India’s Gem & Jewellery (G&J) sector witnessed another volatile year with weaker rupee and sluggish global economy adding more agony to its exports which declined by 17.09% in dollar terms and 4.65 per cent in rupee terms in 2012.
Gems and Jewellery Export Promotion Council (GJEPC) last week published the figures showing overall G&J exports fell to $38.3 billion (Rs 2.05 lakh crore) in 2012 in comparison with $46.2 billion in the previous year. The rupee averaged at 53.49 against the dollar in 2012, as compared to 46.68 in 2011.
While the American markets comprise 11% of India’s overall G&J exports, West Asian countries constitute 48%. Hence, Indian exporters are setting their eyes on to expand their avenues further in the West Asian markets, in addition to exploring new markets like Australia, Romania and former Soviet republics (Commonwealth of Independent States). Japan is another country which Indian jewellery exporters are banking on for high-end ornaments. India’s Jewellery exporters are also depending a lot on the growth in the domestic markets during 2013 after the government took a number of reform measures to bring the economy back on its recovery path.
India’s annual budget is around the corner (to be presented in Feb-end). So the GJEPC has urged the government to accept its demands to put back the ‘derailed’ G&J sector back on its growth track. It has demanded to declare G&J industry in zero-rated indirect tax regime. A memorandum sent to the government insists that all duties collected in way of service tax, value added tax (VAT) or goods and sales tax (GST) should be refunded by way of duty drawbacks.
The GJEPC has expressed its expectations for the G&J industry for increase in its global exports, identifying new trade partners to promote diamond jewellery in India. The supreme trade body has also demanded to establish a special fund by the Reserve Bank of India (RBI) to the tune of US $3.5 billion for the refinance of borrowing given to export industries, which has a high import content of more than 70% of their exports.
The Vice Chairman of GJEPC Mr. Pankaj Parekh said, “The council has put forward some legislative demands too. The threshold, as mandated under the Benign Assessment Procedure of Income Tax should be reduced six to 2.5% for profit as a percentage of turnovers. Duty free import quota for cut and polished diamonds to the tune of 15% of the previous year’s exports must be allowed.”
The Council has demanded establishment of special notified zones for import and trading of rough diamonds. This is with the objective of attracting international companies and trading players to sell rough diamonds in India. This recommendation has been made by the Task Force which had been formed by the government to invite suggestions from various trade bodies (like GJEPC) to make India a diamond trading-hub.
The Convener of GJEPC Mr. Sanjay Kothari, said, “The government in partnership with the G&J sector should earmark a fund for generic promotion of diamonds. We are also organizing Indo-Australia buyer-seller meet this year and some promotional activities to tap the US market is underway.”
Chairman of the GJEPC Mr. Vipul Shah sounded optimistic in the end. He said, “We believe the decline in India’s exports would be fully set off by the end of March 2013 after which the industry is expected to enter into a positive territory.”
“Overall jewellery demand during the Christmas and the New Year seasons remained flat with around 5% growth witnessed in the US market. But it has raised hope for a recovery, with around 15-20% growth is expected during the next financial year,” said Shah.
