India’s gem and jewellery exports to the EU, which constitute about 8% of the country’s total g&j exports, are likely to be affected to some extent by their exclusion from the list of products on which duties are waived under the EU’s GSP Scheme, say exporters. The new list will come into effect on January 1, 2017 and covers a three year period till December 31, 2019.

In the earlier three year period, which ends on December 31, 2016, gem and jewellery exports from India were covered by the GSP waiver. However, earlier this year the EU announced that the sector would be excluded in the forthcoming three year period as it had crossed the threshold level for exemption under GSP.

In 2015-16, India exported almost US$ 3.2 billion worth of gems and jewellery products to EU countries, down from about US$ 3.5 bn of exports in the immediate preceding two years. This includes nearly US$ 2 billion worth of cut and polished diamonds, about US$ 550 million of gold jewellery and over US$ 600 million of coloured gemstones, rough diamonds, non-gold jewellery etc.

Export of gems & jewellery from India to EU:

Others include rough diamonds, non-gold jewellery etc

Under the new duty structure, precious metal jewellery, which accounts for about 18% of g&j exports to the EU, will attract an import duty in the range of 2.5%-4% (varies across the 28 countries which are part of EU). In addition, VAT will be also applicable on jewellery retail sales, with rates varying between 20-25% across EU countries. This may impact exports in this segment to some extent, say exporters.

However, cut and polished diamonds, which constitute the single largest item in the basket with an over 60% share, are already exempt from duties, and may not be affected by the change.