Gems and jewelry exports from India declined three.12 consistent with cent in 2018-19 thanks to credit score crunch, delays in GST (goods and offerings tax) refunds, and high import obligations on a polished diamond. Industry captains don’t see development in export in FY20 both.
Data compiled by the Gems and Jewellery Export Promotion Council (GJEPC) showed that gross gems and jewelry exports from India were $39.Sixty-eight billion in 2018-19, as compared to $40.96 billion inside the preceding yr.
Gross reduce and polished diamond exports from India but remained stable at $23.82 billion throughout 2018-19 (FY19) towards $23.72 billion inside the preceding year.
The decline in exports of gemstones and jewelry, a labor-in-depth industry that contributes around thirteen in keeping with cent of u. S. A .’s merchandise exports are widespread. Since the Nirav Modi-Punjab National Bank (PNB) scam broke in January ultimate yr, the industry has been dealing with liquidity disaster because of lenders tightening provisioning and sanctions of the price range.
Lenders suspended the usage of letters of the task (Los) for disbursal. They started soliciting for collateral valued using 1/3 parties for over a hundred according to cent greater than the loan.
“India’s gemstones and jewelry exporters are going through troubles which need to be addressed straight away. Liquidity remained tight in the course of this yr notwithstanding repeated requests from the industry to bankers and the government in search of ‘ease of doing enterprise’ right here. The enterprise is likewise suffering from a blockage of running capital due to delays in getting a refund. All these problems have hit usual gemstones and jewelry exports this monetary yr,” said Colin Shah, vice-chairman, GJEPC.
He isn’t optimistic about FY20 both. He estimates exports may want to fall a bit once more.
Another hassle is the put-off in GST refund, which no longer most effective blocks working capital but additionally requires repeated efforts for claiming them. Last yr, the authorities raised import duty on cut and polished diamond to 7.5, consistent with cent from 2.Five in step with cent in advance.
However, gold jewelry exports from India averted a steep fall in exports, way to devices in special monetary zones (SEZs) and export-oriented devices (EOUs).
The GJEPC information shows exports from SEZs and EOUs noticed a good jump in the gold jewelry phase. Exports went up 24.36 percent to $12.03 billion compared to $9.67 billion in the preceding year.
“The government wishes to implement the Baba Kalyani file on responsibility-unfastened jewelry sales from SEZs/EOUs to domestic tariff regions (DTAs). While jewelers are ready to pay a gold import duty of 10 in keeping with cent and GST of three in line with cent, different obligations applicable to promoting gems and jewelry from those special export-centric zones to domestic markets ought to be abolished. We have submitted tips to the ministry involved, however, nevertheless looking ahead to a beneficial result,” said Shah.
A committee headed using Baba Kalyani, chairman of Bharat Forge, encouraged the ministry of commerce and enterprise, allowing a duty-unfastened income of gemstones and jewelry from SEZs/EOUs to DTAs. Currently, such income attracts a duty of 15 in step with cent, equal to the obligation levied on imports of gemstones and jewelry from distant places.
China has imposed 20 in step with cent on gems and jewelry, making it tough for Indian exporters to promote there. The industry, consequently, has asked the authorities to permit sales for home and exports from one unit.