Mumbai: Gems and jewellery export to the European Union worth upwards of $3 billion a year is at risk due to the country’s exclusion in the list of Generalized System of Preferences (GSP), a practice which offers tax incentives from origin to destination countries, reports Business Standard.
India enjoyed customs duty benefits to the tune of 2.5-4 per cent and value added tax between 20 and 25 per cent in various countries in the EU in the last three years of the GSP regime, ending this month. As a result, our gems and jewellery export jumped to $3.6 billion in 2014-15, though it then declined by 10 per cent to $3.2 bn 2015-16, due to unfavourable market conditions.
In the revised list, however, the EU has excluded this sector from the GSP list. This means, all customs and VAT applicable for non-GSP commodities would be applicable for gems and jewellery export from India. The EU takes eight per cent of our overall annual export of gems and jewellery, worth $39 bn.
“The decision will definitely hit our exports to the EU,” said Praveen Shankar Pandya, chairman of Gem and Jewellery Export Promotion Council (GJEPC). This exclusion comes as the sector faces challenges, due to the global economic uncertainty.
“With the applicable duties, gems and jewellery exports from India would be uneconomical for European consumers,” worries a city-based exporter. “We would certainly take up this issue with the ministry of commerce very soon,” said Pandya.