Kolkata: IT consultancy firm Accenture has warned that the move by Indian jewellers to set up units in China and Dubai may slow down gem and jewellery exports from the country, even as it suggested steps to boost exports from special economic zones (SEZs), reports The Economic Times.
The jewellery companies that are considering setting up units abroad include Kama Schachter, Tara Jewels, Goldstar, Laxmi Diamonds and KGK, said the consultancy firm in a 100-page report. Accenture was roped in by local gem and jewellery exporters to come up with suggestions to speed up exports from these export-oriented business parks.
Exports from SEZs have fallen to Rs. 60,000 crore or 44% in 2013-14. Accenture has identified policy paralysis and business hurdles as the main reasons for this drop and has suggested the government take proactive steps in certain areas to stop further decline.
The report comes at a time when the Narendra Modi government is trying to give a fresh impetus to SEZs. There are eight SEZs in the country that export jewellery -Nodia, Mumbai, Jaipur, Surat, Hyderabad, Kochi, Kolkata and Vizag.
Accenture has spoken to exporters, customs authorities, government officials to work out a roadmap to revive SEZs, said Colin Shah, managing director of Kama Schachter and convener of gold jewellery panel, Gem & Jewellery Export Promotion Council (GJEPC). “We sought an appointment with the commerce ministry for a discussion on the issue.” According to Accenture, exports from SEZs are not counted under not counted under India’s 80:20 rule and this made procurement of gold from nominated import agencies difficult for units in business parks.
Under the rule, the agencies have to ensure that 20% of the gold they import is ex ported after adding value, such as by turning them into jewellery since exports from SEZs are excluded under this rule, the agencies charge high premium from such units to provide gold. This problem is prevalent in the Noida and Kolkata SEZs, it observed.
SEZ-based manufacturers who require small quantities of gold – for instance, makers of diamond studded jewellery – are severely affected as they find it difficult to, get gold from nominated agencies. Directly importing small quantities of gold is expensive.
Under the current regulation, they cannot group their requirement and order a single lot. Nominated agencies also import less silver on fears that they may have to hold the consignments longer and this has led to a shortage in silver too.
Since the US is the biggest market for India’s gem and jewellery exports, Accenture has suggested that the generalized system of preferences benefits be renegotiated with the US. The consultant said the government should do away with minimum alternate tax and dividend distribution tax for SEZ units. It suggested that SEZ units be given flexibility to retrench workers with notice period and compensation.