A spurt in jewellery demand from America, the world’s largest consumer of luxury ornaments, has revived diamond processing and jewellery manufacturing units in Special Economic Zones (SEZs) and Export Processing Zones (EPZs) in this country.
Jewellery exports from SEZs/EPZs declined sharply in 2014-15, when the government acted to control gold imports, favouring units outside these areas, the Domestic Tariff Area (DTA).
Data compiled by Gems and Jewellery Export Promotion Council (GJEPC) showed export of precious ornaments from SEZs/EPZs declined to $3,660 million during 2014-15 as compared to $4,898 mn the previous year. While gold jewellery exports from the DTA almost doubled to $6,171 mn from $3,470 mn the previous year.
“India’s gems and jewellery sector is highly export-oriented, labour-intensive and a major contributor to employment generation, gross domestic product and foreign exchange earnings. Considering its immense potential and contributions, the Indian government has also declared the sector a thrust area for export promotion. However, in 2013, due to the increasing current account deficit and curbs put on import of gold, the industry was severely affected. These restrictions are leading to a state of panic in the jewellery manufacturing sector,” had said A Didar Singh, secretary general of business chamber FICCI in an AT Kearney report for the year.
The government curbed gold import through an increase in levy to 10% and several other measures, restricting availability for jewellers. Also, as supply from SEZs/EPZs to the DTA was considered an import and thus attracted duty, activity was hit in export- oriented zones.
“Jewellery demand from the United States has revived, resulting in revival of manufacturing units in SEZs/EPZs. Since the US economy has also indicated a recovery after several years of muted growth, jewellery demand in the US is likely to continue growing. Indian exporters have also expanded shipment to other markets, including the Middle East, the Far East and Southeast Asian countries,” said Praveen Shankar Pandya, chairman, GJEPC.
Its data show jewellery export from SEZs jumped 65% to $2,993 mn in April–September from $1,811 mn in the same period last year. Export of gold jewellery from the DTA, however, declined 23% to $1,451 from $1,873 mn in the same period the previous year.
“So long as jewellery demand continues from the US, 42% of the world’s luxury ornaments’ consumption, India’s SEZs/EPZs would continue to grow their business,” said Pandya.
Mehul Choksi, managing director, Gitanjali Gems, says jewellery demand in the US States saw growth of 10-15% this festive season.