US move to end HK pref status buoys Indian jewellery exporters

The trade war between the US and China is set to boost India’s gem and jewellery exports to the US.

Through an executive order, US President Donald Trump has ended the preferential economic treaty signed with Hong Kong, which effectively ends the territory’s separate customs treatment from China.

Subsequently, the US will increase duty on imports from Hong Kong to 7.5 per cent from 3.3 per cent. This means, goods exported from Hong Kong will now be considered as goods made in China for duty purpose.

The ending of Hong Kong’s preferential treaty would open new business avenues for India.

Opportunities for India

Colin Shah, Chairman, GJEPC, said the US move will possibly create opportunities for India in the gem and jewellery trade.

Both Hong Kong and China are the fourth largest importing destinations for the US in gems and jewellery after India, France and Italy.

Last year, Hong Kong and China exported gem and jewellery worth $981 million and $2.62 billion respectively to the US.

The manufacturing business has the potential to witness a shift to India from China. However, Hong Kong and China are also an important destination for India’s gem and jewellery exports. Of the overall exports from India, these countries account for nearly 27 per cent.

Both these countries largely import diamonds and gemstones as raw materials, which are studded in jewellery and exported to the US.

Many Indian diamond and jewellery companies have their offices in Hong Kong and the US move is likely to impact their businesses too.

According to GJEPC, India has exported gem and jewellery worth $10.48 billion in FY19 and $9.17 billion in FY20 to the US, which is 26 per cent of overall gems and jewellery exports from India.