The State Gem Corporation was established under the State Gem Corporation Act No. 13 of 1971 on 9th of March 1971 for the Development, Regulation and Control of the Gem Industry. The State Gem Corporation came into operation on 15th November 1971. Below listed are it's scope of activities and functions.

Thus the SGC became the sole authority responsible for the issue of licenses to carry on the gem industry. With the involvement of SGC, unlawful removal of gems of the country rapidly decreased and exports rapidly increased. New mining towns sprang up and more and more people took to gem mining and gem dealing which was until then confined to a handful of people. The SGC was given the exclusive rights on the exports of gemstones thereby compelling all gem exporters to channel their exports through the government.