Silver jewellery exports may lose duty-free status in US

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New Delhi, Nov 19 : Indian silver jewelry export sector, hit by rising input costs and a demand slowdown in its major export markets, is now facing another huge threat. The US, one of its major export destinations, may revoke the duty-free status for Indian silver jewelry imports.

Under its generalised system of preferences (GSP) programme, which was created in 1974, the US gives duty free entry for products from developing countries like India to promote economic growth in those countries and improve bilateral trade with the US.

The US is likely to withdraw duty-free benefits for Indian silver items due to the rise in imports of such items. This means silver jewelry could be subjected to the normal duties soon, which in turn will make them less competitive.

According to the statistics data compiled by the US department of commerce and the US International Trade Commission, exports of silver jewelry and related items from India to the US under the GSP scheme, were worth $49.4 million, in the January-August 2007 period, an increase of 7.1% over the $46.1 million in the same period in the previous year. In January-December 2005 period, silver jewelry exports were worth $53 million, which then grew to $69.75 million in the whole of 2006.

Among the leading products exported by India under GSP programme during January-August 2007 period were - wind powered electric generating sets ($109 million), gold necklaces and neck chains ($76 million), hand-hooked carpets and other textile floor coverings carpets ($72 million), silver jewelry ($49.4 million), auto and truck parts ($47 million), and worked monumental or building stone ($46 million).

As per the ‘Competitive Need Limitations’ (CNL) provision of the GSP rules, if exports of a product from a country to the US enjoying the duty-free benefits, crosses the $130 million mark or if it gains more than 50% of share in the total imports of that item by the US, then that item would be taken off the GSP beneficiary list, as that item would then be considered strong enough to compete without the duty-free benefits.

Sources said the Gems and Jewellery Exports Promotion Council (GJEPC) had submitted their petition requesting CNL waivers for silver jewelry items before the November 13 deadline for the 2008 Annual Review specifying the reasons for the request and the issues contested.

Indian government will soon take up the matter with their counterparts in the US administration saying the loss of such benefits along with the increase in input costs and slowdown in demand in the US would result in major job losses in that industry in India, official sources told FE.

In the April-September period this fiscal, the gem and jewelry industry as a whole registered a 16.74% growth to $11.03 billion, while the imports of such products grew by 31.58% to $11.66 billion during the corresponding period last fiscal.

Last fiscal, the sector’s exports grew by just 9% in dollar terms to $20.8 billion. But this was a significant 12.7% of the total exports worth $163 billion. More importantly, the sector provides employment to around 10 million workers. Of the total exports from the sector, 35% goes to the US.

Two years ago, the US had withdrawn similar GSP benefits to gold from after exports of that item touched $2.21 billion under the GSP programme. Gold jewelry was included in the GSP programme in 2001. Though several representations were made by the Indian government and industry before the US authorities, the US has not yet recondered its decision.

According to the US government, India with $3.4 billion worth exports under the GSP program in the January-August 2007 period, is the leading country supplying 16.4% of all GSP exports. Shipments from India under GSP accounted for 22% of the country’s total exports to the US.

Gold jewelry exports were worth over 32% (or $1.1 billion) of India’s GSP exports.

The US has already rejected the applications by Export Promotion Council (EPC) for Handicrafts to add certain vanity bags, handbags and hand made lace, hats and headgear items in the GSP.

The US had also rejected the handloom EPC’s request to add to the GSP hand-loomed carpets, textile-floor covering items, terry toweling items, shawls, scarves, mufflers, gloves, mittens, bed linen, table linen, toilet linen and kitchen linen items, curtains, interior blinds, furnishing articles, floor cloths, dishcloths & similar cleaning cloths of textile materials.

Losing the sheen

• Under its generalised system of preferences programme, which was created in 1974, the US gives duty-free entry for products from developing countries such as India to promote economic growth in those countries and improve bilateral trade with the US

•The US is likely to withdraw duty-free benefits for Indian silver items due to the rise in imports of such items. This means silver jewelry could be subjected to the normal duties soon, which in turn will make them less competitive

• According to the statistics data compiled by the US department of commerce and the US International Trade Commission, exports of silver jewelry and related items from India to the US under the GSP scheme, were worth $49.4 million, in the January-August 2007 period, an increase of 7.1% over the $46.1 million in the same period in the previous year