Tariff impact: Gems & jewellery shipments to US hardest hit in September

Exports of gems and jewellery to the United States (US) were hit the hardest in September, following the full impact of the 50 per cent tariff that took effect during the month. Shipments of pearls, precious, and semi-precious stones plunged 76.7 per cent during the month, while exports of gold and other precious metal jewellery dropped 71.1 per cent, disaggregated data released by the commerce department showed. 

During the month, exports of cotton fabrics and madeups (-36.2 per cent), marine products (-26.9 per cent), industrial machinery for dairy (-28.1 per cent), readymade garments (-25 per cent), drug formulations (-16.4 per cent) and auto components (-12 per cent) also contracted in double digits. 

The US accounts for 37 per cent of India’s total exports of precious stones and 28 per cent shipments of gold jewellery, respectively. Exports of drug formulations contribute 40 per cent to India’s total exports, while readymade garments (34 per cent), marine products (36 per cent) and auto components (22 per cent), also form significant shares of India’s shipments. 

While the 25 per cent so-called reciprocal tariff on India kicked in from August 5, the additional 25 per cent US tariff on Indian goods — imposed in response to New Delhi’s purchase of Russian oil — came into effect on August 27, raising the cumulative duty on Indian exports to 50 per cent. 

In September, India’s total shipments to the US contracted 11.9 per cent to $5.5 billion, the fourth consecutive dip in value terms. Exports had hit $8.8 billion in May before starting to slide. However, during September, exports of telecom instruments (218.9 per cent), including iPhone shipments, electronics components (38.2 per cent), and petroleum products (26.5 per cent) among others, remained robust.

 

The US is India’s largest export destination, contributing about a fifth of India’s total shipments. Notwithstanding India’s efforts to diversify its merchandise exports, the country’s dependence on the US for its outbound shipments has increased over the past 14 years, according to commerce department data. 

India and the US aim to conclude a bilateral trade deal by the end of this month. Commerce and industry minister Piyush Goyal on Saturday said trade talks with the US are at an “advanced stage”. 

“The important thing is not the amount of tariff (the US will impose on India under the trade deal), the important element will be what will be the comparative advantage India will have over its competitors. Tariffs are not paid by the Indians, they are paid by the Americans. So the negotiation is always to find that competitive edge, which will help us grow business. We have an ambitious target with the US to double our engagement on goods and services to about $500 billion by 2030,” he said at an event on November 1. 

The US has been reluctant to grant India a tariff advantage by lowering the current 50 per cent tariff under the proposed trade deal to below the levels applied to regional competitors such as Pakistan (19 per cent), Indonesia (19 per cent) and Bangladesh (20 per cent), given India’s current market liberalisation offer, Business Standard reported on October 18.