GJEPC Urges Industry To Petition USTR Against USA Govt.’s Proposed 25% Import Duty Levy

GJEPC held an open forum on 17th April to discuss the import duty till 25% as proposed by the USA Government on some categories of gems and jewellery imports from India. The Council along with industry members organized an open e-forum with its members in the presence of Steephen L., Director, Department of Commerce, and R.V. Anuradha, Partner, Clarus Law Associates, andconcluded with GJEPC requesting trade members to write petitions to the United States Trade Representative (USTR) against the levy. 

In his opening remarks, Colin Shah, Chairman, GJEPC, said, “India imposed a 2% equalisation levy on online transactions done from abroad and the US Government in retaliation is right now cautioning that it may impose an import duty till 25% on some category of gem and jewellery imports from India.” 

It is believed that India could face a steep tit-for-tat tariff proposed by the office of the USTR on jewellery exports to the USA due to what it termed as “unreasonable” and “discriminatory” taxes imposed by India on US digital companies.

A total of six countries — Austria, India, Italy, Spain, Turkey, and the United Kingdom — are subject to the proposed action based on an investigation of the US Trade Department under 301 statute. Of these, only India, Turkey and the UK could see jewellery exports being impacted.

Sabyasachi Ray, Executive Director, GJEPC, pointed out: “USA is India’s major export market for gem and jewellery products. Exports of around $9.3 billion go to the USA each year, accounting for a quarter of the total gem and jewellery exports of $36 billion from the country. If the proposed action of raising tariff rates gets implemented, this would adversely impact gem and jewellery exports of around $46-53 million and be another setback to one of the most labour-oriented export sectors of the country.”

Around the end of March this year, the USTR had called for comments on its proposed action against these six countries as their Digital Service Taxes (DSTs) “discriminated against US digital companies, were inconsistent with principles of international taxation, and burdened US companies.”

USTR commented that: “India has adopted a DST that imposes a 2% tax on revenue generated from a broad range of digital services offered in India, including digital platform services, digital content sales, digital sales of a company’s own goods, data-related services, software-as-a-service, and several other categories of digital services. India’s DST only applies to ‘‘non-resident’ companies.” 

USA has proposed retaliatory tariffs up to 25% on select Indian products including gems and jewellery for 2% equalization levy being levied by the Indian Government that would collect duties on goods of India in the range of the amount of DST that India is expected to collect from US companies Initial estimates indicate that the value of the DST payable by US-based company groups to India will be up to approximately $55 million per year.

The following gem and jewellery products are included in the US proposed list of products:

S.No.HTS US Sub HeadingProduct Description2020 (US$ million)2019 (US$ Million)DutyRate Description
17101.22.30Cultured pearls, worked, graded and temporarily strung for convenience of transport0.000.06FreeMFN Applied
27101.22.60Cultured pearls, worked, not strung, mounted or set0.060.11FreeMFN Applied
37103.99.50Precious or semiprecious stones, nesoi, worked, whether or not graded, but n/strung (ex. ungraded temporarily strung), mtd. or set3.002.0810.50%MFN Applied
47104.90.50Synth. or reconstruct. precious or semiprecious stones, wkd, whether or not graded, but n/strung (ex. ungraded temp. strung), mtd./set, nesoi1.540.636.40%MFN Applied
57106.10.00Silver powder0.270.03FreeMFN Applied
67113.11.20Silver articles of jewellery and parts thereof, nesoi, valued not over $18 per dozen pieces or parts5.468.3613.50%MFN Applied
77113.19.21Gold rope necklaces and neck chains11.3311.55.00%MFN Applied
87113.19.25Gold mixed link necklaces and neck chains6.074.715.80%MFN Applied
97113.20.25Base metal clad w/gold mixed link necklaces and neck chains0.771.595.80%MFN Applied
107113.20.50Base metal clad w/precious metal articles of jewellery and parts thereof, nesoi0.612.385.20%MFN Applied
117114.20.00Goldsmiths’ or silversmiths’ wares of base metal clad with precious metal0.030.153.00%MFN Applied
127116.20.05Jewellery articles of precious or semiprecious stones, valued not over $40 per piece9.389.183.30%MFN Applied
137116.20.15Jewellery articles of precious or semiprecious stones, valued over $40 per piece2.615.486.50%MFN Applied
147116.20.30Semiprecious stones (except rock crystal), graded and strung temporarily for convenience of transport0.411.772.10%MFN Applied
157116.20.35Semiprecious stone (except rock crystal) figurines0.460.44.50%MFN Applied
167116.20.40Semiprecious stone (except rock crystal) articles (other than jewellery and figurines)2.66310.50%MFN Applied
177116.20.50Precious stone articles, nesoi2.061.91FreeMFN Applied
 USA Imports from India (US$ million)46.7253.34  
Source: USITC 29 th March 2021 World Tariff as on 29th March 2021

R.V. Anuradha, Partner, Clarus Law Associates, an expert on international trade law, who is providing legal guidance to GJEPC on this subject, commented: “The US findings are the result of a unilateral process. In their investigation the US has not been able to identify which law we have violated. The Equalisation Levy is not violating any rule of law which is agreed at the international level. The sole purpose of the investigation is that this 2% is primarily impacting US digital providers as opposed to other countries.” 

Steephen L. said, “The Government of India is completely against this proposed USTR levy that affects several other nations, including European countries. So, as a Government we are not fighting alone. Equalization Levy is a justifiable levy. But since it is discussed at the multilateral level, the US taking a unilateral decision against this levy is not acceptable as far as other Governments are concerned. The intergovernmental consultations are already done, and now the window is open for public comment, where especially the GJEPC, individual exporters, and US importers should file a representation to USTR against this action.”

Colin Shah noted that gems and jewellery exports have already been affected by the withdrawal of the Generalised System of Preferences (GSP) by the USA. Further penalising the sector with high import duty will have severe adverse impact on overall gem and jewellery exports of the country.

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