Suvankar Sen, Director, Senco Gold and Convener, SEZ Committe, GJEPC, talks about the role of SEZs in the growth of gems and jewellery exports, and policy interventions that can help the sector achieve its US$ 100 billion export target and become a global hub.
The share of the gems & jewellery SEZs in India’s total merchandise exports is 3.4%. This is more than the contribution of other major sectors like leather (1.53%), marine (2.15%), plastic & rubber articles (2.63%).
The fact that SEZs have been like trampolines for India’s growth is attributed to the various perks that companies enjoy by virtue of their SEZ membership such as easier custom clearances and access to shared facilities.
Aligning these production facilities with some of the initiatives of the Indian government such as the Atma Nirbhar Bharat & the One District One Product Programme is going to have promising results.
But improving on knowledge sharing, logistics and infrastructure would be the key to this. Financial incentives compliant with the WTO norms can play an important role in making the sector globally competitive.
The gem and jewellery (G&J) sector is reckoned as one of the fastest growing segments in the Indian economy. India constitutes 5.8% of the total exports of gems and jewellery sector, according to the Gems & Jewellery Export Promotion Council. It is ranked as the world’s fifth-largest gems and jewellery exporter, after Switzerland (12.7%), the US (9.5%), Hong Kong (8.6%), and the UK (6.8%). It has, therefore, been identified as one of the champion sectors by the Government of India with the aim to boost investments and manufacturing competitiveness.
Special Economic Zones (SEZs) have been instrumental in fuelling the growth of India’s gems and jewellery exports. To put things in perspective, there are 500 G&J manufacturing units operating out of the 10 SEZs across the country & SEZs constitute around 30% of these exports. For example, the overall gross exports of Gems & Jewellery at US$ 25.31 billion in 2020-21, & exports of gems & jewellery from SEZs stood at US$ 11 billion.
It is also worth noting that the share of the gems & jewellery SEZs in India’s total merchandise exports is 3.4%. This is more than the contribution of other major sectors like leather (1.53%), marine (2.15%), plastic & rubber articles (2.63%). Further, India is processing 90% of the rough diamonds, the smaller sizes, and a large part of it is happening in the SEZs. The US, Hong Kong & the Middle East are key destinations where these products are exported.
Growth engines for the gems & jewellery sector
The fact that SEZs have been catalysts for India’s growth is attributed to the various perks that companies enjoy by virtue of their SEZ membership. SEZs are regional manufacturing hubs where a group of companies manufacturing similar products have access to the same resources, knowledge, common facility centres and so forth. Another advantage of SEZs is that artisans working in SEZs are much well-versed with their craft and hence skilled. Further, custom clearances for these goods happen faster, unlike a DTA where one has to run from pillar to post to get these clearances. Lastly, 100% FDI is allowed in these regions.
Further, aligning these production facilities with some of the initiatives of the Indian government such as the Atma Nirbhar Bharat & the One District One Product Programme is going to have promising results. With regards to the Aatma Nirbhar Bharat, one notable fact is that India lacks most of the raw materials needed for production, yet it is the largest exporter of lab-grown diamonds. This is one of the biggest achievements of the sector. USA, Canada, and Europe are some of the nations where these are exported.
The sector is also striving to be a part of the ODOP initiative. So far, 390 districts have been identified, which can serve as ODOP clusters. There is a lot of potential for the development of knowledge transfer, confidence building, logistics, infrastructure and so forth.
Moving towards a more radiant future
The G&J sector was one of the sectors hit by the pandemic. Thus, there was a 28.46% yoy dip in India’s gems & jewellery exports in FY 2020-21. The sector, which is now on its way to recovery, is aiming at US$ 100 billion in merchandise exports & aims to become a global G&J production hub. Certain policy improvements by the government will go a long way in helping this sector realise this vision. Some of the suggestions that can be incorporated in this regard are:
At present, the import duty has to be paid to import raw materials into various free trade warehouse zones. The government must consider allowing their duty-free imports to enable greater liquidity into the sector.
There are times when the capacity of gems and jewellery sector may not be fully utilized owing to its seasonality. Allowing reverse job work policy by allowing investments into the sector can help fix that.
There are also some exit barriers that crop up during the transfer of property and assets. A lot of companies are reluctant to dispose of their redundant assets. These issues create problems that must be addressed.
In order to make the sector globally competitive and to encourage R&D and infrastructure development, etc., financial incentives compliant with the WTO norms must be offered to the sector.
Although there are a lot of regulations to promote FDI in the country, we need to have tie ups with foreign collaborations in terms of technology developments, advancements that the country needs to do with regards to the sector.
Lastly, each of the 10 SEZs in the sector operated in their own unique ways. They need to work together and collaborate to bring in more homogeneity in the sector.
Suvankar Sen is the 4th generation scion of Senco Gold & Diamonds. After completing his graduation from St. Xavier’s College, Calcutta and his Management from IMT, Ghaziabad he plunged into the family business in 2005 to take it to dizzying heights. He brought in strategic and contemporary thinking which are the hallmarks of any modern business of today. Under his stewardship, Senco Gold & Diamonds embarked on a path-breaking journey which included setting up a strong identity in new unknown shores.