Value content norms curb jewellery exports to China

Despite being a leader in gems and jewellery exports, India has a trade deficit in this segment with China. India has not been able to tap the growing jewellery market in China due to the Regional Value Content restrictions.

As of FY18, Indian gems and jewellery industry imported $235 million worth goods to China. Of this, the largest chunk worth $215 million was cut and polished diamonds. On the other hand, India imported silver bars, gold bars, rough coloured gem stones, rough pearls especially cultured pearls valued $550 million, which led to a trade deficit of $314 million.

India has not been able to export value-added products like gold jewellery, silver jewellery or imitation jewellery due to the Regional Value Content restrictions. As part of the Asia-Pacific Trade Agreement, India gets a 100 per cent Margin of Preference for cut and polished diamonds sent to China. However, there is a condition that the RVC should be 45 per cent. India procures the raw materials like rough diamonds, gold and silver from overseas producers, processes them and exports to various markets. Hence RVC of 45 per cent cannot be applicable in case of cut and polished diamonds, said Gems and Jewellery Export Promotion Council.

Similarly, in case of gold jewellery and silver jewellery there is a Margin of Preference of 35 per cent, but an RVC of 45 per cent.

“Since CPD is a major commodity exported from India to China, the GJEPC strongly recommends for negotiating with China for reducing stringent RVC 45 per cent condition to maximum 15 per cent. Though coloured gem stones, silver, gold and imitation jewellery are not much exported from India to China, negotiations can be done towards reducing RVC to 20 per cent in case of silver and imitation jewellery and 10 per cent in case of gold and coloured gem stones,” said GJEPC.