Kolkata: The fresh round of withdrawal of the Generalised System of Preference (GSP) by the United States will affect $86.54 million in gem and jewellery exports from India. This will take the aggregate impact of withdrawal of GSP on gem and jewellery exports to $625.94 million. The aggregate figure includes gem and jewellery worth $539.4 million on which GSP was withdrawn by US in the period 2007-2009.
“Exports of 45 gem and jewellery commodities from India on which GSP benefit will be withdrawn by the US are pegged at $86.54 million. Therefore, it is expected that this much quantum of exports from India will be adversely affected in terms of escalated prices of these products and reduced export competitiveness in the US market,” said a senior executive of Gem & Jewellery Export Promotion Council (GJEPC).
The 45 items on which GSP is being withdrawn include precious stones (other than diamonds) and semiprecious stones, silver unwrought (other than bullion and dore), gold (including gold plated with platinum) in semi-manufactured forms (except gold leaves) among others.
Indian gem and jewellery exports suffered when US withdrew GSP in 2007, 2008 and 2009, and thereby started attracting most favoured nation (MFN) rate of around 5-6 per cent at the USA customs territories. The products from which GSP was withdrawn were silver articles of jewellery and parts, gold rope necklaces and neck chains, gold mixed link necklaces and neck chains among others.
The GJEPC has estimated that US imports of these commodities from India fell by 23.2 per cent from $2.32 billion in 2007 to $1.78 billion in 2018. India exported gem and jewellery worth $12.22 billion to the USA in calendar 2018.
Colin Shah, chairman, GJEPC, said apart from the GSP issue, the trade is unable to grow exports due to the challenges in India on interest costs and ease of doing business.
“The demand in the US is robust for Indian gem and jewellery, especially after the trade war with China,” Shah added. To mitigate the impact of GSP, GJEPC has asked the government to grant 4 per cent benefit under the Merchandise Exports from India Scheme (MEIS) to key gem and jewellery export commodities to the US.