The Gem and Jewellery Export Promotion Council (GJEPC) held a discussion on framing a policy for domestic and international trade in gems and jewellery through e-commerce with the Department of Promotion of Industry & Internal Trade (DPIIT) (Consumer Industry section), Ministry of Commerce & Industry, Government of India, through video conference on 7th August, 2020.
The meeting was chaired by Dr. Guruprasad Mohapatra, Secretary, DPIIT, and attended by key officials of DPIIT, DGFT, Department of Commerce, DDG (Department of Post), RBI, CBIC, GJEPC, Flipkart, Amazon, eBay and Reliance Retail.
In her presentation, Smt. Rupa Dutta, Economic Adviser, Department of Commerce informed that thus far, gems and jewellery e-commerce exports have been done only through the B2B/trade mode. She explained that exports have plummeted during the pandemic whereas global e-commerce sales have increased exponentially, opening up opportunities for gems and jewellery exports via B2C cross-border e-commerce.
She remarked: “Interventions are required by the Government primarily for easing the procedures, reducing the transaction and operational cost, fast-tracking of Customs clearances, seamless returns management, allowing courier mode for gems and jewellery shipments, etc. The facilitation shall have due safeguards to avoid misuse.”
Smt. Dutta pointed out that the present challenge of the gems and jewellery industry is primarily the high cost of operations, which has been preventing the sector to undertake B2C e-commerce exports. “As per an estimate, the process and compliance cost for a shipment originating from China or the Middle East to the US is $3.5 and $5 respectively, whereas the cost for a shipment originating from India to the US is as high as $65 to $100, which is an unviable option for our sellers,” she observed.
The key reasons attributed to the high processing and compliance cost include: compulsion to send shipments in “cargo mode”, thereby restricting courier companies to ship goods in “courier mode”, where there is some restriction specific to gems and jewellery products; unavailability of a dedicated fast-track Customs clearance mechanism for e-commerce shipments, similar process and compliance for a small-value shipment and a high-value shipment, which adds up to the cost for a low-value parcel, making it unviable to export.
She highlighted the enablers required for promoting B2C exports of gems and jewellery:
- Facilitating small-value shipments up to $800
- Quick Logistics – 72 hour Door-to-Door [Factory to Consumer]
- Economise Cost – $5 for a shipment of value up to $800, including all process, compliance, insurance, freight, etc.
- Seamless Returns management – to de-risk the consumer having an entirely EDI-based reverse logistics system
- Seamless Payment Flows through payment gateways and online closure of export bills in EDPMS
- No Human Intervention, Faceless Customs, Cloud-based solutions, API integration with EDI are key requirements for handling large volumes
- RMS-based system with requisite safeguards
- Recognising e-commerce exports as a way of doing exports
Shri. Colin Shah, Chairman of the GJEPC, noted that gems and jewellery products that sell through e-commerce have an average ticket size of $75. At present, gem and jewellery e-commerce exports take place mainly through the warehouse model where goods in bulk quantities are shipped to a warehouse to an overseas location as a consignment from where the orders are fulfilled. But this model has its own demerits, which include blockage of inventory, multiple warehousing of same products at various locations, tax implications overseas, issue of leftover inventories, re-import cost, etc. These challenges make the warehouse model unviable for most of Indian exporters, Shri. Shah added.
Indian exporters could save huge costs and offer greater variety to the customer by manufacturing the product only on a need basis once the online order is received, as done by competitors in China, Thailand, etc.
Shri. Shah added that the present process is cumbersome, involving too much paperwork that increases both time and cost, thereby making this route unviable, adding, “E-commerce is the future as it is increasing exponentially, but we are losing the opportunity, thereby making survival difficult.”
Shri. Sabyasachi Ray, Executive Director, GJEPC pointed out that in the US, diamonds, due to their high value and interest cost involved, are clubbed with perishable commodity clearance through Customs, and the maximum time permitted for customs clearance is 6 hours. India requires a similar kind of facilitation for e-commerce exports of gems and jewellery, he advised.
The Chair, Dr. Mohapatra concluded that the procedural or operational aspects for B2C exports of gems and jewellery through e-commerce needs to be eased for facilitating such exports.
The Chair directed GJEPC to make a step-by-step flowchart for goods, from the seller till the buyer, indicating the transaction cost, time involved in each step so as to help identify the issues and the concerned Government agency for rectifying the same.
The Chair further directed to submit the same within two weeks for convening the next meeting on the subject for seeking responses from concerned departments about their agreement to resolve with definite timelines or refusal/ counter proposal with reasons.