In this exclusive interaction with TPCI, Mr. Pramod Kumar Agrawal, Chairman, Gem & Jewellery Export Promotion Council, speaks about the opportunities and challenges faced by India’s gems & jewellery industry and necessary measures to boost exports in value terms.
Q: How is India placed vis-a-vis competition in the gems & jewellery exports and what are the major market opportunities/competitive threats going forward?
Pramod Kumar Agarwal (PKA): India enjoys a great position in the global gems & jewelry segment, when it comes to cutting & polishing of diamonds. However, it has not yet made great strides in the luxury or branded jewellery sector. When it comes to marketing plain gold jewellery, it needs to expand its presence from South Asia to the white skinned community (Europe). It should go beyond the US which imports about US$ 1.5 billion from India & establish itself in other markets also. At the same time, it needs to tap the international market for silver & imitation jewellery. It doesn’t even feature among the top 5 producers of imitation jewellery in the world; and faces stiff competition from China.
Given the recent US-China trade tensions, US has emerged as a potential market for India since India can fill the void created by the China and has the potential to export jewellery worth up to US$ 3 billion to US alone. India’s market penetration into Middle East can also be a major source to enhance the exports of gems & jewellery. Some of India’s large gems & jewellery retailers have, in fact, established their presence in regions like the Middle East, Singapore, US & Far East.
Q: What are the major market access/structural challenges faced by Indian exporters in international markets and domestically? How can they be addressed?
PKA: One major challenge faced by Indian exporters is the low buying capacity in major part of Africa owing to the poor standard of living, sparse population & the dismal state of their economy. Another thing is that India’s GSP status has been terminated in the US. If India can somehow convince the US to restart the scheme, it will be of immense help to the gems & jewellery exporters. There’s also the problem of high local taxes like GST & VAT in countries like Italy, which needs to be addressed when doing FTA negotiations.
Another major non-tariff barrier is that the Indian system of hallmark is not accepted in countries like the UK & Bahrain and the products have to be re-stamped according to the criteria prevalent there. Other regions like Dubai & Hong Kong are acting as intermediary markets for gems & jewellery. Also, India does not gain much in the FTAs signed for gold and these should be discouraged. Imported gold is often melted here, which changes its character. On the other hand, the FTAs signed with countries like Malaysia & Thailand have been advantageous for diamonds as they are markets for the same. Similar trade pacts need to be signed in the future for diamonds and colored gemstones.
One of the hurdles in doing gems & jewelry trade in India is the difficulty in ease of doing business, owing to the kind of regulatory system present here. Another problem is that the jewellery is being made using imported raw materials, which drives up the compliance burden and thus the production costs and impacts our exports. At the same time, owing to problems like frauds, the banks in India have become reluctant to offer credit to the industry. Infrastructural bottlenecks, too, act as roadblocks to trade. Technological interventions like establishing jewellery parks in manufacturing zones (eg Mumbai & Kolkata), having mega common facility centers & support by local government/institutions will bolster trade.
Q: What measures need to be taken to boost India’s gems exports in value terms across international markets?
PKA: Jewellery promotion needs to be strengthened at an international level. Some steps are already being taken in this regard. For example, we’re reaching out to industry stalwarts like the World Gold Council in order to reach out to less tapped regions like China, US, Japan, Europe & Middle East. At the same time, we need to invest in the skill development of our craftsmen. We’ve collaborated with the National Skill Development Council. We’ve also set up a Gem and Jewellery Skill Council of India. There should be a ‘design connect programme’ to keep up with international trends & to add value to our gems & jewellery. There should also be exhibitions & store-based promotions of our gems & jewellery.
Pramod Kumar Agrawal, started his career in Jaipur, in silver jewellery during the year 1986 with one artisan and one customer. He is also the Chairman of Derewala Industries Limited. With this humble beginning, his company has evolved into a multi vertical company. He has worked as a Member of Committee of Administration in GJEPC for several years and was Regional Chairman of GJEPC –Rajasthan Region before getting elected as Chairman at the national level. He has also looked after GJEPC’s institute – Indian Institute of Gem and Jewellery, Jaipur for almost 5 years as its Chairman.
