Withdrawal of GSP benefits by US could affect India’s gem and jewellery exports
The US government’s decision to withdraw its Generalized System of Preferences, implemented on June 5 in India, is expected to negatively impact India’s gem and jewellery exports.
“The withdrawal of GSP will affect exporters of gems and jewellery the most because 15 percent of such exports availed of its benefits in calendar 2018,” independent research firm Crisil Research’s director Hetal Gandhi told ET Bureau. “Now there will be an additional duty of seven percent on exports of precious metal-based and imitation jewellery. That will reduce competitiveness of domestic exporters and put pressure on margins.”
As India is a top exporter of jewellery to the US, the move to withdraw GSP will earn the US a sizeable amount in terms of customs fees. For Indian exporters, this will mean a decrease in profit and increase in competition from other countries vying for the market share.
Whilst trying to increase jewellery exports and increase domestic sales, India’s jewellery industry is also currently grappling with a more hostile lending environment from banks. Following the media storm around jewellery tycoons Nirav Modi and Mehul Choksi’s alleged fraud at the Punjab National Bank, many Indian banks are more reluctant to lend large sums to jewellery businesses.
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