The generalised system of preferences (GSP) programme, which allows importers of the United States to purchase gems and jewellery from India at one per cent duty against 6.5 per cent, is now set to increase India's jewellery exports by 20 per cent.
India is soon expected to complete formalities with authorities in the US for renewal of the legal authorisation of the GSP programme. These talks are in the final stages.
Talks for similar benefits are also going on with Israel and Belgium. If and when they are finalised, Israel will become another important destination for Indian gem and jewellery.
"We may see immediate growth in India's gems and jewellery exports of at least 20 per cent to the US," said Sabyasachi Ray, executive director, Gem & Jewellery Export Promotion Council (GJEPC).
GSP benefit was extended to India off and on but the one offered, last expired on July 31, 2013. Since then, the government of India was trying hard to get it renewed. Despite several rounds of talks, the United States Administration in June this year wrote a letter to the Indian embassy in Washington seeking GSP application from the government of India.
The GSP programme assumes significance for India's gems and jewellery exporters as the sector has lost its United States market share significantly in the last two years.
Till 2013, India's gems and jewellery exports were growing rapidly following GSP benefit from the US, the world's largest consumer contributing nearly 40 per cent of global jewellery output. From the level of 38 per cent two years ago, India's share in the overall US gems and jewellery consumption has declined to less than 30 per cent. After hitting the level of $43.21 billion in 2011-12, India's gems and jewellery exports slumped to $35 billion in 2013-14 but recovered marginally to $36 billion in 2014-15.