Gems & Jewellery: Policy Reforms Needed for US Tariff

Mumbai, Aug 7 (PTI) Gems and jewellery exporters' body GJEPC on Thursday urged the government to bring in immediate policy reforms to support the industry, which is facing challenging times due to a steep 50 per cent tariff imposed by the US on all Indian goods.

The United States is the largest market for Indian gems and jewellery sector, accounting for over USD 10 billion in exports, nearly 30 per cent of the industry's total global trade, according to GJEPC (Gem and Jewellery Export Promotion Council) chairman Kirit Bhansali.

US President Donald Trump's announcement of a sweeping 50 per cent tariff on all Indian goods is a deeply concerning development and the move will have far-reaching repercussions across India's economy, disrupting critical supply chains, stalling exports, and threatening thousands of livelihoods, he said.

"The Indian gem and jewellery sector, in particular, stands to be severely impacted... A blanket tariff of this magnitude is severely devastating for the sector," Bhansali said.

He further said, currently there is significant reliance on the US market, as 85 per cent of exports from SEEPZ SEZ, which provides 50,000 jobs, is directed there.

For cut and polished diamonds, half of India's exports are US-bound and with the revised tariff hike, the entire industry may come to a standstill, placing immense pressure on every part of the value chain, from small karigars to large manufacturers

What adds to the concern is that competing manufacturing hubs such as Turkey, Vietnam and Thailand continue to enjoy significantly lower tariffs of 15 per cent, 20 per cent and 19 per cent, respectively, making Indian products relatively less competitive in the US market, Bhansali said.

"This imbalance, if unaddressed, could erode India's long-standing position as a key supplier to the US. We are also concerned about the possibility of trade rerouting through low-tariff destinations such as Mexico, Canada, Turkey, UAE, or Oman, undermining the spirit of legitimate trade and impacting transparency," he added.

The GJEPC chairman said the domestic market, currently pegged at USD 85 billion, is expected to grow to Rs 130 billion in the next two years providing some relief, particularly for the diamond sector.

Meanwhile, GJEPC is actively exploring new markets through initiatives including the upcoming Saudi Arabia Jewellery Exhibition (SAJEX) that is expected to open fresh avenues in emerging regions and diversify India's export destinations.

"While we understand that no trade talks can happen in the current scenario, we urge the government for immediate relief. We appeal for policy reforms and extensive support to aid the industry in these extraordinarily challenging times.

"We urge the government to provide the industry relief through Duty Drawback Scheme, financial support for market diversification through Market Access Initiative (MAI) scheme, deferment of interest on working capital facilities, allowance of reverse job work by units located in SEZs, allow exporters to offload their existing stock or pipeline to the domestic market, relief packages among others," he added.

On August 6, President Trump announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total to 50 per cent with effect from August 27.