India's gems and jewellery exports fell by about 9 percent to $39.5 billion during the fiscal year 14 as compared to $43.34 billion in the previous fiscal. The exports of gems and jewellery, which contribute about 15 percent of the country's overseas shipments, declined mainly due to the sluggish demand in global markets and stern Government’s norms on gold imports.
Gold is the second largest import item for India after crude oil and is mainly utilised to meet the demand of jewellery industry. The government had taken various measures like high customs duty of 10% and 80/20 rule to curb gold shipments to check country’s widening current account deficit (CAD). Under the 80/20 scheme, which was introduced in August last year, nominated agencies could import gold on condition that 20 percent of the shipment would be exported and the remainder would be kept for domestic use. The export of gems and gewellary has been declining since October 2013.
Concerned over the declining gems and jewellery exports fell, Commerce Ministry has asked the Ministry of Finance to relax curbs on gold imports adding that these restrictions were leading to gold smuggling. Meanwhile, contracting India’s gold imports has helped to contain the current account deficit (CAD) to $31.1 billion (2.3% of GDP) during the April-December FY14 period as compared to $69.8 billion (5.2% of GDP) reported in the same period of previous fiscal year.
