In a significant move affecting the gems and jewellery sector, India has placed unstudded platinum jewellery under the restricted import category until April 2025. This decision comes as a response to traders exploiting loopholes in the existing system, particularly the import of items with high gold content through zero-duty Free Trade Agreement (FTA) routes.

Key Points of the Import Restriction

• Duration: The restriction is set to remain in place until April 2025.
• Requirement: Importers will now need government authorization for bringing unstudded platinum jewellery into the country.
• Target: The move aims to address the exploitation of FTA routes for importing high-gold content items.

Impact on the Industry

This policy change is expected to have far-reaching effects on various stakeholders in the gems and jewellery sector:

Context of the Decision

The government's decision comes against a backdrop of challenges in the gems and jewellery sector:

• Export Decline: The sector has been grappling with a 30% decline in exports as of October.
• Revenue Leakages: The move is part of efforts to address revenue losses due to exploitation of trade agreement loopholes.
• Trade Control: It represents a broader initiative to strengthen oversight of precious metals trade in India.

Implications for the Future

While the immediate effects of this policy are clear, its long-term implications remain to be seen. The restriction could potentially:

1. Encourage domestic production of platinum jewellery
2. Lead to shifts in trade patterns within the gems and jewellery sector
3. Prompt reassessment of Free Trade Agreements and their implementation

As the industry adapts to these new regulations, stakeholders will need to closely monitor the evolving landscape of India's gems and jewellery trade. The effectiveness of this measure in curbing the exploitation of trade loopholes and its impact on the sector's overall health will be crucial factors to watch in the coming months.

In a strategic move to bolster the gems and jewellery sector, the Indian government has announced an increase in duty drawback rates for gold, silver, and platinum jewellery exports. This decision comes as a response to the steep 50% tariff imposed by the United States on Indian jewellery shipments, set to take effect from August 27.

Revised Duty Drawback Rates

The revised rates mark a significant increase across all three precious metal categories:

This adjustment aims to provide much-needed support to exporters facing challenges in the US market, which is India's second-largest destination for gems and jewellery exports.

Impact on the Sector

The gems and jewellery sector plays a crucial role in India's export landscape:

• Total exports to the US in the last fiscal year: $9.94 billion
• This represents nearly one-third of India's total gems and jewellery exports, which stood at $29.8 billion

Industry Response

Vipul Shah, representing the Gem and Jewellery Export Promotion Council, welcomed the government's move but emphasized that more support might be necessary to maintain export momentum. Industry representatives have stressed the importance of sustained assistance to keep Indian exporters competitive against rivals such as Turkey and Thailand, which currently enjoy lower tariff barriers in the US market.

Challenges and Outlook

The 50% tariff imposed by the US poses a significant challenge to Indian jewellery exporters. This move by the Indian government to increase duty drawback rates is seen as a step towards mitigating the impact of these tariffs. However, the industry's call for further support indicates that the sector may need additional measures to navigate the changing global trade landscape effectively.

As the new tariffs and duty drawback rates take effect, all eyes will be on how India's gems and jewellery sector adapts to these changes and maintains its strong position in the global market, particularly in the face of increased competition from countries with more favorable tariff structures.