Budget 2024: Gem and jewellery industry calls for reduction in import duties on gold, cut and polished diamonds
Budget expectations: In order to keep the industry competitive on a global scale, the Gem and Jewellery Export Promotion Council (GJEPC) has urged the government to lower import duties on gold and cut and polished diamonds ahead of the Union Budget, news agency Press Trust of India (PTI) reported.
India’s gem and jewellery industry relies heavily on imports for raw materials such as gold, diamonds, silver, and colored gemstones.
The GJEPC has urged that the current 15 per cent import duty on precious metals be reduced to 4 per cent. The industry body calls for reducing the current 5 per cent customs duty on cut and polished diamonds to 2.5 per cent.
According to the apex body, increased import taxes on polished and cut gemstones would result in lower exports and fewer jobs being created in the jewellery sector, making it harder for the industry to survive as it would lose its competitive advantage to rival nations like China and Thailand.
It asked the government to slash import duties and reinstate the diamond imprest licence.
This will level the playing field for Indian MSME diamond exporters with that of their larger counterparts, halt the exodus of Indian diamantaires from diamond mining locations, and create more jobs in the form of assorters and semi-finished diamond processing in factories, the exporters’ body said.
The Council has urged the government to take into account its long-standing request to extend the list of organisations permitted to conduct business through Special Notified Zones (SNZs) and to allow the sale of rough diamonds in SNZs via the Safe Harbour Rule. At this point, mining countries only host viewing sessions at SNZs.
In order to ensure that the facilities established are fully utilised and that the centres’ financial viability is maintained, the council also urged that the SNZ be allowed to operate as a Free Trade Warehousing Zone (FTWZ) when it is not being used by Foreign Mining Companies and entities.
The GJEPC asked the government to permit internationally renowned diamond broking and trading houses to operate out of these SNZs in order to further broaden and deepen their reach.
The industry group stated that these trading houses serve as the hub for smaller miners’ sales of diamonds, which together account for nearly 35 per cent of the world’s mining output.
In order to fully utilise the advantages of the India-UAE CEPA, the Council also suggested implementing a “Rates and Taxes Refund” mechanism via the EDI (Electronic Data Interchange) system, like the GST refund. The rate of reimbursement ought to correspond with the applicable rates and taxes, specifically import duty and GST, on the day of export.
“Gem and jewellery exports have been facing a challenging time on account of the economic downturn in key export markets, geo-political concerns, supply and demand side constraints in the global diamond industry, and unavailability of precious metal in the country among others. Our pre-Budget proposals will facilitate easy access to raw materials for the industry especially for MSMEs,” PTI quoted the GJEPC chairman.
According to him, India can become a trading hub similar to Dubai and Belgium by adopting the “safe harbour rule” for the sale of rough diamonds in SNZs. This will eliminate the need for diamond manufacturers to travel overseas in order to access these trading hubs.
According to him, the introduction of a 2.5 per cent Diamond Imprest Licence will assist in mitigating the effects of beneficiation initiatives implemented in several nations with abundant diamond resources.
“This will give India a level playing field with competing countries like China, Vietnam and Sri Lanka. We are hopeful that with the additional support of the government in terms of reduction in import duty of precious metals and MOOWAR scheme for the gem and jewellery industry, the exports of gold jewellery will increase substantially in these challenging times,” he added.
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