Gem sector urged to tap new marts

Gems and jewellery producers should intensify their efforts to tap the developing economies of the two Asian giants, India and China, according to the Minister of State for Industry and Commerce, Jairam Ramesh.

To reduce the dependence on the US market, Ramesh urged the gem and jewellery sector to introduce innovative designs in newly-explored markets such as Russia, Africa and Japan.

He was speaking on the sidelines of the "Mines to Market" seminar organised by the Gems and Jewellery Export Promotion Council (GJEPC) in Mumbai today.

The GDP of India and China is growing at 10 per cent and 8.5 per cent respectively and indications are that the current growth rate would sustain for the next few years.

While the gem and jewellery sector is estimated to grow at 16 per cent in China, the Indian and US markets are estimated to grow at 9 per cent and 3 per cent respectively.

As the US has become saturated, it offers the least growth potential. However, exporters are still keen on the country because of higher realisations under the generalised system of preferences (GSP).

But the $4-billion jewellery exports to the US is under threat as the GSP will expire on June 30.

GJEPC Chairman Sanjay Kothari said the sector has been trying to get the period extended to at least one year and despite an initial positive response from the US government, the real stand would be known only on the date of expiry.

Instituted in 1976, the GSP was aimed at promoting the economic prosperity of designated underdeveloped countries with more than 4,650 selected products from 144 countries for a preferential entry into the US.

Under the programme, duty-free entry for diamond jewellery was permitted in the US, which proved a boon for all those countries. Since then, the programme has been extended periodically.

Surprisingly, India was considered to be in the GSP programme even though it did not fall under norms chalked out by the US authority.

This was possible because of the Indian government's sincere efforts, industry sources said.

"Why do you compare India with the countries such as Bhutan, Myanmar and Bangladesh that have been under GSP in the US? We are claiming that we are the fourth largest economy in the world and asking for GSP. Let the sector grow independently," said the minister. India's exports of gems and jewellery jumped marginally to $17 billion in 2006-07 from $16.7 billion in 2005-06.

The minister denied any possibility of a squeeze in the margin of jewellery sector due to rupee's appreciation.

Jewellery exporters are more sensitive about non-pricing factors and the need to improve their credentials on delivery timeline, quality assurances and other commitments, which are affecting India's image in the world.