Story Highlight
– GJEPC requests export-oriented units to produce for domestic market.
– Urges six-month interest moratorium for jewellery export loans.
– High US tariffs causing steep decline in export orders.
– Demand for lab-grown diamonds rising in US and India.
– SEEPZ units facing 40% drop in capacity utilization.
Full Story
The gem and jewellery industry has called upon Finance Minister Nirmala Sitharaman to grant permission for export-focused jewellery units located in Mumbai’s SantaCruz Electronics Export Processing Zone (SEEPZ) and other jewellery Special Economic Zones (SEZs) to produce merchandise for the domestic market. During a Wednesday meeting, industry representatives also requested a six-month interest moratorium on loans taken for jewellery exports to the US amid concerns over the significant impact of recent US tariffs.
Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council (GJEPC), along with executive director Sabyasachi Ray, presented their case during the discussion. They emphasised that allowing manufacturing for the domestic market at SEZs could help safeguard jobs at a time when exporters are experiencing a dramatic drop in orders from the United States, following the implementation of a 50% tariff effective August 27.
An official from the ministry mentioned that the sector is advocating for a temporary three-month duty exemption to facilitate domestic sales ahead of the festive season. However, he acknowledged the presence of numerous technical obstacles, noting that SEZs are currently required to pay full customs duties on products sold outside these zones.
The industry has proposed that customs duties be calculated based on the cost of imported raw materials instead of the finished products. In the fiscal year 2025, India exported gems and jewellery valued at $10 billion to the US.
Post-meeting, Bhansali remarked on the positive resumption of India-US trade talks but highlighted that meaningful progress could take time. He stressed the urgency for immediate relief measures to protect the sector’s viability. He noted that as domestic demand for jewellery increases, allowing SEZ units to produce for local markets could help avert job losses.
Furthermore, Bhansali disclosed that the GJEPC is advocating for an extension of the export obligation period for transactions with the US, requesting the timeframe of 90 days to be increased to six months starting from April 2, 2025. The industry is also seeking a specific six-month interest moratorium on packing credit loans for jewellery exports to the US, as well as a delay in interest payments on working capital loans from August 1, 2025, through January 1, 2026.
GJEPC representatives are focused on preventing job losses in key manufacturing hubs like SEEPZ and Surat, where 90% of the world’s polished diamonds are processed. Many firms dealing with natural diamonds are now diversifying into lab-grown diamond (LGD) production to meet rising demand in both US and domestic markets. Bhansali noted that the pricing of LGDs remains significantly lower than that of natural diamonds, providing resilience even amid high tariffs. He expressed hope that conditions for natural diamonds would improve once a bilateral agreement between India and the US is established.
Currently, India produces over three million carats of LGDs each year, representing about 15% of the global market share, according to CARE Ratings. SEEPZ, as a vital export hub for gems and jewellery, is already feeling the effects of these tariffs. Adil Kotwal, president of the SEEPZ Gems & Jewellery Manufacturers’ Association, highlighted that around 200 jewellery manufacturing units operate within SEEPZ, employing close to 100,000 workers and exporting jewellery worth approximately ₹25,000 crore to the US. He reported a 40% reduction in capacity utilisation due to declining orders, resulting in sporadic work for contract employees.