India's Gem, Jewellery exports up 2.74% in 2006-07

During the 2006 financial year that ended March 31, 2007, India’s total gem and jewellery exports grew by 2.74 per cent to $17.1 billion (Rs.77,180.28 crore), compared to a growth of 15 per cent to $16.6 billion a year ago, according to The Gem & Jewellery Export Promotion Council (GJEPC), which announced the figures at a recently held conference in Mumbai.

“We have registered a marginal growth this year. We had set our target at $18 billion, but under the given circumstances – volatility of oil and gold prices, a fluctuating economy, and luxury items vying for space alongside jewellery – we have sustained growth over the years and that in itself is commendable,” explained GJEPC chairman Sanjay Kothari. “At this point of time, the rupee is strengthening vis-à-vis the dollar. For exporters that is a great setback,” he added.

Cut and polished diamond exports in 2006 declined by 7.83 per cent to $10.9 billion, as against $11.82 billion in 2005.

Kothari said that removing the import duty on cut and polished diamonds would have helped the industry to enhance growth in the sector. The reduction of duty from 5- to 3 per cent is a half-hearted measure, he added.

Gold jewellery exports, which drove the growth in the sector, rose by 34.5 per cent to $5.21 billion, mainly due to the high price of the precious metal. Coloured gemstone exports grew by 6.08 per cent to $246.48 million.

The industry’s contribution to the total value addition is to the tune of $4.1 billion as compared to $2.6 billion last year, Kothari said.

In 2006, total gem and jewellery exports to the US – India’s biggest market – grew by 14 per cent to $5.4 billion. The United Arab Emirates (UAE) and Hong Kong were the second- and third-highest export destinations respectively, with exports worth $3.37 billion and $3.62 billion.

“Our overdependence on the US market has given us negative results,” said GJEPC vice chairman Vasant Mehta, who led a seven-member delegation to China in early March to identify areas for joint ventures and to enhance bilateral trade relations.

“We need to promote jewellery worldwide, and create demand for smaller diamond jewellery, especially among the 18-to-35 age group. We believe that in the future China will be a good market for our diamond studded jewellery,” Mehta added.

“During the year, the GJEPC undertook a number of initiatives to capture a larger market share in places such as Japan, Commonwealth of Independent States (CIS) and other East European nations,” Kothari commented. “Regular buyer-seller meets, India’s presence at gem and jewellery trade fairs in these nations, media exchange programmes are being organised at frequent intervals,” he stated. “We will zero in on African countries soon.”

The GJEPC said it welcomed the introduction of the turnover tax regime during the latest budget, but noted that the minimum profit ceiling of 8 per cent on turnover tax was unviable, as the industry barely witnesses profit beyond 3 per cent.

It also called for the elimination of the 1 per cent value-added tax (VAT) on supply of gold for exports due to the time-consuming refund process, which in turn leads to increased transaction costs for exporters, and said that the 2 per cent octroi duty on purchases of gold, silver diamonds, etc., for consumption in Mumbai was also too high.