Ban on Trading of Precious Gems by SEZs Hits Dealers

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special economic zones, special economic zones in india, special economic zones act, special economic zones news, special economic zone new delhi, precious gems, precious gemstones, indian gems, indian gemstones, indian gems and jewellers, news for indian gemstones,The blanket ban on trading of precious metals and gems by special economic zones in order to check circular trading have hurt the business of some of the genuine exporters.

Ministry of Commerce and Industry had directed the SEZs last year that no unit is allowed to carry on trading of gold, silver, platinum, other precious metals, diamonds and other precious and semi-precious stones.

“Some of the SEZs or units were indulging in black practice of round tripping for raising bank finance at multiple locations. In such cases selective action can be taken on the units or SEZs instead of suspending trading activity in all SEZs,” said Premkumar Kothari, president, SEEPZ Gems and Jewellery Manufacturers Association.

Some of the large exporters were into importing in bulk of articles like mountings, findings, hooks, chains and master alloys through their trading arms. These trading divisions used to supply the products to their own manufacturing divisions as well as to smaller companies because import in smaller quantities is not economical for individual units. However, the ban has affected the procurement of such articles.

“There are trading companies in SEEPZ who stock and sell these items as per the quality specifications by major jewellery buyers like Wal-Mart, J C Penny, Helzberg Diamonds and Fred Meyer. The requirement of these items by individual manufacturing units is small in quantity and larger in variety. Hence, to keep stock by individual units in not feasible and can only be catered by trading units,” said Rajeev Sheth, CMD, Tara Jewels.

“In such cases, we have asked the government to lift the blanket ban and ensure that 90 per cent of these articles are traded within the SEZs and only 10 per cent of the defected ones are re-shipped back to the supplier,” said Kothari.

In case of import of semi-finished jewelery for re-export, the industry wants the norms to be relaxed.

“In view of the high import duty being charged by the US Customs on diamond jewellery, we export semi-finished products from manufacturing unit along with centre stones from the trading division separately to our sister concern in the US. It, in turn, sets the centre stone in the product and supplies the finished goods to the customers. In case trading of diamonds is discontinued in SEEPZ SEZ, we will have to set the centre stones in the product itself and export the final product to the US, thereby making the product liable to a higher import duty on the full value of the product,” said Sheth.

“Round tripping will not happen to countries with import duties. For the consignments going to Hong Kong or Dubai, the government can verify whether value addition is happening,” said Kothari.

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