US strips jewellery of duty-free status

Gold and diamond-studded jewellery exporters from Surat are in a tizzy with the US government withdrawing duty free access to them.

The US withdrew the benefits after an annual review of Generalised System of Preferences (GSP) programme on Thursday.

Many exporters from the diamond city believe this will affect adversely affect their turnover as they will now have to pay 6.5 per cent duty.

One can ascertain the impact from the fact that India shipped $ 1.6 billion in gold jewellery to the US in the first 10 months of 2006.

“Given that the US is the main market for Indian gold jewellery exports, the revoking of the duty-free status will result in a substantial fall in exports from here,” said Chandrakant

Sanghvi, regional convenor of Gem and Jewellery Export Promotion Council (GJEPC).

“With the US imposing a 6.5 per cent duty on jewellery from India, other countries like China will be in a better position to access American markets.”

In the last one year, the Indian gems and jewellery industry witnessed 2.74 per cent growth. Total gems and jewellery exports to the US were $ 17.1 billion (Rs 77,180.28 crore) in 2006-07 compared to $ 1.6 billion (Rs 73,342.44 crore) in the previous year, according to GJEPC figures.

Exporters are worried also because they generally have a profit margin of around four to five per cent and they will now have to deal with a 6.5 per cent duty. Diamond exporter Savji Dholakia of Hare Krishna Export however is not worried. “Even if exports to the US dip, there is hope in the domestic market, which has seen a spurt in recent months with more Indians ready to buy diamond jewellery,” he says.