G&J exports likely to remain under pressure this fiscal
Apex industry body ASSOCHAM urged the government to extend incentives like interest subvention, Merchandise Exports from India Scheme (MEIS) and others to promote gems and jewellery (G&J) exports that have been marred by global slowdown thereby putting at risk livelihood of over 30 lakh people employed by the sector across India.“G&J exports from India are likely to remain under pressure this year as well, even though there are indications of improvement in business sentiment in United States of America (USA) which takes nearly half of country’s diamond jewellery production,” noted an ASSOCHAM paper titled ‘2015-16: A year of dismal export performance for India.’
“Though market share of the USA and Hong Kong in diamond and precious stones’ exports has expanded to 29 per cent and 36 per cent respectively over the last few years, market share of the UAE has fallen steadily from one-fifth a few years ago to less than one-tenth of the total exports,” noted the paper prepared by the ASSOCHAM Economic Research Bureau (AERB).
While import of rough diamonds and semi-precious stones have fallen by over 11 per cent in FY2015-16, the net diamond exports and semi-precious stones have declined by about 43 per cent year-on-year i.e. from $4.2 billion (bn) in 2014-15 to just $2.4 bn in 2015-16.
Besides, exports of jewellery have also fallen by about 17 per cent i.e. from $13.2 bn in 2014-15 to $11 bn in 2015-16. Dubai and Thailand are fast emerging as major jewellery manufacturing hub as a lot of Indian businesses are setting up units there.
The Gold Monetisation Scheme might help reduce reliance on import of gold to meet domestic demand and may have some positive impact during the course of the year, the paper observed.
ASSOCHAM has reiterated its appeal to the government for granting ‘industry status,’ to the gems and jewellery sector to give a fillip to investments and bring down costs of operation as that would also help build trust and faith in Indian brands in global markets and in achieving goals of Make in India.
Modernisation of labour laws, requirement of more export-oriented economic zones, establishment of a gold board, ensuring access to better financing, relaxation of certain taxation laws, segregation of investment and consumption demand, setting up a gold tourism circuit are certain key areas focus on which can help in reviving the G&J sector in the country.
Impact of falling global prices and export volumes has not only affected the G&J sector but petroleum products’ exports have also plummeted by over 46 per cent i.e. from about $67 bn to $30.4 bn during the aforementioned period. “This seems to be much larger problem as Indian firms are losing their share in global markets.”
The ASSOCHAM paper has also suggested for replacing power looms that account for about 65 per cent of fabric production in India by modern shuttle-less weaving equipment, besides it is also required to diversify its export markets away from a few countries in the European Union and the USA to nearby countries in the Asian continent.
Further, ASSOCHAM has recommended to urgently put in place the long-pending goods and services tax (GST) to reduce the burden of un-refunded state level taxes to make India’s exports competitive.
It has also suggested the government to set up a high-level committee to look into costs of inter-state barriers to trade and suggest a time-bound roadmap to address the same as that would not only provide much-needed relief to the export sector but weld India into a single market much bigger than EU in terms of population.