U.S. might slap 25 per cent duty on Indian Gems & Jewellery

India and the United States are at loggerheads over an ongoing dispute over a digital service tax, some say it is likely —that a wide range of Indian jewellery items will be slapped with a new import duty of as high as 25 per cent

A virtual hearing on Indian tariffs is set for May 10, with the final determination likely to be made in the coming weeks.The dispute is rooted in the fact whether the Office of the United States Trade Representative (USTR) considers India’s 2 per cent digital service tax, which targets e-tailers like Amazon, is “unfair and discriminatory,” as it affects only non-Indian companies. As a result, the USTR has proposed additional tariffs of up to 25 per cent on around 40 different Indian goods. Of those 40, 17 involve jewellery. Affected categories could include: gold necklaces and chains, silver jewellery, cultured pearls, unstrung precious or semiprecious stones, and unstrung synthetic precious or semiprecious stones.

India’s Gem and Jewellery Export Promotion Council (GJEPC) has listed the 17 jewellery-related items.V eteran trade watchers say the imposition of the duties—never mind duties that reach as high as 25 per cent —is far from certain.According to Jewelers of America president and CEO David Bonaparte  they are keeping an eye on this duty. So far, they don’t see anything alarming that will affect the industry at this time. They don’t think it’s going to have a heavy impact. Still, the proposed actions are strong enough that the GJEPC asked members to submit comments asking that the gem and jewellery business not be singled out.

GJEPC chairman Colin Shah, said, “Our sector had earlier been significantly impacted with the abrupt withdrawal of the GSP benefits

in 2019

. We are now deeply disturbed with the threat of further action against our niche sector.”He said that the imposition of tariffs would create “severe economic harm, not only for the Indian businesses and their employees, but also to the U.S. businesses with whom we have built a solid foundation of harmonious business relationship.”

He added that the main beneficiary of any jewellery tariffs would likely be China, which has emerged as India’s main competitor on the world jewellery market.A smaller but not insubstantial jewellery producer, Turkey, may also be subject to retaliatory tariffs on its jewellery, and several Turkis jewellery producers voiced unhappiness on that as well.