India's jewellery export to fall by 15% this year.

SURAT: For the first time in the last one decade, India's gems and jewellery export is set to fall by 10 to 15 per cent. This is mainly because of the 10 per cent import duty on gold.

While the polished diamond export has registered a 20 per cent increase from April 2013 to February 2014 compared to the same period in the previous year, gold jewellery export has declined by almost 45.56 per cent.

The Gems and Jewellery Export Promotion Council (GJEPC), the Indian industry's umbrella organization, said the country exported $ 718.36 million worth of gold jewellery in February, which was an increase of just 1 per cent over February 2013. India exported $$6.35 billion worth of gold jewellery in the 11 months from April 2013, down from $ 11.67 billion a year earlier.

On the other hand, the polished diamond export has increased by almost 20 per cent at $18 billion compared to $15 billion in the previous year. In a bid to reduce its current account deficit, the Indian government announced a 10 per cent import duty on gold. The GJEPC is asking for this tax to be dropped to 2 per cent in a bid to help finished jewellery exports.

Sources said if raw material availability remains low, it will give rise to smuggling. During the festive season, industry's sales fell about 50 per cent from the previous year period in 2013. However, there is a need for conducive government policies for the sector to perform well. If the gems and jewellery sector grows to its full potential, it can easily employ another 1 million people.

The sector currently employs about 2.5 million people. Indian demand for gold jewellery is shifting to West Asia due to competitive prices.

"The desired curb in the total import of gold has now been duly achieved. So the import duty should be rolled back to much lower rate say 2 per cent by the new Union govenrment at the Centre. But this year, the export will definitely reflect a negative sentiment due to a drastic reduction in gold jewellery export," chairman, GJEPC, Vipul Shah said.

A DTC sightholder said, "Though the polished diamond export has been robust this year, but the diamond jewellery export has decreased tremendously due to the 10 per cent import on gold. Since the prices of gold and diamond jewellery are high due to import duty, buyers are preferring jewellery from China and Italy."

Source : timesofindia.indiatimes.com