The gems and jewellery sector welcomed the US' move to suspend taxes on certain services from India and other countries for up to six months, and said imposition of such duties could impact the COVID-hit industry to the tune of USD 46-53 million, resulting in job losses, an official said on Thursday.
The US on Wednesday announced tariffs on six countries, including India, that have imposed or are considering equalisation levy/digital services tax on e- commerce companies but immediately suspended the taxes for up to six months to provide additional time to complete the ongoing multilateral negotiations on international taxation at the OECD and G20.
"The suspension of tariff on goods for up to 180 days is an indication that the United States Trade Representative (USTR) is willing to wait till a multilateral solution is found for Digital Service Taxes (DST)," the Gem & Jewellery Export Promotion Council (GJEPC) chairman Colin Shah said.
He also said, "I would like to thank USTR for giving the Indian jewellery industry an opportunity for sharing its views at the public hearing last month and considering our representation."
The "imposition of duty" by the US authorities could adversely impact the labour-oriented gems and jewellery sector in India, he said.
"The imposition of the proposed 25 per cent import duty on 17 Indian jewellery items would have immensely impacted this labour-intensive sector with loss of jobs and livelihoods and a shift of business to countries such as China and Mexico," he said.
At the United States Trade Representative (USTR) multi-jurisdictional hearing held virtually on May 10, the GJEPC along with other major trade bodies and leading exporters from the sector raised "the industry's grievances over the proposed 25 per cent import duty on 17 Indian jewellery items", Shah said.
The US market accounts for 25.6 per cent of the total USD 36 billion gem and jewellery exports from India, he said.
In March last year, the USTR proposed retaliatory trade actions against India and certain other countries that have imposed or are considering equalisation levy/digital services tax on e-commerce companies.
The USTR has proposed to impose additional tariffs of up to 25 per cent ad valorem on an aggregate level of trade that would collect duties on Indian goods in the range of the amount of DST that India is expected to collect from the US companies.
India had earlier stated that the equalisation levy is not discriminatory and only seeks to ensure a level-playing field with respect to e-commerce activities undertaken by entities with permanent establishment in the country.
