US Republican Senator Bill Thomas is preparing to introduce a controversial Bill, which if passed, could strip the President of his powers to extend duty sops to sectors excluded from the Generalised System of Preferences (GSP). The GSP scheme gives duty free entry to products from developing countries like India and isdue for renewal early next year. With a duty-free market access, jewellery exporters have an edge over their counterparts from countries that do not enjoy the duty-free treatment. If the GSP benefits are not extended, it would see the duty rates going up to 6.5% .
Indias jewellery sector is particularly on the line of fire since its exports to the US are worth $1.6 billion. Bakul Mehta, convenor, diamond panel committee, Gems and Jewellery Exports Promotion Council (GJEPC) says the Bill seems to be punitive as the Senator is upset that India backed off from the WTOs Doha Round negotiations. He added, This (Indias stance at the WTO) should not be clubbed with granting it GSP benefits. If GSP benefits are not extended to the jewellery sector, it will affect the livelihood of 325,000 workers involved in the sector, particularly women and those in rural areas.
Besides, the sector is yet to recover from the floods which wrecked their business in Surat recently. The GSP scheme is to support development and employment. But if it is withdrawn, it will defeat the schemes very purpose, Mehta said. Mehta said Manufacturing Jewellers and Suppliers of America as well as several retailers in the US including Walmart, JC Penny and Macys have expressed their support to the Indian jewellery sector by voicing their opinion that the US should extend GSP benefits to the sector.
The exclusion of GSP benefits to the sector will affect their business too as most of the Indian jewellery exports to the US are in the mid and low range. Besides, these products are not in competition with US made products as the US is not into large-scale jewellery manufacture. Indian jewellery associations have also contacted Indian authorities and US senators to gather their support.