Government Postpones New Wastage Norms for Jewellery Exports to July 2024

The Indian government, in a swift move on Tuesday, has temporarily suspended the newly revised norms concerning the permissible wastage amounts for gold, silver, and platinum in jewellery exports. This decision came into effect immediately, extending the suspension until July 31, 2024. This development follows closely on the heels of the notification issued on Monday, which introduced revised standards for wastage and standard input-output in relation to the export of gold and silver jewellery.

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The revision of these norms had sparked significant concern within the gems and jewellery industry, with claims that the changes were made without adequate consultation. In response to these concerns, the Directorate General of Foreign Trade (DGFT) announced that it would consider the industry's feedback. The Gem and Jewellery Export Promotion Council had particularly highlighted the challenges posed by the revised norms to their sector, prompting a reevaluation.

According to a public notice by the DGFT, there will be a period up until July 31, 2024, during which the norms issued on May 27 will be put on hold. During this interim period, the wastage norms that were in place before this date will be reinstated. The DGFT has also indicated that industry consultations were previously held on March 5 and 21 this year but will now offer another opportunity for stakeholders to submit their views and data regarding manufacturing workflows and justifications for process wastage at different stages of jewellery making.

The industry has voiced concerns that the revised wastage norms, which saw significant reductions in permissible wastage limits for both plain and studded jewellery, could adversely affect India's jewellery exports. In particular, the permissible wastage by weight for plain gold and platinum jewellery was reduced from 2.5% to 0.5%, and for studded jewellery from 5% to 0.75%. Additionally, wastage norms for medals and coins were cut from 0.2% to 0.1%.

The DGFT's May 27 notice also clarified that the weight of mountings, findings, or parts of gold or silver imported and used in export products would not count towards determining the net content of gold and silver in export products. This adjustment is part of broader standard input-output norms (SION) which dictate the required amount of input(s) to produce a unit of output for export purposes across various sectors including electronics, engineering, chemical, food products, handicrafts, plastic, and leather products.

While some experts believe that tighter wastage norms could encourage the industry to adopt better manufacturing practices and reduce wastage, others argue it may lead to increased production costs. The government's decision to hold off on implementing these changes until July 2024 provides a window for further dialogue and adjustments based on industry feedback and data analysis.

The DGFT's move to suspend these norms reflects its responsiveness to industry feedback and its willingness to ensure that any new regulations support rather than hinder India's jewellery export sector. The council's suggestion for a commissioned study involving top exporters in each category indicates a collaborative approach towards establishing fair and effective standards for the industry.