Story Highlight
– GJEPC requests domestic production in jewellery SEZs.
– Seeks six-month interest moratorium on export loans.
– High US tariffs causing decline in export orders.
– Domestic jewellery demand is rising amidst challenges.
– Over 200 units in SEEPZ at risk of job losses.
Full Story
The gem and jewellery sector has called on Finance Minister Nirmala Sitharaman to permit export-focused jewellery units in Mumbai’s Santa Cruz Electronics Export Processing Zone (SEEPZ) and other Special Economic Zones (SEZs) to produce pieces for the domestic market. Additionally, they are seeking a six-month interest moratorium on loans related to jewellery exports to the United States. This request comes as exporters are grappling with a significant downturn in orders due to heightened tariffs enacted by the US.
Leaders from the Gem & Jewellery Export Promotion Council (GJEPC), including Chairman Kirit Bhansali and Executive Director Sabyasachi Ray, conveyed their concerns during a meeting with the finance minister. They emphasised the urgent need to allow the production of jewellery for domestic consumption as a means to safeguard jobs within the sector. Bhansali noted that the rising US tariffs, which reached 50% on August 27, have severely curtailed export orders, prompting fears of job losses among workers.
A ministry spokesperson highlighted the industry’s proposal for a three-month duty exemption to facilitate sales within the domestic market, particularly targeting the upcoming festive season. However, they cautioned that there are numerous technical hurdles associated with implementing such a measure. Under the current regulations, SEZs are required to pay full customs duty if finished products are sold outside these zones, known as the domestic tariff area. The GJEPC has suggested that the finance ministry assess duty based on the imported raw materials instead.
In the fiscal year 2025, India exported gems and jewellery valued at $10 billion to the US. Following the meeting, Bhansali remarked on the resumption of India-US trade discussions, describing it as a positive development, though he acknowledged that reconciliation may take time. Until a resolution is found, he stressed the importance of immediate relief measures to support the sector.
The GJEPC has also requested an extension of the export obligation period for jewellery exports to the US, proposing an increase from the current 90 days to six months for shipments made after April 2, 2025. Furthermore, the industry is asking for a moratorium on interest for packing credit loans linked to US jewellery exports, lasting from August 2025 to January 2026, to alleviate financial pressures stemming from the recent tariffs.
Bhansali further mentioned the need for deferred interest on working capital loans from August 1, 2025, to January 1, 2026. GJEPC representatives aim to mitigate potential job losses at SEEPZ and in Surat, where 90% of the world’s diamonds undergo cutting and polishing. Companies focusing on natural diamonds are increasingly establishing lab-grown diamond (LGD) production facilities in response to changing market dynamics.
With growing demand for LGDs in both the US and domestic markets, which are priced significantly lower than natural diamonds, the pressure from tariffs appears more manageable for consumers. Bhansali expressed optimism that the situation for natural diamonds could improve once a bilateral trade agreement between India and the US is finalised.
Currently, India produces over 3 million carats of LGDs annually, representing about 15% of the global output, as reported by CARE Ratings. Mumbai’s SEEPZ, a vital hub for gem and jewellery exports to the US, is already experiencing adverse effects from the tariffs. Adil Kotwal, President of the SEEPZ Gems & Jewellery Manufacturers’ Association, stated that approximately 200 jewellery manufacturers operate within SEEPZ, employing close to 100,000 individuals. These units export gems and jewellery worth around ₹25,000 crore to the US. Kotwal noted a 40% reduction in capacity utilisation due to diminished orders from US buyers, leading to irregular work for contractual employees.