Story Highlight
– GJEPC requests SEZs to produce jewellery for domestic market.
– Industry seeks six-month interest moratorium on US export loans.
– High US tariffs have drastically reduced export orders.
– Call for three-month duty exemption for festive season sales.
– Job losses at SEEPZ due to declining demand and tariffs.
Full Story
The gem and jewellery sector is seeking intervention from Finance Minister Nirmala Sitharaman to facilitate changes that could assist exporters grappling with significant challenges in the US market. During a meeting on Wednesday, representatives from the Gem & Jewellery Export Promotion Council (GJEPC), including Chairman Kirit Bhansali and Executive Director Sabyasachi Ray, put forward a proposal for export-oriented jewellery units located in Mumbai’s SantaCruz Electronics Export Processing Zone (SEEPZ) and other jewellery special economic zones (SEZs) to be permitted to manufacture jewellery for domestic consumption.
The GJEPC highlighted the predicament facing exporters due to a steep increase in tariffs, which has imposed a 50% duty on jewellery exports to the United States since August 27. This situation has precipitated a noticeable decline in export orders, prompting the council to request a six-month interest moratorium on loans tied to jewellery exports to the US. This measure aims to alleviate the financial strain experienced by exporters in the face of these rising costs.
GJEPC representatives argued that allowing SEZs to produce jewellery for the local market would not only sustain businesses but also protect the jobs of numerous workers amid declining export orders. Bhansali noted, “The India-US trade talks have resumed, which is a welcome step. However, the process may take time, and until a resolution is achieved, it is essential to introduce relief measures to help the sector survive and sustain.”
In addition to these requests, the industry has suggested extending the existing export obligation period for jewellery exports to the US from 90 days to six months, effective from April 2, 2025. They are also advocating for a duty exemption window to boost domestic sales ahead of the upcoming festive season, although ministry officials cited various technical challenges related to this proposal.
Currently, SEZ units are subject to full customs duties if they sell finished products outside these zones. The industry has recommended that customs duties be calculated on imported raw materials instead. In FY25, India exported approximately $10 billion worth of gems and jewellery to the US, underscoring the industry’s significance to the national economy.
Adil Kotwal, President of the SEEPZ Gems & Jewellery Manufacturers’ Association, expressed concern about the impact of tariffs on manufacturing units, which employ nearly 100,000 people. According to Kotwal, the high tariffs have reduced order placements from US buyers, leading to a 40% decline in capacity utilisation within these units.
As the sector grapples with these challenges, the rise of lab-grown diamonds (LGDs) presents both opportunities and competition. Bhansali noted that demand for LGDs is increasing in both the US and domestic markets, as their prices are generally lower than those of natural diamonds. Despite the imposition of tariffs, LGDs are not putting financial pressure on consumers, offering a potential avenue for growth as the industry awaits resolutions from ongoing bilateral discussions between India and the US. Currently, India produces over 3 million carats of LGDs annually, which constitutes around 15% of global production, as reported by CARE Ratings.