The scrapping of the 80:20 gold import norms by the Indian government is likely to increase jewelry export business through the country’s Special Economic Zones (SEZs). Industry sources predict shift in export business from Domestic Tariff Area (DTA) to SEZs during the upcoming months.
Generally, DTAs constitute only 40% of the gold jewelry exports from the country, whereas 60% of the exports are handled by SEZs. However, since the imposition of the controversial 80:20 rule, the exports through DTAs witnessed sudden surge. As per the rule, 80% of the imported gold can be utilized towards domestic consumption provided the balance 20% is exported in the form of gold jewelry. The DTA units of many companies were seen involved in jewelry exports for trading purpose. As a result, the DTA share of the export business surged to 70% during the past three months.
According to export figures published by the Gems and Jewellery Export Promotion Council (GJEPC), the gold jewelry exports from DTA during the initial six months of the current fiscal shot up by 135% to Rs 16,231 crores when matched with Rs 6,893 crores during the corresponding six-month period from April to September last year. On the other hand, the exports through SEZs dropped by 22% from 16,290 crores during April to September 2013 to Rs 13, 654 crores this year.
The abolition of the 80:20 gold import rule is expected to bring back the jewelry export business to SEZs. The figures published by the Council indicate that exports till November have gone higher by 30% when compared with the previous year. However, the net gold jewelry exports from the country are expected to remain flat during the current fiscal.