As starting from January, Indian jewellery exports will get impacted in the coming future, from the previous 0.36 % to 5 % the import duty has been hiked in Dubai.
As a hub for jewellery business, the jewellery exporters may discontinue using Dubai and to the other countries’ markets start selling straight away. In last two months, large exports have already happened and gold and in Dubai jewellery has been stocked up. India has exported; about 32 % Out of the Gems and jewellery has been shipped to UAE.
In India, the jewellery business as to face a lot of restrictions felt by the jewellery industry and India Jewellery exports will be uncompetitive due to this duty increment by Dubai. Some exporters to save on the duty may shift their business to Dubai.
For exports, many jewellers have their hub in Dubai. From Dubai to other developed nations Jewellery is re-exported with increased markups.
At Dubai, many of the tourists buy jewellery due to high prices in their own countries. In comparison with many western countries, jewellery is sold at a low markup In Dubai. On top of high markups, buying jewellery became a very expensive affair as these countries also add VAT.
In the short term, the gold and jewellery business in Dubai could impact by the increased duty, said by experts. As it will come out as a strong manufacturing unit, so in long term, Dubai will not have any impact. From 62% in 2011 to 34% this year, Indian exports to UAE have fallen though India is the biggest supplier of gems and jewellery. India may see a competition in diamond and precious stone handmade jewellery besides this fall in exports s the artists making these will in most likelihood move to Dubai. In this industry in India, because of the increasing job losses, there is seen in a shift of skilled labour. The other factors like a tax-free income, efficient workforce, low-cost capital, etc will attract these export businesses to Dubai.
By many jewellers, for re-export, Dubai was preferred as a hub due to the facilities and flexibilities extended there. The ones most impacted will be the South Indian jewellers as they export largely to Dubai.