Local jewellery industry petitions US Government to end preference

G. Srinivasan

Putting it in context


At stake

is jewellery exports worth $1.7 billion

The net

extent of accrual and retention in India from the import value is restricted to 20 per cent or less

The developmental

impact of GSP is, therefore, to be viewed not in the context of the total value of the Indian exports but in the wake of the Indian value addition

New Delhi, Sept. 23

The Indian jewellery export industry is jittery over reported moves in the US to terminate the duty-free entry of its products under the Generalised System of Preferences (GSP) once the current programme gets over on December 31, 2006.

Sources in the jewellery industry told

Business Line

here that the Gem and Jewellery Export Promotion Council had already taken up the matter with the Department of Commerce since Indian jewellery exports, which would fetch $1.7 billion from the US alone this year, remain by far the single largest beneficiary among all products originating from the entire universe of GSP countries.

They said that more than 90 per cent of the jewellery exports of India are focused on one tariff line, which not only benefits from GSP but also enjoys a waiver from the condition that trade preferences be abolished once exports reach a certain figure- what is referred to GSP terminology as `competitive needs limitation' (CNL). Exports under this category are to the order of $1.6 billion.

The Manufacturing Jewellers and Suppliers of America (MJSA) had petitioned the US-GSP Sub Committee with a view to denying GSP treatment/CNL waiver to Indian jewellery.

The sources said with the imminent expiry of the current GSP programme, some US senators, such as Mr Charles Grassley and Senator Bill Thomas (Chairman of the House Ways and Means Committee), sought to link eligibility of GSP beneficiaries vis-à-vis the positions adopted by them at WTO.

Bolstering India's case

The sources said it is Indian jewellery that has democratised diamonds in the US by making the diamond-studded jewellery available to US consumers in the price range of $50 to $300. Sourcing of jewellery from India has opened a new market and a commercial avenue for US-based retailers, as they end up saving around $202 million due to nil customs duties on jewellery imported from India under GSP.

Moreover, Indian jewellery symbolises a typical sector with employment of around 3.25 lakh skilled workforce, mostly from the rural areas of India who are the beneficiary of the duty waiver by the US.

Industry sources further say that of the total value of jewellery exported from India to the US on an average, 80 per cent of the value is contributed by inputs, viz, diamonds, gemstones and gold, which are bought out by India from other countries. Thus the net extent of accrual and retention in India from the import value is restricted to 20 per cent or less. The developmental impact of GSP is, therefore, to be viewed not in the context of the total value of the Indian exports but in the wake of the Indian value addition.

Petitions presented

Already the Indian gems and jewellery industry, labour organisations such as INTUC and RMMC, World Confederation of Jewellers, besides a host of US-based retailers, have presented petitions to the US Sub-Committee recommending continuation of US GSP and CNL waiver to Indian jewellery. In the meanwhile, the industry has appealed to the Commerce Ministry to take up the matter with the right quarters in the US administration.

When contacted, the Minister of State for Commerce, Mr Jairam Ramesh, told

Business Line

here that his senior colleague and Union Commerce & Industry Minister, Mr Kamal Nath, is seized of the issue and is taking appropriate steps with the relevant bodies in the US and also in the higher echelons here.

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(This article was published in the Business Line print edition dated September 24, 2006)
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