US President Donald Trump's announcement of fresh tariffs on commodities imported from China may have a silver lining for India's ailing gem and jewellery industry.
The 10 per cent duty, starting September 1, will apply to rough and polished diamonds, rough and polished synthetic gemstones as well as jewellery articles of precious or semi-precious stones coming into the US from China.
If the new round of tariffs is actually implemented, and not postponed or withdrawn, China’s gold jewellery exports to the US would not be viable and Indian exporters will get an opportunity to fill that gap. China’s gold jewellery exports to the US is around $2 billion per year.
Paul Zimnisky, an independent diamond analyst and consultant in New York, told Business Standard, “US imports less than one per cent of loose polished diamonds from China, but the it is importing an estimated 15 per cent of jewellery from China. If the tariffs persist, it may lead to US retailers buying more fabricated jewellery from India.”
This could be good news for ailing Indian jewellery exporters who saw exports of gem and jewellery drop in the past few months. India’s total gem and jewellery export is pegged at around $40 billion, but its export of gold jewellery to the US is the same as China.
In 2018-19, India’s total exports of gold jewellery to the US was $1.9 billion, which was actually 16.4 per cent lower than preceding year’s $2.3 billion. China is also estimated to have exported $2 billion worth of gold jewellery to the US in FY19.
In first quarter of FY20, India’s total gold jewellery exports to the US was $419 million, down 1.5 per cent over the same period in the previous fiscal.
China has a month to defend its case against fresh tariffs. If the US is convinced, it may not impose the 10 per cent duty, or may postpone it.
However, if the tariffs materialise, Indian gold jewellery exporters will get some lost mojo back. Already, there are fears of a sharp fall in exports of gem and jewellery this year. An industry source told Business Standard that this year the sector fears almost a 10 per cent fall in exports. The global market is facing an economic slowdown and buying of luxury goods is not a priority for consumers.
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