Extend interest subvention to gems & jewellery sector to increase exports: Assocham

To promote gems and jewellery exports that have been marred by global slowdown

Apex industry body Assocham on Wednesday urged the government to extend incentives like interest subvention, Merchandise Exports from India Scheme (MEIS) and others to promote gems and jewellery (G&J) exports that have been marred by global slowdown.

While import of rough diamonds and semi-precious stones have fallen by over 11 per cent in FY16, the net diamond exports and semi-precious stones have declined by about 43 per cent year-on-year i.e from $4.2 billion in FY15 to just $2.4 billion in FY16. Besides, exports of jewellery have also fallen by about 17 per cent i.e from $13.2 billion in FY15 to $11 billion in FY16.

The demand assumes significant in the wake of gems and jewellery contributes around 13 per cent of overall merchandised exports from India.The sharp decline in exports of gems and jewellery has put livelihood of over 3 million skilled workers at risk across India.

"G&J exports from India are likely to remain under pressure this year as well, even though there are indications of improvement in business sentiment in US which takes nearly half of country's diamond jewellery production," said an Assocham study titled "2015-16: A year of dismal export performance for India," released on Wednesday.

Interestingly, Dubai and Thailand are fast emerging as major jewellery manufacturing hub as a lot of Indian businesses are setting up units there.

"Though market share of the US and Hong Kong in diamond and precious stones' exports has expanded to 29 per cent and 36 per cent respectively over the last few years, market share of the UAE has fallen steadily from one-fifth a few years ago to less than one-tenth of the total exports," said the study.

The Gold Monetisation Scheme might help reduce reliance on import of gold to meet domestic demand and may have some positive impact during the course of the year.

Assocham appealed to the government to grant 'industry status,' to the gems and jewellery sector to give a fillip to investments and bring down costs of operation as that would also help build trust and faith in Indian brands in global markets and in achieving goals of Make-in-India.

Modernisation of labour laws, requirement of more export-oriented economic zones, establishment of a gold board, ensuring access to better financing, relaxation of certain taxation laws, segregation of investment and consumption demand, setting up a gold tourism circuit are certain key areas focus on which can help in reviving the G&J sector in the country.

Impact of falling global prices and export volumes has not only affected the G&J sector but petroleum products' exports have also plummeted by over 46 per cent i.e from about $67 billion to $30.4 billion during the aforementioned period."This seems to be much larger problem as Indian firms are losing their share in global markets."