The sustained slowdown in global economy, especially in the US and China has taken heavy toll of India’s gems & jewellery exports during recent years. If sources are to be believed, the industry has registered steady growth, but 2015-16 shows a 15% decline in exports.
The Indian government, worried by such dismal export figures, recently increased allocations for export incentive schemes across the economy, including the diamond and jewelry sectors, in the current financial year to $3.2 billion (Rs. 21,000 crore). The government is still considering giving more incentives to promote the dwindling exports. Jewellery is key area to boost exports as India’s share in the global market is very small. Due to wide differences in duty paid and duty refunded, exporters are shying away from tax refund scheme.
India’s Commerce Secretary Ms. Rita Teaotia had recently convened an inter-ministerial meeting in New Delhi during which some measures such as making available duty-free gold in smaller denominations to jewellery exporters were discussed.
It may be noted here that a delegation led by Chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC) Mr. Pravinshanker Pandya had met the Union Commerce Minister to seek redressal of issues faced by the G&J industry during which it (the delegation) suggested that the government undertake certain initiatives to lighten its burden. These included a level playing field with regard to China and allowing the industry to include gems and jewellery industry in Merchandise Exports from India Scheme (MEIS) as well as allowing goods to enter the country on a consignment basis for manufacturing.
The Indian government and the Reserve Bank of India (RBI) allege each other for sabotaging country’s export growth. The Centre claims that exports are being throttled to death by the RBI which refusing to devalue the rupee to make it competitive against its other emerging market peers. RBI Governor Mr. Raghuram Rajan has strongly refuted centre’s allegation, arguing that it is not the rupee but other factors that are responsible for the exports decline.
Industry analysts feel that indirect cause for a slowdown in global trade is a slowing global economy. But breakdown of export figures shows that it is crude oil that is the main culprit that has fired the fatal shot. Petroleum products, which account for over one-fifth of India’s exports, were down by 47% between April 2015 and January 2016 as compared to the previous year. While the demand for petroleum products was impacted by slowing demand, the sharp cut in crude oil price has also affected the value of Indian exports.
It was also discussed during the inter-ministerial meeting about the steps like supply of duty-free gold under the replenishment scheme to the jewellery exporters, as and when required. The industry circles here expect paperwork may be reduced for gold jewellery exporters to promote ease of doing business in this area and at the same time, exporters may be allowed to ship jewellery on notional rate basis for the purpose of claiming incentives. But, they will have to tell the actual value within 180 days of the shipment.
Under the new scheme, the nominated agencies will also be able to transfer gold from one port to another, giving flexibility to the nominated agency. India’s Commerce Ministry has also hinted that the jewellery exporters can avail duty-free gold on exports done from Jan 2013-Feb 2014.
Posted by Suresh Chotai