Half of India's USD 80 billion jewellery market constitutes exports. Of these, a third or USD 12.5 billion is exported to UAE. With UAE's recent hike in gold's import duty to 5 percent from 0.36 percent, India's exporters will see their profits shrink, says Sanjeev Agarwal, CEO of Gitanjali Export Corporation.
India is known for its export of high value-added gold products and not cut and polished diamonds. So they have enjoyed very high margins, says Agarwal.
So, Indian exporters to the UAE are already considering the idea to shut shop in India and shift operations to UAE, he tells CNBC-TV18. They are also mulling a plan to move all exports to another Gulf country, from where the goods can then be re-exported.
This hike in duty, will not only affect the country's image as a re-exporter of gold, but its financial capital, Dubai's image as a famous shopping destination as swarms of buyers flock from all around the world, he says.
Gitanjali, says Agarwal, may not see any significant impact as only a fraction of its exports are to the UAE. Most of their exports go to US, South East Asia and Hongkong.
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