Foreign Trade Policy Concessions Welcomed by India’s Diamond Industry

The Indian gem and jewelry industry has welcomed the changes to the Indian government’s Foreign Trade Policy (FTP) announced by the Minister of Commerce and Industry Kamal Nath on Friday. The changes provide certain concessions to exporters who have been hit hard by the appreciation of the rupee versus the dollar.

In a statement, Sanjay Kothari, chairman of the Gem & Jewellery Export Promotion Council (GJEPC) commented that he appreciated the measures, which he says will help the gem and jewelry industry tide over the difficult time it is going through and drive growth in the year ahead.

Specifically, the GJEPC welcomed the extension of the income tax exemption available to 100 percent Export Oriented Units (EOUs) under Section 10B of Income Tax Act until March 31, 2010. The previous exemption was to expire on March 31, 2009.

Some of the other provisions that are expected to benefit gem and jewelry exporters are:

• The limit value of jewelry parcels for export through foreign post office (including via speed post) has been raised from $ 50,000 to $75,000;
• Export of colored gemstones on consignment basis has now been allowed;
• The Surat Hira Bourse has been included as the port of export for gold, silver and platinum jewelry;
• The time period for re-import of branded jewelry remaining unsold has been extended from 180 days to 365 days;
• The replenishment authorization for duty free import of consumables, machinery, tools and equipments has been extended to cut and polished diamonds;
• Conditions (for an exporter with turnover of Rs.50 million - $1.25 million - for the last 3 years) for sending diamonds to laboratories for certification and grading have been removed;

The GJEPC is urging the government to make further amendments to the policy. They include the introduction of a positive value addition norm for exporters of plain/studded precious metal jewelry from units in the DTA and EOU, which is necessary due to the phenomenal rise in the price of gold; the inclusion of all exporters (apart from nominated agencies) for direct import of gold and, in the case of goods sold through auction, to include the import of rough diamonds and colored gemstones under the category of exemption from obtaining IEC number.

According to the minister, the changes to the FTP will boost the creation of new jobs. Overall exports from India stood at $155 billion in fiscal 2007-08, and are targeted to touch $200 billion in 2008-09 and $1,600 billion by 2020. If the latter target is achieved, India would have a 5 percent share in global trade, and create a further 10.1 million jobs in the country’s export sector.