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Objectives This study provides an estimate of the annual cost of blindness and moderate to severe visual impairment (MSVI) among people with diabetes aged 40 years and above in India in the year 2019.Design A cost of illness study.Setting India.Participants People with diabetes aged 40 years and above in India in the year 2019.Primary and secondary outcome measures Estimates are provided for the total costs of screening for most common vision-threatening eye conditions, treatment of these conditions, economic activity lost by these people and their family carers whose ability to work is affected, and loss of quality of life experienced by people with diabetes and blindness or MSVI.Results It is estimated that for people with diabetes aged 40 years or above, annual screening followed by eye examination where required would cost around 42.3 billion Indian rupees (INR) (4230 crores) per year; treating sight problems around 2.87 billion INR (287 crores) per year if 20% of those needing treatment receive it; and lost economic activity around 472 billion INR (47 200 crores). Moreover, 2.86 million (0.286 crores) quality-adjusted life years (QALYs) are lost annually due to blindness and MSVI. The estimate of lost production is highly sensitive to the proportion of people with MSVI able to work and how their output compares with that of a person with no visual impairment.Conclusions This is the first study to estimate the cost of blindness and MSVI for people aged 40 years and over with diabetes in India. The annual cost to the Indian economy is substantial. This cost will be expected to fall if a successful screening and treatment plan is introduced in India. Further work is suggested using more robust data, when available, to estimate the loss of productivity and loss of QALYs, as this would be worthwhile.