The jewellery sector has always been an important contributor to the country's economic growth and will continue to do so. It accounts for about six per cent of gross domestic product and has created employment for 4.5 million people. In fact, the gems and jewellery sector, which contributes $50 billion worth of export, is recognised as a leading force in the global industry, and has the potential to create an additional one million jobs in the next few years, with more progressive policy initiatives by the government.
The government has initiated measures to divert some of the investment demand in gold to financial instruments such as inflation-indexed bonds. Over the last decade, gold consumed by the jewellery industry has declined from an 84 per cent share to 65 per cent in total imports, while investment demand has soared from 15 per cent to 35 per cent. This has been the major reason for the high gold import bill.