Page 8 - Bullion World Volume 02 Issue 11 November 2022_Neat

Bullion World | Volume 2 | Issue 11 | November 2022
Rise and Shine: Facilitating Gems and

Jewellery exports from Indian SEZs

Mrs Arpita Mukherjee, Dr Nida Rahman and Ms Eshana Mukherjee 1

This article examines the implication of DESH Bill Therefore, the SEZ units are in an
(2022) for gems and jewellery units located in unfavourable situation where (1) the
fiscal incentives have to be phased
Indian SEZs and lays down recommendations to out in agreement with the WTO
enhance exports from Indian SEZs. ASCM and (2) other countries like
China, Turkey, etc. are supporting
India is a key exporter of gems and are located in both multi-product and their SEZs with a competitive
jewellery products. In 2021, India’s single-product SEZs. There are four package of WTO compliant subsidies
exports of gems and jewellery stood single-product gems and jewellery and non-fiscal incentives like reverse
at USD 38.15 billion, recording an SEZs, whereas 25 multi-product- job work, which are not available
annual growth of around 56 percent operational SEZs, such as Santacruz to the Indian SEZs. The share of
from FY 2020. In FY 2021 vis-a-vis Electronics Export Processing Zone exports from SEZs to total exports
FY 2020, India’s exports climbed up (SEEPZ) (Mumbai, Maharashtra) declined to 17.7 percent in 2021-22.
in new product categories such as have gems and jewellery units.
coloured gemstones and lab-grown The single-product SEZs include To become WTO compliant, Indian
diamonds. India is the top exporter Manikanchan in Kolkata, West SEZs need to redesign its incentive
of cut and polished diamonds and Bengal; Surat SEZ in Surat, Gujarat, package. The fiscal incentives
ranks 2nd in gold and silver jewellery Hyderabad Gems SEZ Limited in should not be a drain on the
exports. The sector meets a large Hyderabad, Telangana, and Jaipur government budget and the benefits
part of its raw material requirement, Special Economic Zone, Sitapur, of the incentives, such as growth in
such as raw gold and rough Jaipur, Rajasthan. Exports from SEZs exports, must outweigh the costs
diamonds, from imports. was around 30 percent of the total associated with the incentives. While
gems and jewellery exports in 2019- designing the incentives, it is also
Globally, many countries have 2020. pertinent to see that the incentives
harnessed Special Economic Zones doesn’t become the sole reason for
(SEZs) in their export promotion However, lately, the gems and the firms to re-locate from Domestic
strategies. India set up its first Export jewellery units in Indian SEZs are Tariff Area (DTA) to SEZs and vice
Processing Zone (EPZ) in Kandla, facing an uncertain operational versa. Given these complexities
Gujarat, in 1965. As of November, environment as the export-linked and given that both Centre and
2021, there were around 5604 subsidies offered under the Indian states offer multiple incentives, we
units in Indian SEZs, contributing SEZ regulation have come under the conducted an online pilot survey
around 35 percent to India’s total scanner for non-compliance with the covering 14 SEZs units, 19 DTA
exports, and generating employment WTO’s Agreement on Subsidies and retailers and 5 DTA manufacturers
for 25,60,286 persons. Around Countervailing Measures (ASCM). (total 38 online survey respondents)
500 gems and jewellery units had The United States of America (USA) and 4 stakeholders’ consultations to
located in the Special Economic challenged a number of Indian examine the present status of gems
Zones (SEZ), primarily motivated by export promotion schemes, including and jewellery units in the Indian
3 benefits offered in an SEZ; (i) zero the incentives given to SEZ units SEZs, the issues faced by them and
duty imports, (ii) better infrastructure conditional upon the unit being a suggests a way forward.
and ease of doing business, and (iii) net foreign exchange earner as an
availability of fiscal and non-fiscal export linked prohibited subsidy, in
benefits. Gems and jewellery units the WTO and won the case in 2019.

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