India should encourage gold imports to boost jewellery exports

By Archana R Nair

If gold imports could boost the thriving export industry, should India discourage gold imports? Provided India's jewellery and gem sector expected to double during the next few years, shouldn't the government promote imports and abolish the hike in its import duty?

India is growing as a significant player in the overseas jewellery market. India's jewellery export share in the world market is booming and the demand is expected to continue to double during the next few years.

As India' domestic gold production is very limited, the only way out is to buy it from outside.

According to a latest report by the World Gold Council, the value of jewellery demand in 2011 reached a new annual record of US$99.2billion. India and China continue to believe in both the intrinsic and emotional value of gold jewellery which explains why overall global jewellery demand was resilient despite high gold prices, difficult economic conditions, volatility and currency weakness against the US dollar.

As per the data given by the Gems and Jewellery Export Promotion Council, India's export of jewellery is expected to have reached $30 bn in 2010-11, the latest year for which data is available.

However, the gold import declined by 44% in the last quarter of 2011, according to the data released by World Gold Council. The rallying gold prices and the hike in import duty are cited as the reasons for the downfall.

Indian designs are a major attraction internationally, be it traditional or trendy. Gemmologists and Jewellery designers are engaged in bringing out new trends which are famous even among Hollywood stars.

Mehul Choksi, CMDof Gitanjali Gems Ltd says that," With increasing competition from China, the government should encourage the development and promotion of BRANDED Jewellery in the International market, for the long term sustainable growth of the Gems & Jewellery Sector. The levy of Excise Duty on Jewellery should not only be immediately abolished but a "Indian Brands" promotion corpus should be made available to promote Indian Jewellery Brands in the International Market."

He adds, The government should provide a boost to the development of the modern, organised segment of the Indian jewellery industry by abolishing excise duty on jewellery, creating "Indian Brand" development fund to promote export, allowing duty free imports of cut & polished diamonds in Bonded Warehouse for value add and re-export.