Story Highlight
– Gem and jewellery trade seeks production allowance for domestic market.
– Request for six-month interest moratorium on export loans.
– Exports to the US have declined due to high tariffs.
– Industry urges to extend export obligation period to six months.
– SEEPZ employment declines; capacity utilization falls by 40%.
Full Story
The gem and jewellery sector has approached Finance Minister Nirmala Sitharaman to seek permission for export-oriented jewellery units located in Mumbai’s Santa Cruz Electronics Export Processing Zone (SEEPZ) and other Special Economic Zones (SEZs) to manufacture jewellery intended for the domestic market. The industry’s representatives, including Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council (GJEPC), and executive director Sabyasachi Ray, also requested a six-month interest moratorium on loans taken for jewellery exports to the United States, aiming to mitigate the effects of recently imposed hefty tariffs.
Currently, these SEZs are required to pay full customs duties if finished products are sold outside their designated areas, classed as the domestic tariff area. The industry has proposed that duties be calculated based on the imported raw materials instead. According to ministry officials, while the industry has requested a three-month window for duty exemption to facilitate domestic sales during the festive season, several technical hurdles remain.
In the previous fiscal year, India exported gems and jewellery worth $10 billion to the US, and the recent imposition of a 50% tariff, effective from August 27, has led to a significant downturn in export orders. Following the meeting, Bhansali commented: “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.”
With growing domestic demand for jewellery, Bhansali emphasised that manufacturing jewellery for local markets within SEZs could help retain employment. He urged the finance minister to consider extending the export obligation period for goods exported to the US, suggesting an extension from the current 90 days to six months for exports made from April 2, 2025.
Furthermore, the industry has proposed a six-month moratorium on interest for packing credit loans related to jewellery exports to the US, designed to alleviate the financial pressure caused by the abrupt tariff increase. “Along with this, we have also sought deferment of interest on working capital loans from August 1, 2025, to January 1, 2026,” mentioned Bhansali.
The GJEPC is particularly focused on preventing job losses at SEEPZ and Surat, which processes a significant portion of the world’s diamonds. A notable trend is the establishment of lab-grown diamond (LGD) manufacturing units alongside traditional diamond operations, with demand for LGDs rising in both US and domestic markets due to their lower prices compared to natural diamonds. Bhansali remarked, “Even with a 50% tariff, LGDs are not putting pressure on consumers. However, we hope that the situation will improve for natural diamonds once the India-US bilateral agreement is established.”
India currently produces over three million carats of LGDs each year, representing approximately 15% of global production. SEEPZ, a crucial hub for gem and jewellery exports to the US, is already feeling the impact of these tariffs. Adil Kotwal, president of the SEEPZ Gems & Jewellery Manufacturers’ Association, indicated that there are around 200 jewellery manufacturing units in the zone, employing nearly 100,000 people, and exporting approximately ₹25,000 crore worth of gems and jewellery annually to the US. However, he noted that order volumes have dwindled due to high tariffs, causing capacity utilisation in these units to decline by 40%, resulting in inconsistent work for contract workers.