US withdrawal of trade benefits likely to impact gems and jewellery exports: Report

Mumbai: The US government’s decision to withdraw trade benefits under the Generalised System of Preferences (GSP) is likely to impact the gems and jewellery exports the most, the report said. The gems and jewellery sector is already under pressure on account of stringent lending rules and working-capital crunch. India tops the list of exporters to the US in this category, with more than 15 per cent share, the rating agency CRISIL said. [caption id=“attachment_6687851” align=“alignleft” width=“380”] Representational image. Reuters[/caption] “The withdrawal of GSP will affect exporters of gems and jewellery the most because of around 15 percent of such exports availed of its benefits in calendar 2018. Now, there will be an additional duty of around 7 percent on exports of precious metal-based and imitation jewellery, which will reduce the competitiveness of domestic exporters and put pressure on margins,” CRISIL Research director Hetal Gandhi said. The report, however, expects a limited impact on the country’s overall export trade. India’s goods and services trade with the US totalled $142.1 billion in 2018 of which, exports were $83.2 billion. It said that within exports, that under GSP is estimated to be 7.5-7.8 percent, which translates into around $260 million of levies saved, tantamount to a 4 percent duty benefit. For the pharmaceutical sector, it expects the impact of GSP withdrawal to be minimal. The US market accounts for 35-37 percent of Indian formulation exports.