SEEPZ Jewellers' Plea: Cracking the Domestic Market Amidst US Tariff Challenges

The Santacruz Electronics Export Processing Zone (SEEPZ) in Mumbai has long been a powerhouse for Indian jewellery exports, particularly to the United States. However, with the US set to impose reciprocal tariffs on Indian jewellery imports from April 2025, the industry is facing unprecedented challenges. In response, jewellers at SEEPZ are now seeking permission from the Indian government to shift their focus towards the domestic market. This strategic move aims to safeguard jobs and ensure the sustainability of the numerous jewellery manufacturing units in the region.

Current Scenario: SEEPZ and Its Significance

SEEPZ is renowned for being one of the largest hubs for diamond-studded precious metal jewellery manufacturing in India. It exports a staggering ₹28,000 crore worth of jewellery annually, with a significant majority—about 85%—destined for the US market[1][2]. The zone houses around 200 jewellery units, employing approximately 50,000 permanent workers and a similar number of contract employees. The expertise and compliance of these units with international standards position them well to produce high-quality jewellery for both global and local markets[1][2].

Impact of US Reciprocal Tariffs

The proposed tariffs by the US government have raised concerns among Indian jewellery exporters. The tariffs are part of a reciprocal measure aimed at balancing trade between the two countries. Currently, India levies a 20% import duty on gold jewellery from the US, significantly higher than the 5.5-7.0% tariffs imposed by the US on Indian gold jewellery. Additionally, India charges a 5% duty on imported cut and polished diamonds, whereas the US does not apply any such tariffs[1][2].

Given these circumstances, the US could increase tariffs on Indian gem and jewellery exports, making them more expensive in the US market. This could severely impact India's jewellery export volumes, potentially leading to job losses and economic instability in the sector[1][2].

Plea to Expand Domestic Market Reach

In light of these challenges, jewellery exporters at SEEPZ have requested government approval to manufacture and sell jewellery in the domestic market. This move would not only help maintain employment but also allow these units to survive and thrive by diversifying their sales strategy. Adil Kotwal, President of the SEEPZ Gems & Jewellery Manufacturers Association, emphasized that allowing SEEPZ units to manufacture for the domestic market would require a change in the special economic zone (SEZ) status, necessitating a government notification[1][2].

Benefits of Expanding into the Domestic Market

Economic Stability

• Expanding into the domestic market could provide a safety net for the industry in the face of global trade uncertainties.
• It would help stabilize employment for the 100,000 workers currently engaged in jewellery manufacturing at SEEPZ[1][2].

Market Potential

• The Indian market, being the second-largest consumer of gold jewellery globally, presents a vast and growing demand[4].
• Current trends indicate that Indian consumers are increasingly interested in both traditional gold jewellery and modern, Western-style pieces[4].

Compliance and Quality Assurance

• Jewellery units at SEEPZ are already compliant with international standards, ensuring that they can produce high-quality products for the domestic market as well[1][2].

Regulatory Challenges and Solutions

To facilitate the shift towards the domestic market, the Indian government would need to adjust the existing SEZ policies. Currently, SEZs are primarily designed to encourage exports by offering tax benefits and streamlined regulatory processes. Allowing SEEPZ units to sell locally would require them to pay applicable domestic taxes and comply with local market regulations.

On a broader scale, the industry is also urging the government to reconsider existing tariffs on imported gold jewellery from the US. Reducing the import duty from 20% to 6% could help balance trade relations and mitigate the impact of the US tariffs[1][2].

Future Prospects: Modernization and Investment

SEEPZ is undergoing modernization efforts, including the establishment of state-of-the-art common facility centres (CFCs). These facilities offer cutting-edge technology and services such as 3D printing, hallmarking, and refining, which could significantly enhance the quality and competitiveness of Indian jewellery exports[5]. Additionally, the proposed India Jewellery Park in Navi Mumbai and similar infrastructure developments aim to boost the country's position as a leading gem and jewellery exporter[3].

Conclusion

As SEEPZ jewellery exporters await government approval to venture into the domestic market, the industry is poised for a strategic shift. This move could be crucial in safeguarding employment and economic stability in the face of global trade challenges. With its rich talent pool and modern infrastructure, India has the potential to become one of the world's leading players in both the domestic and international jewellery markets.

The success of this endeavor will depend on collaborative efforts between the government and private sector to create a conducive environment for both exports and domestic sales. As the industry looks to the future, focusing on high-quality products, innovative designs, and leveraging technology will be key to thriving in both local and global markets.