Jewellery exports set to soar as US lifts levy

India's jewellery exports to the United States, the world's largest market, is expected to rise sharply in the forthcoming financial year as US has lifted the 5.7 per cent tariff on finished jewellery from India.

A tariff of up to 6.6 per cent will continued to be levied on jewellery from China. This is expected to help India exporters and make them more competitive.

The drop in duties could lead to doubling of jewellery exports to US by 2005 to $1.2 billion, says Raj Basnatani, chairman of Soundcraft Industries, one of the top exporters of diamonds and jewellery.

Exporters of finished jewellry are toning up operations to take advantage of the tariff reduction.

"Things are changing fast at SEEPZ. As recently as a year ago, the 15,000-odd factory hands days lined up at long tables working with tiny gems and small, inexpensive settings, which required little skill and did not add much profit. Now, they are working with larger stones, creating more complex settings, using newer equipment and pumping up profits." he added.

Some Indian players had invested in overseas units to set stones though labour costs were higher there because these units enjoyed zero tariff.

Soundcraft, which has a similar base abroad, now plans to move most of its production to India within two years. This would lead to annual savings of up to $1 million.

Basantani said India's 2,500 diamond exporters were making big plans to expand into finished jewellery. This would help Indian jewellers fend off growing competition from other exporting nations like Thailand which already enjoy tariff-free exports to US.

However, exporters warned the duty on Chinese goods may be withdrawn soon because China had become a member of the World Trade Organisation (WTO).

Indian exporters said China was a threat as exports from China to the US had already doubled from 1997 to $712 million in 2001, according to US government data.