US government shutdown to hit India Diamond Exports

By:Supriti Chatterjee 2019-03-15

The limited blackout of the US government is expected to have taken an undesirable influence on exports of small diamonds from India to the US, as per to Colin Shah, and also the vice chairman of the Gem & Jewelry Export Promotion Council (GJEPC). This actually approaches as uninvited news to a company that is previously undergoing slow-moving performance, with The Economic Times quoting an 8.5% weakening in the worth of sophisticated exports in the first nine months of FY2018, meeting at to $22.41 billion. 

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The closure has just begun before Christmas and continued for a best ever 35 days in which an expected 800,000 workforces though not including the constricted employees providing them – that gone without reimbursement as the Democrats in Congress challenged Trump's high demand for $5.7 billion in federal resources for a US-Mexico border partition.

“We are thus far to measure the complete influence of the US blackout on exports,” added by Shah, “but the effect will absolutely be felt on the intake of minor diamonds that are usually bought by staid US people who have been pretentious by this closure.” In addition, although the government has entirely renewed, it is only at complete-strength for the time being.

President Trump has fixed a time frame of February 15 for a budget deal, without which coming shutdown might track. Vipul Shah, a reliable diamond exporter, said the Times that the US-China trade war has also obstructed the program of loose diamonds from India to China. “Exports of diamond jewelry from China to the US have sluggish. Greater demand from the Far East is very lower at this time, which is also affecting Indian exports.” Just within the nine months to December 2018, exports of cut and refined diamonds from India dropped 13% to 22.89 million carats.

GJEPC looking for relief submits 'wish list'

The previous week, the GJEPC issued its pre-financial plan wish-list counting the numerous policy fluctuations essential for the business's extra development. The GJEPC has pursued Government livelihood in safeguarding effortlessness of doing business to assist exporters to augment exports in 2019-20. Definitely, the GJEPC looks for a drop of the import duty on cut and refined diamonds and jewels from 7.5% to its previous level of 2.5%, as per to a report from GJEPC Chairman Pramod Kumar Agrawal.

The association also requested that 5% of the FOB (free-on-board) worth of exports of cut & refined diamonds in the prior authorizing year must be permitted to be re-imported duty-free by exporters. The wish-list did not break there, as the GJEPC termed for a drop of the import duty on gold from 10% to 4%, in addition to alteration in the country's income tax principles to allow foreign mining corporations to sell uneven diamonds through the Special Notified Zone.

In addition, the GJEPC repeated an established demand for the overview of a likely tax policy system for diamonds and jewels in India. “The introduction of Presumptive Taxation would not only surge the effortlessness of running a business for diamantaires but also boost diamantaires from all over the globe to just commence movements in India as contrary to other favorite destinations such as Belgium, UAE, and Hong Kong,” the GJEPC clarified. They also supported the exclusion of ITC HS Code for both uneven lab-grown diamonds and other artificial stones to offer for the perfect variation between natural and lab-developed diamonds. They are looking for the overview of a job work strategy in the gems and jewelry industry, and an exception from payment of IGST on re-import of merchandises exported throughout foreign presentations/deliveries/export promotion excursions "to defend exporters from aggravation.”

Moreover to the GJEPC appeals for “a favorable banking atmosphere” for exporters of the jewelry and gemstone segment. For this, it commended the reduction of credit standards for working wealth requests and requested the government to announce an interest subsidy of 5% on export money for the gem & jewelry segment. The gems and jewelry segment funds 7% to the nation’s GDP, 13.5% to India’s stock exports and directly hires around five million folks.

As the exports of gold pendants & coins dropped by 84.7% to US$ 258.35 million in the nine-month term, though silver jewelry exports plunged by 81.4% to US$ 578.95 million, and Coloured Gemstones exports were fallen by 3.71% at US$ 274.73 million in April-December 2018.

December was a reasonably sluggish month for the India hub. Exports of cut and refined diamonds mounted at US$ 1.31 billion, a deterioration of 17.51% as compared to the US$ 1.59 that can be exported in December 2017.

GJEPC data discloses “Uneven imports fallen throughout the month to US$ 1.74 billion as compared to US$ 2.18 billion imported throughout the prior December. In bulk terms, also uneven imports dropped from 20.76 mn carats throughout December 2017 to 19.29 mn carats in December 2018.”

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