the booming lab-grown diamond segment, and the rise of digital retail platforms.

Operations

During the year under review, the Company has had no production activities. There is no sale in the current year. Due to stoppage of production, the expenditure has reduced leading to reduction in loss. The Company has suffered a loss of Rs. 31.56 lakhs as compared to loss suffered in the previous year of Rs. 80.17 lakhs.

Also the Company s accounts with its banks are in non-performing assets since 2015 leading to stoppage of Company s operations. The Management of the Company has been putting in its best efforts to revive its business operations and mitigate the losses and is hopeful for better results in the coming years.

Internal Controls & their adequacy

The Company has in place adequate system of internal control. It has documented procedures covering all financial and operating functions.

Human Resources & Industrial Relations

The Company s Human Resources philosophy is to establish and build a strong performance and competency driven culture with greater sense of accountability and responsibility.

The industrial relations scenario remained unchanged throughout the year.

For and on behalf of the Board of Directors

	Gaurav Doshi
	Chairman & Managing Director
	DIN - 00166703
Date: 30 th August, 2025	G-32, Gems &Jewellery Complex III,
Place: Mumbai	Seepz (SEZ), Andheri (E), Mumbai-400096

Registered Office:

G-32, Gems & Jewellery Complex III, Seepz (SEZ), Andheri (E), Mumbai-400096 CIN: L36911MH1991PLC063357