Imports of cut and polished diamonds trebled in August on concerns on export markets. Traders are importing more for local sales if export demand doesn't match up.
Gems and Jewellery Export Promotion Council (GJEPC) data showed imports in the domestic tariff area, or DTA (where normal duties prevail as against Special Economic Zones, or SEZs), of Mumbai had jumped to Rs 2,326 crore ($382 million) in August compared with Rs 885 crore ($140 million) a year ago.
Imports into DTA shot up four-fold to Rs 12,072 crore ($2,010 million) during April-August against Rs 3,244 crore ($555 million) a year ago.
The imports into DTA has posed a threat to thousands of cutting and polishing units in SEZs. Since these are primarily meant to process imported goods, rising import into DTA indicates jewellers' growing optimism on the domestic market.
“Imports into DTA attracts two per cent duty, while this is not applicable for SEZs. Despite that if jewellers are keen on importing goods into DTA, these may be looking at the domestic market,” said Vipul Shah, chairman, GJEPC.
Traders can sell diamonds imported into DTA, after processing, in the domestic market or abroad. But commodities imported into SEZs will have to be exported after value addition.
Imports of processed diamonds into SEZ fell to a third to Rs 701 crore ($115 million) in August versus Rs 2,191 crore ($347 million) a year ago. Imports of cut and polished diamonds into SEZs between April and August declined 74 per cent to Rs 3,160 crore ($526 million) compared with Rs 12,148 crore ($2,083 million) a year ago.
“All domestic markets are looking more promising. But August is when jewellery is crafted for Diwali sales in India and the Christmas, New Year and Mother's Day sales abroad. The US jewellery demand has been robust," said Saurabh Gadgil, managing director of P N Gadgil Jewellers. The exports season, November to February, accounts for a third of annual sales.
“The fall in gold prices has renewed the consumer sentiment in the US this season," said Mehul Choksi, managing director of Gitanjali Gems.