The likelihood of India’s key export products to the U.S. attracting higher tariffs ranging from 5% to 20% [in case the Union government fails to nullify the action by providing increased market access and buying more technology from the U.S.), could negatively impact India’s gem & jewellery exports to that market, as per a study conducted by the Gem & Jewellery Export Promotion Council (GJEPC), India’s apex trade body.

India’s gold jewellery exports to the U.S. could decrease by as much as 50% to $1.5 billion and the loss of 20 tonne of jewellery can lead to direct job less for 1-1.5 lakh people only in the gold jewellery segment, said Sabyasachi Ray, Executive Director, GJEPC.

The study has also mentioned that Indian gold jewellery manufacturers could shift base to Oman, Singapore, the UAE and even Hong Kong to take advantage of relatively lower tariffs in those countries for USA.

And the UAE can further expand its trading of gold jewellery to the U.S. and the world while India would lose out big time, as per the research paper.

Countries like Jordan, Switzerland and France are rapidly increasing their exports to the US, posing a threat to India’s dominance in this business. With duty-free competitors gaining traction, India faces potential market erosion due to tariff disadvantages, it is feared.

The Make in India for the world aspect of India’s gem & jewellery can face several challenges due the Reciprocal and Fair Plan of the U.S. recently announced by American President Donald Trump, the exporting members of GJEPC fear.

“India needs policy interventions to enhance its global market position,” said Mr Ray.

GJEPC exporter members opined that Indian government should pursue a Preferential Trade Agreement with the U.S. and need to engage in bilateral discussions to highlight reciprocal trade concerns and seek tariff relaxation.

Indian government has to strengthen Brand India in the US and promote Indian craftsmanship and ethical sourcing to create a premium positioning, they said.

Supply chain and logistics efficiency has to be enhanced and logistical bottlenecks to improve cost competitiveness have to be addressed, they added.

India’s current tariff structure limits its ability to compete effectively against nations with preferential trade access. Strategic interventions, including trade negotiations and market positioning efforts, are essential to enhancing India’s exports and sustaining its leadership in this sector, the GJEPC members stated.

It is feared that the U.S. can shift its imports of gold jewellery from India to France, Italy and Switzerland as tariffs on certain products in these countries are relatively lower than the tariffs prevailing in USA.

Jordan and Korea are observed to be beneficiary to the reciprocal plan of USA because under the ambit of FTAs, tariff structure in Jordan, Korea and USA are equal i.e. Nil and it has been observed that after the FTAs imports of the commodities in USA from Jordan and Korea have increased substantially, therefore these countries are expected to pose a competitive threat to India in case USA increases its import tariffs, as per the research paper.

GJEPC’s research shows that average tariffs in USA on gem and jewellery products without local taxes [3.17%] is lower than the average tariffs in India for USA [8.63%]. While with local taxes Average tariffs in USA are computed at 15.15% which are relatively higher than the average tariffs of 12.19% (with local taxes) prevailing in India.

Tariffs in India are higher for USA than what USA imposes for India on imports of the above products.

India’s gem and jewellery exports to USA were at $9.45 billion which comprised of 28.77% share in India’s total gem and jewellery exports of $32.85 billion to the world in FY24.

Similarly, India is one of the key sourcing countries of USA for gem and jewellery products. According to the USITC data , India constitutes for 12.99% share in USA total gem and jewellery imports of $89.12 billion from the world.

Courtesy: The Hindu