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India
By Zainab Morbiwala
India’s gems and jewelry industry made a formal pitch in November to be reinstated to the list of preferential duty-free traders with the United States in a high-level meeting with Charles Rivkin, assistant secretary of the U.S. Bureau of Economic and Business Affairs. The U.S. delegation met at Mumbai’s Bharat Diamond Bourse (BDB) with the top gem and jewelry associations of India, including the BDB, the Gem & Jewellery Export Promotion Council (GJEPC) and SEEPZ Gem & Jewellery Manufacturers Association (SGJMA). “Currently, import of jewelry from India attracts duty between 5.5 percent and 5.8 percent,” Vipul Shah, chairman of the GJEPC told the delegation. “Jewelry exports to the U.S. have witnessed a sharp decline from $2.3 billion in 2007 to $1.5 billion in 2013 due to the withdrawal of Generalized System of Preferences (GSP) benefits extended to India by the U.S. If GSP is restored, this would help boost India’s gem and jewelry exports to the U.S.” In a tour of the bourse, Rivkin seemed awestruck. “I am startled by the sheer magnitude of the bourse and the employment generated by the industry to the tune of 3.5 million,” he said. He stressed the importance of the Indian diamond industry having a transparent supply chain and responsible sourcing to be considered for reinstatement to the GSP list because those are the two key concerns of the U.S. government in matters of trade. An annual review by the U.S. of its GSP list is underway.
The Indian diamond industry representatives at the meeting stressed their ongoing efforts already underway in the areas of transparency and sourcing. They said there is a need for the U.S. to incentivize the Indian industry for being members of the Responsible Jewellery Council (RJC), which sets international standards on responsible business practices. The official press note to the meeting added that the Indian jewelry industry is proactively engaged with the Organisation for Economic Co-operation and Development (OECD) for responsible sourcing of conflict-free gold for manufacturing of jewelry to comply with Dodd-Frank Act regulations. Another announcement at the meeting was made by Anoop Mehta, president of the BDB, who revealed that the bourse, along with GJEPC, was in the process of implementing a project called MY KYC (Know your Customer) to achieve compliance in areas of antimoney laundering and terrorist financing.
On another matter, GJEPC’s Shah told Rapaport Magazine that the council has presented its wish list for the new national budget cycle to the Indian Ministry of Commerce. Some of the items on the list were familiar, especially the industry’s request to establish a trading hub in Mumbai as well as its opposition to the presumptive tax that uses indirect methods of assessing tax liability. According to Shah, a Mumbai hub would enable diamond manufacturers to be in direct contact with miners so that diamond auctions would not all have to be done in Antwerp, Israel or Dubai. Shah added that the council also asked the ministry to consider granting a banking license to the Netherlands-based ABN AMRO Bank, the world’s largest lender to the diamond industry, which would allow the bank to open branches in India. Shah is of the opinion that such an action would give the diamond sector greater financial support. The Times of India reported that the bank licensing request arises from concerns over shrinking capital for the Indian diamond industry from certain banks that are at the same time asking for additional collateral on their loans. “Indian diamond companies are finding it difficult to get financing from the banks, especially after the closure of Antwerp Diamond Bank (ADB) and the move by Standard Chartered Bank to drastically reduce its exposure to the diamond industry,” explained Shah.
With the holiday season just around the corner, the industry is upbeat about good demand from the U.S. and Europe. “Internationally, things are getting better and we are optimistic of good sales coming from the US.,” said Tarang Arora, chief executive officer (CEO) and creative director of Amrapali Jewels, adding that “Europe is a bit slow, though. What I have observed in the past few months is that people are being a bit conservative in spending on jewelry. They are only buying what they need. In India, too, this Diwali we did not see the sale of jewelry as ideally it should have been. Things were a little slow but then, this could also be because Diwali was a bit early this year.” In terms of strong product categories, Arora is of the opinion that diamond jewelry with colored stones is seeing especially good demand in the Indian market, based on his company’s sales. He said that rubies and emeralds are trending particularly well.Article from the Rapaport Magazine - December 2014. To subscribe click here.
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