It is a generally accepted principle that an export market is more easily captured if there is a thriving domestic market. On that basis, the concept of trying to tap the domestic market for studded jewellery cannot be faulted.Moreso, as the jewellery segment languished during the days of the obnoxious Gold Control Act. This Act, in operation since the early 1960s to 1990-91, effectively killed whatever chances the jewellery industry had for exports. India was thus a non-starter, what with anyone connected with gold being considered a smuggler. Given this, the fact that the industry almost managed to touch $1 billion in just 8-10 years is commendable.
As India imports diamonds solely for exports under the replenishment scheme, the diamonds which find their way into the domestic markets are ostentatiously rejections, without import duty. This is fertile ground for leakages which at times hovers between 5-10 per cent. The threat for the industry is, will the government continue with its policy of not charging any duty on diamonds which find their way to the domestic markets, should the `leakage' exceed 10 per cent of imported diamonds?
As all and sundry try to tap the domestic demand for studded jewellery, the prospects of customs and other government officials knocking on their doors is not an altogether pleasant thought for the diamantaires.
SA