A sharp decline in the value of the Indian rupee is offering a sliver of relief to exporters of studded jewellery in Jaipur, who are battling punishing import tariffs of nearly 50% in the crucial United States market. While the currency movement improves earnings in rupee terms, the prohibitive duty structure continues to erode their competitive edge against rival manufacturing centres in Southeast Asia.
Currency Dip Boosts Export Realisations, But Pain Persists
Exporters present at the recent Jaipur Jewellery Show (JJS) indicated that the rupee's depreciation will enhance their export realisations, particularly from the value addition done within the country. Under current regulations, manufacturers operating from export zones can import gold and re-export it to the US without attracting the higher tariffs. However, the levy on the making charges and other value-added costs remains exorbitantly high, payable at over 50%.
Rajiv Jain, the honorary secretary of the Jaipur Jewellery Show, confirmed that the fall in the rupee's value will indeed help manufacturers and exporters earn more in Indian currency. "It will certainly help, though partially, as expenses are also paid in the Indian currency," Jain stated. Exporters explained that the initial 25% tariff was somehow absorbed by sharing the burden between sellers, buyers, and consumers. The greater concern, they emphasised, is the additional 25% duty that has compounded their woes.
Limited Benefits and Rising Input Costs
Industry voices, however, caution that relying on currency depreciation is not a sustainable solution. Ajay Kala, a spokesperson for JJS, pointed out that the benefits are significantly limited. "The rupee depreciation can help to an extent but only neutralises the pain," Kala remarked. He highlighted a critical counter-effect: imports of precious and semi-precious stones from African nations have become more expensive due to the weaker rupee.
"Imports of stones have also become costlier as we pay more Indian currency than earlier. So the benefits are limited to 15-20% of the value addition that happens in the country," Kala elaborated. This sentiment was echoed by Rajiv Jain, who admitted that several key inputs, including imported gemstones, specialised tools, and machinery, become pricier when the rupee weakens, thereby offsetting a portion of the gains from exports. Jain also noted that currency volatility complicates long-term contracts and pricing commitments with international buyers, adding another layer of uncertainty to business planning.
Competitive Disadvantage in a Key Market
Jaipur, renowned globally as a hub for coloured stone and studded jewellery, finds itself at a significant disadvantage in the US market. The high landed cost of its products, driven by the tariff structure, makes it difficult to compete on price with exporters from Southeast Asian hubs like Bangkok, which face lower duties.
As a direct consequence, local manufacturers in Jaipur continue to struggle to match the prices offered by competitors, particularly in the mid-priced jewellery segment. This segment is vital as it drives high sales volumes, and losing ground here impacts the overall health of the export-oriented industry. The dual challenge of managing input costs in a volatile currency environment and remaining price-competitive under a harsh tariff regime defines the current predicament for Jaipur's jewellery exporters.
