Kolkata: Gems and jewellery exports are likely to decline 10-15 per cent year on year in this financial year owing to choppy global economies, high import duty on gold and diamonds, and liquidity crunch in the sector, said industry executives.
There is a lull in demand in overseas as well as domestic markets, said Colin Shah, vice-chairman, Gem & Jewellery Export Promotion Council. “The US-China tradewar is affecting global economies and has slowed down offtake of gems and jewellery. In May, exports dwindled 12.08 per cent in dollar terms and the same trend has continued in June as well.
The situation is unlikely to improve in the coming months and our estimate is that gems and jewellery exports from India will decline 10-15 per cent in the current fiscal,” he said. Shah said that high import duty on gold and diamonds would further affect organised trade. “Smuggling of gold will increase,” he said. In the budget for 2019-20, the government announced an increase in import duty on gold to 12.5 per cent from 10 per cent. With GST of 3 per cent, the total tax on gold is 15.5 per cent.
The first three months of the current fiscal saw a 10.32 per cent year-on-year decline in exports to $9.18 billion. June saw a steeper fall of 16.26 per cent to $2.826 billion. In 2018-19, India had exported gems and jewellery worth $30.96 billion. In June, sentiment in diamond market was weak owing to sluggish demand and tightening of manufacturing profits.