Minister hints at sops for gem exporters

Minister of State for Industries Ashwani Kumar today assured exporters, including those of gems and jewellery, that the Centre would take all possible measures to protect them for the rising rupee.

Speaking on the sidelines of the 24th India International Jewellery Show in Mumbai on Thursday, the minister added that the rupee would rise in a range for the next 6 to 12 months.

The currency has appreciated by more than 10 per cent in the last one year, hitting gems and jewellery exports badly. The total inventories of gems and jewellery are estimated at Rs 28,000 crore as in July against Rs 25,000 crore during the the same time last year. The rising unsold stock has severely dented the country's gem industry.

The minister expressed hope that the country's total exports would touch the targeted $160 billion during 2007-08 despite the hitches. India is the largest cutting and polishing hub of diamonds in the world, both in terms of quantity and value. The domestic gems and jewellery sector contributed to about 15 per cent of the country's total merchandise exports during 2005-06 and 13.7 per cent in 2006-07.

Major markets for Indian gems and jewellery are the USA, the UAE, Hong Kong, Belgium, Israel, Japan, Thailand, the UK, Singapore and Korea. The US accounts for 29 per cent of the total gem exports from India.

The gems and jewellery exporters should learn to live without incentives such as the Generalised System of Preferences (GSP), the US incentive, under which India was treated at par with backward countries such as Bangladesh to avail of the 6 per cent duty rebate for jewellery exports to the US.

"We are in the process of engaging the industry to set up a hallmark to strengthen our credentials in exporting markets, especially in the EU. But as of now, we, barring a few, are facing no problem as far as the quality goes," said Sanjay Kothari, chairman, Gem and Jewellery Export Promotion Council.

"I must confess that some discrepancies still exist, but the government, in association with experts in the diamond jewellery industry, has put systems in place to counter-check before approving the export consignments," he added.

Kothari demanded sops such as fund availability at lower interest rates and compensation to cover losses as a consequence of the rupee appreciation and the withdrawal of the GSP. The government has already announced pre-emptive taxes on profits at an average of 7-8 per cent against the actual profits of about 3 per cent.