After successfully navigating the pandemic, the gems and jewellery sector is riding high as foreign orders rise and more manufacturers enter the export market, Colin Shah, chairman of the Gems & Jewellery Export Promotion Council, told Moneycontrol in an exclusive interview.
Employment in the sector has comfortably crossed pre-Covid levels as a series of free trade agreements push up earnings. GJEPC is aiming to exceed the initially predicted $45 billion in exports in FY23 by targeting annualised growth of 15 percent, Shah said.
GJEPC is the largest forum for the Indian gems industry, which recently saw jewellers opening showrooms in international hubs such as London, New York, Hong Kong and Singapore. Edited excerpts:
Has the industry overcome the impact of the Covid pandemic?
Yes. Employment levels are now easily above pre-Covid ones. Considering the amount of growth we have seen in an industry which is as labour-intensive as ours, the number of people employed by export units has quickly shot up. Despite the churn in the aftermath of the pandemic, we have seen solid growth. Overseas buyers have continued to source Indian products.
The government is depending on the gems and jewellery sector to reach its export target of $500 billion in FY23. What are the sector’s prospects?
We have informed the government that $45 billion worth of exports would be done by the gems and jewellery sector in the current financial year. We have seen a 10 percent growth in the April-July period. The prime minister has called for $70 billion worth of exports from the sector based on calculations made by GJEPC. That equates to a 15 percent annualised growth in exports.
That can be easily achieved if India continues signing FTAs and improves its ease of doing business. Overall, the number of our members has also gone up to 8,000.
How are the recent FTAs signed with the United Arab Emirates and Australia expected to affect the gems and jewellery sector?
The deal signed with the UAE is very good for us since it has removed the earlier 5 percent import duty imposed by the UAE on plain and studded gold jewellery from India. Since the UAE is India’s largest market for gold products, the deal is expected to immediately boost exports in the current year. GJEPC estimates that exports to the UAE would rise by $5 billion while exports to Australia would rise by $600-700 million as a result of the deals.
Because of these FTAs now being signed, a lot of Indian brands are now opening showrooms in major international hubs such as New York, London, Singapore, Hong Kong and others. We have always had a large manufacturing base but over the years and especially after the pandemic, a large number of them have begun to enter the export business.
Among the FTAs currently under negotiation, which is the most in focus for GJEPC?
The one with the US would be the most important since the US constitutes the largest market for the sector. Otherwise, trade deals with Australia, the European Union and the UK are all important since we are aiming for the removal of import duties and preferential market access.
How is the new mechanism of rupee-denominated trade announced by the Reserve Bank of India expected to help gems and jewellery exports?
Not only our industry per se, but for all exporters and the country at large, it would be good to be able to pay for our imports in rupees. Not only from Russia, Iran, or any specific country. If imports, in general, can be bought in rupees, it would also save on US dollars. Also, importers should have the choice to pay in rupees since India is now a major trade partner to many countries.
Industry insiders had cited concerns over the flow of diamonds from Russia, which dried up since the invasion of Ukraine. Is that a worry?
The slowdown in the flow happened since payments could not be made to Russia. Diamond prices have risen by 20-30 percent after the pandemic, but we continue to receive foreign orders. The latest price rise has occurred because prices had not risen in the past 10 years. The domestic market also continues to be very strong.
Do you feel the revamped gold monetisation scheme has worked?
The amended Gold Monetisation Scheme is much better than what it was, but if they really want to push the pedal, there obviously needs to be some incentives for the consumer. However, the government also has its own reasons for not doing it.
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