India-UAE FTA to benefit gems and jewellery sector, indicates Piyush Goyal

Hinting at a duty waiver for India’s gems and jewellery exports to the United Arab Emirates (UAE), commerce and industry minister Piyush Goyal on Friday said that the “gift” in the form of a bilateral free trade pact, to be signed in the evening, will expedite growth for the sector for several decades to come.

“Today evening there will be another reason for this sector to celebrate. It will be a gift that will ensure an expedited growth of this sector for many decades to come,” said Goyal, referring to the India-UAE Comprehensive Economic Partnership Agreement.

India’s gems and jewellery sector is expected to achieve the $40bn export target this fiscal, said Goyal while addressing the Inaugural Ceremony of India International Jewellery Show (IIJS) Signature 2022 on Friday.

India and UAE free trade pact, to be signed at a ceremony around 7pm on Friday, is expected to give a boost to New Delhi’s gems and jewellery exports on the back of a possible waiver of the 5% (MFN) import duty on gold, platinum and silver jewellery by the UAE.

The sector is expected to post a 6.5% growth in exports over the pre-Covid levels, said Goyal. “Our Gold and Diamond trade contributes about 7% to our GDP and employs over 50 Lakh persons. The exports already stand at $32 bn this year until January,” said Goyal in his address through video conferencing.

The UAE accounts for 80% of India’s plain gold jewellery exports and 20% of studded jewellery exports. According to Gems and Jewellery Export Promotion Council (GJEPC), exports to UAE have witnessed the highest fall of 41.50% between April 2021 and January 2022 on a year-on-year basis. India’s exports of studded gold jewellery declined from $1.04 billion in FY2017 to US$400 million in 2020-2021, which is expected to go back to the average level of $ 800 million if the duty is withdrawn, according to GJEPC.

The minister added that the Budget 2022 has paved the road for the sector to grow & expand India’s footprint in Global G&J trade. The facilitative measures announced in the Union Budget include a reduction in import duty on cut & polished diamonds from 7% to 5%; extension of Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs up to March 2023. (Over 90% of units in G&J sector are MSMEs); acceptance of personal surety bonds in place of bank guarantee for import of gold; replacement of SEZ Act with a new SEZ regime. Besides, a simplified regulatory framework for e-commerce in the next few months is expected to facilitate G&J exports through e-commerce, ensuring that small retailers are able to ship their products overseas.

“Despite disruptions due to COVID-19, GJEPC has channelled its entrepreneurial spirit to convert a crisis into an opportunity. GJEPC organized virtual trade events like Buyer-Seller Meets, e-International Gems & Jewellery Show, India Global Connect, Webinars etc,” which Goyal said have helped the industry to bounce back quickly and gave a push both to domestic sales & exports.