"Exporters were already facing a demand slowdown in the western markets and the imposition of curbs on gold imports are now acting as a double whammy," an industry expert said. Gems and jewellery exports were at USD 43.34 billion in 2012-13, an official in the Ministry of Commerce and Industry said.
The government took steps last year to contain gold imports in a bid to narrow the current account deficit. It raised the import duty on the metal to 10 per cent and made it mandatory for traders to export 20 per cent of imported gold, creating a supply crunch in the domestic market.
A local supply shortage hit exports as well, with volumes declining on a monthly basis. The gems and jewellery export sector employs 1.5 million people. The commerce ministry has asked the Ministry of Finance to relax curbs on gold imports.
After registering growth of 21.8 per cent in October, exports of gems and jewellery started contracting, with shipments down 22 per cent in March. Commerce and Industry Minister Anand Sharma had favoured a review of curbs on gold imports and said the restrictions were leading to smuggling.
Gold and silver imports dipped 40 per cent to USD 33.46 billion in 2013-14. India's overall exports touched USD 312.3 billion in 2013-14, short of the target of USD 325 billion.
The current account deficit narrowed to USD 31.1 billion, or 2.3 per cent of GDP, in April-December 2013 from USD 69.8 billion, or 5.2 per cent of GDP, a year earlier, the Reserve Bank of India said on March 5.