West Asia Conflict and Its Impact on India’s Gem & Jewellery Industry
The escalating geopolitical tensions in West Asia, involving the United States, Israel, and Iran, are beginning to affect global trade and supply chains. One of the sectors expected to experience significant disruption is India’s gem and jewellery industry, which has deep economic linkages with the Gulf Cooperation Council (GCC) region.
According to the Gem & Jewellery Export Promotion Council (GJEPC), the industry may face a dual shock due to both supply chain disruptions and falling demand in Gulf markets.
Importance of the GCC for India’s Jewellery Trade
The GCC region plays a crucial role in India’s gem and jewellery sector.
The GCC includes:
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United Arab Emirates
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Saudi Arabia
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Qatar
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Kuwait
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Oman
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Bahrain
Over the last few years, the region has become increasingly important for India’s exports.
Key trends include:
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GCC’s share in India’s total exports increased from 14% in FY22 to about 22% in FY25.
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Between April–December 2025, this share rose to 36%.
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India’s gem and jewellery exports to the GCC grew from $5.1 billion in FY22 to $8.3 billion in FY25.
Among these countries, the Dubai in the UAE functions as a major global trading hub for diamonds and gold.
Supply Chain Disruptions
The ongoing conflict is disrupting upstream supply chains, which provide raw materials to the Indian jewellery industry.
India relies heavily on the UAE for:
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Rough diamonds
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Gold bullion
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Precious metals
The GCC region supplies over 30% of India’s gem and jewellery imports. In fact:
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Imports from GCC countries rose from $16 billion in FY22 to $28 billion in FY25.
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The GCC’s share as a sourcing hub increased to 32% over the last four years.
If the conflict continues to escalate, the flow of these raw materials into India may be severely affected.
Declining Demand in Gulf Markets
The crisis is also affecting downstream demand in the GCC region.
The UAE is one of the largest markets for India’s cut and polished diamonds and gold jewellery. However, the conflict has created economic uncertainty in the region.
Major challenges include:
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Reduced consumer demand in Gulf markets
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Business disruptions in Dubai, a key jewellery trading hub
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Increased geopolitical uncertainty affecting trade flows
Since over 50% of India’s gold jewellery exports go to GCC countries, any slowdown in the region can significantly affect the industry.
Rising Logistics and Insurance Costs
The conflict has also disrupted shipping routes, particularly in the Red Sea region.
As a result:
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Shipping companies are rerouting vessels, increasing travel distance.
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Freight costs are rising.
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War risk insurance premiums are increasing.
These rising logistics costs further strain the supply chain and reduce profitability for exporters.
Strategic Role of Dubai in Global Diamond Trade
Dubai has emerged as one of the world’s largest diamond trading centres.
Through bilateral trade agreements with India, Dubai has facilitated:
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Smooth import of gold and diamonds
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Efficient re-export networks
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Investment and business opportunities for Indian jewellery companies
However, with the region facing security threats, business confidence has been shaken and trade activities are being affected.
Government and Industry Response
The Gem & Jewellery Export Promotion Council (GJEPC) has stated that the industry is closely monitoring developments.
The organisation is:
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Coordinating with industry stakeholders
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Consulting with the Government of India
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Assessing potential impacts on exports and supply chains
The industry has expressed hope for stability and peace in the region to restore normal trade operations.
Conclusion
The ongoing geopolitical tensions in West Asia highlight the vulnerability of global trade networks. India’s gem and jewellery industry, which depends heavily on Gulf markets for both raw materials and exports, faces serious challenges if the conflict continues.
Ensuring stable trade routes, diversified sourcing of raw materials, and stronger diplomatic engagement with GCC countries will be crucial for protecting India’s export sector.
In the long term, reducing overdependence on a single region and strengthening domestic capabilities will help the industry remain resilient against global disruptions.
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