After China imposed a national security law on Hong Kong earlier this month, the United States on July 14 withdrew the special status granted to Hong Kong, and the United Kingdom, Australia, and Canada followed suit.
The US’ withdrawal of special status to Hong Kong could boost India’s jewellery exports to developed nations and help it become the world’s largest diamond trading hub, say experts.
India processes 11 out of 13 rough diamonds mined globally.
Shifting of business units from Hong Kong to India will further strengthen India’s position in the world diamond processing and jewellery manufacturing.
After China imposed a national security law on Hong Kong earlier this month, the United States on July 14 withdrew the special status granted to Hong Kong, and the United Kingdom, Australia, and Canada followed suit.
“This move will possibly create opportunities for India in gems and jewellery trade.
"For the US, Hong Kong and China are the fourth largest destinations of imports of gems and jewellery after India, France and Italy,” said Colin Shah, chairman of the Gems and Jewellery Export Promotion Council (GJEPC).
India’s gems and jewellery exports have taken a severe hit because of Covid-19 and the resultant lockdowns across the world.
GJEPC data show exports declined by 55 per cent to a mere $2.7 billion in the first quarter of financial year 2020-21, compared to $6.07 billion in the corresponding period last year.
Hong Kong enjoyed a discounted export duty of 3.3 per cent on goods shipped to the US because of the special status, while a tax of 7.5 per cent is imposed on shipments from other countries.
“Hong Kong and China exported gem and jewellery worth $980.85 million and $2.6 billion, respectively, to the US in 2019.
"Ending of preferential treaty with Hong Kong would open new business avenues for India.
"The manufacturing business has the potential to witness a shift to India from China,” said Shah.
However, Hong Kong and China are also important destinations for India’s gem and jewellery exports, with nearly 27 per cent of exports directed to those markets.
Many Indian jewellery companies have their offices in Hong Kong and the withdrawal of special status is likely to impact their businesses, too.
“Indian gem and jewellery sector has an opportunity ahead to take a quantum leap to become the global leader and a trading hub in gems and jewellery,” said Shah.
According to GJEPC, India has exported gem and jewellery worth $10.48 billion in 2018-19 and $9.17 billion in 2019-20 to the United States, which stands at 26 per cent of overall shipments.
Photograph: Tyrone Siu/Reuters
