How is the jewellery sector coping with U.S. tariffs?, Pg8

Key Highlights:

• The U.S. has imposed import duties of 50% on India’s cut and polished diamonds and 50-57% on studded and non-studded jewellery, impacting established trade.
• In 2024-25, India exported diamonds worth ₹46,000 crore and studded gold jewellery worth ₹23,000 crore to the U.S.
• The Gems and Jewellery Export Promotion Council predicts that the U.S. tariffs could affect the jobs of 1.7 lakh skilled workers.
• The industry seeks government intervention in the form of policy reliefs, aid for workers, and monetary and marketing benefits for three to six months.
• The industry estimates that the total bailout package needed is around ₹500 crore.

Detailed Insights:

• The U.S. tariffs are disrupting businesses established over five decades, disproportionately affecting MSMEs that constitute 85% of India's exporters in this sector.
• Policy reliefs sought include extending the export obligation period for exports to the U.S. from 90 days to 270 days and allowing reverse job work in DTAs by jewellery manufacturing SEZs.
• The industry also wants the government to allow SEZs to sell in the domestic market with import duty foregone, unlike the current 20% duty on finished products for domestic sales.
• Incentives demanded encompass monetary incentives like interest subvention, temporary subsidization of exports to the U.S., worker benefits such as restructuring of personal loans, and funding to explore newer markets.
• Gujarat, Rajasthan, and Maharashtra are the states expected to be most severely affected by the U.S. tariffs on the gems and jewellery sector.

Key Concepts Involved:

• Export Obligation Period: The time frame within which exported goods must be shipped to avoid import duties and GST.
• Reverse Job Work: Allows SEZs to manufacture goods for domestic buyers, utilizing idle machinery and retaining skilled workers.
• Domestic Tariff Area (DTA): Areas within a country that are subject to its customs and fiscal laws, as opposed to Special Economic Zones (SEZs).