According to CRISIL, US withdrawal of benefits under Generalized System of Preference (GSP) which has been in effect from June 5, could moderately impact the gems and jewellery sector in India. In calendar 2018, India’s goods and services trade with the US totaled $142.1 billion of which, exports were $83.2 billion. Within exports, that under GSP is estimated to be 7.5-7.8%, which translates into $260 million of levies saved, tantamount to a 4% duty benefit.

“The withdrawal of GSP will affect exporters of gems & jewellery the most because 15% of such exports availed of its benefits in calendar 2018. Now there will be an additional duty of 7% on exports of precious metal-based and imitation jewellery. That will reduce competitiveness of domestic exporters and put pressure on margins,” said Hetal Gandhi, director, CRISIL Research.

The gems and jewellery sector has suffered major setbacks due to strict regulations and tightening of line of credit by banks. With more than 15% share in overall exports, India is one of the leading countries for gemstone polishing.