​Gems and precious stones in Sri Lanka: an underground market worth over a billion dollars

According to CBSL data, declared exports of precious stones in 2024 were less than £382 million. However, the value is much higher for unaccounted exports and clandestine trade. The main destinations are Hong Kong, Thailand and Dubai. Experts find it difficult to intervene because those responsible ‘enjoy political protection’.

Colombo (AsiaNews) - As revealed in Parliament on 24 October, Sri Lanka's gem and jewellery industry is characterised by a black market of unaccounted exports and illegal trafficking worth over 300 billion rupees (more than one billion dollars). However, according to data from the Asian country's Central Bank (CBSL), declared exports of precious stones in 2024 would have been less than 2 million (equivalent to approximately 115.895 billion rupees). This figure is even more significant when one considers that, during that period, the US dollar continued to trade below 300 rupees and fell further against the rupee in 2025.

Precious stones illegally imported into popular foreign markets such as Hong Kong, Thailand and Dubai and sold at “exorbitant prices” indicate that they are leaving the country without being declared at customs and that the multi-million pound proceeds are not being repatriated. Furthermore, although industry players have exerted intense pressure, sometimes involving politicians, to obtain huge tax breaks and incentives of various kinds, the industry has recorded unaccounted exports in recent decades.

Scholars believe that to remedy the problem, ‘all exports of gems and jewellery must be carried out within an appropriate legal framework’. Meanwhile, the Sri Lanka Gem and Jewellery Association has proposed duty-free imports of processed and unprocessed precious stones, including duty-free imports of “gold and other precious metals” by banks, selected retailers and large manufacturers. This proposal was put forward in view of the relatively low value of the island's monthly and annual gem and jewellery export earnings.

Although the export of rough gems - geuda, a variety of corundum found in Sri Lanka - is not permitted, they are sent abroad irregularly. Industry experts Thushari Mendis and Ajantha Tennakoon, based in Western Australia, explain to AsiaNews that the island ‘is one of the main producing countries’; it also boasts ‘the highest density of gems and is a global destination for the supply of over 75 varieties of precious and semi-precious stones, including rubies, sapphires, topazes and tourmalines’.

The sale of precious stones, including Ceylon sapphires and jewellery set with precious stones, fetches hundreds of thousands of dollars on foreign markets, particularly at auctions. Two pieces of jewellery with Ceylon sapphires sold separately by the world's leading auction house Sotheby's generated approximately 344 million rupees. As indicated in the institute's records, 19 of the most expensive sapphire jewellery items (most of which feature Sri Lankan sapphires) have been sold for £12 million since 2024, approximately 169% more than the maximum estimate of £4.5 million, as stated by Sotheby's itself. ‘Since Sri Lanka,’ conclude Thushari and Ajantha, ‘does not have an adequate legal framework to monitor and take necessary legal action against those responsible, especially since most of them enjoy political protection, most of the racketeering goes unnoticed.’

According to Ratnapura Akalanka Gomes, Ramesh Satharasinghe and Ramzi Shihabdeen, precious stone traders, "the industry supplies 75 types of precious stones, including rubies, padparadscha and moonstones, as well as Ceylon sapphires, which are highly priced, blue in colour and velvety in texture. In an industry where small gemstones are traded for millions of dollars, exports of gems, diamonds and jewellery in 2024 amounted to a modest 1.9 million. The value, according to industry operators, fell by more than 23% from 0 million in 2023. In December 2023, the US dollar was trading at 323.92 rupees, and by March, the exchange rate had fallen to around 295 rupees. These figures distorted the real value of gemstone exports at that time.

According to academics Nishan Galappathi and Samanthika Gamage, 'this year [in September], for the first time, the authorities agreed to the export of rough gemstones (natural, uncut and unprocessed stones) from Sri Lanka. Most companies were interested in selling rough stones abroad, as some of them operate globally. This decree will allow them,‘ they conclude, ’to export rough stones and then sell them in other countries."