As expected, the jewellery manufacturers are feeling the heat now following the US government's decision in June to lift the generalised system of preferences (GSP) given to Indian jewellery sector.

Several exporters in Surat said they are finding it tough to clear their stocks for Christmas as they are not in a position to contain the price rise caused by the GSP withdrawal and strengthening of rupee against dollar.

The exporters fear that the shipments to the US will come down substantially this year.

However, the traders are trying to modify their products to avoid the rise in prices. As a result, the diamond caratage has been brought down marginally. Gold weight has also been compromised, wherever necessary, to maintain the prices at the same level.

Though the problem has been sorted out between Indian manufacturers and the US importers, consumers are still staying away from fresh buying.

Exporters forecast the realisation to come down at least by 1 per cent.

The domestic gems and jewellery industry had estimated an exports growth of 2-3 per cent this year, which seems unlikely on account of the GSP withdrawal and the strengthening of rupee against dollar.

Anticipating a sluggish US market, exporters have shifted their focus to new markets like Japan, Russian and the West Asia.

With the unsold inventory of the Christmas season piling up, it will be a big challenge for exporters to clear it in the next couple of months. Sales to the US may decline by 5 per cent next year.

Gems and jewellery exports during the first eight months (April-November) of the current financial year increased 14.70 per cent in the rupee terms to Rs 37,104.03 crore compared with Rs 32,348.84 crore in the same period last year.

In the dollar terms, the exports recorded a growth of 28.52 per cent to $9,123.19 million from $7,098.71 million last year. In caratage term, however, the total exports rose by 16.17 per cent to 280.86 lakh carats from 241.77 lakh carats.

Instituted in 1976, the GSP was aimed at promoting economic prosperity of designated under-developed countries.

Under the programme, more than 4,650 products from 144 countries were given a preferential entry into the US.

Since then, the programme has been extended periodically. India was one of the beneficiaries of the GSP programme.

1 lakh = 100,000; 1 crore = 10 million