Participating at International Shows Turning Out Expensive for Indian Companies; 3% IGST Levied on Goods Imported Back; Exporters Worried

Things are not looking up for the jewellery exporters. Ever since the new GST rate kicked in July this year, doing business abroad has gotten trickier and tougher. Recently, almost 64 Indian exhibitors participated at the Dubai Show and a 100 of them exhibited at the Bahrain Show. Many of them, especially exhibitors from Delhi and Jaipur faced the issue of 3 per cent IGST on unsold goods sent back for exhibition purposes. As a result of which, many of them had their goods withheld at the customs. ‘We have spoken to the Commissioner of Import at the airport and the Chief Commissioner and for the moment they are releasing the goods by taking a bond. However, there is really no clarity as to why this tax is being implemented,’ said Kewal K. Duggal, Director (Trade & Policy), GJEPC, Delhi.

The industry is already facing the brunt of many a regulation and this issue has further sent them into a vortex of uncertainty. ‘There is no clarity on the 3 per cent GST levied on exhibitors who are returning from an international show. In some places they are asking for GST to be paid while in others they are asking for bonds. Ideally, it should not be levied because GST is applicable only on goods that are sold and these good are not being sold. These goods are going for approval and what is not approved is coming back. So ideally, no GST should be implemented,’ continued Duggal.

Kewal K. Duggal, Director (Trade & Policy), GJEPC, Delhi

This is exactly the problem; nobody has clarity about the situation. Neither the council nor the government has answers about what the future holds regarding issues pertaining to GST. ‘Luckily my goods didn’t get withheld at the customs but I know of exhibitors whose goods got withheld. For instance, if I am paying a 3 per cent GST on unsold goods when I return from an international show, and I am travelling soon for another show, then will I be subject to GST again? How many times will I pay GST for the same products again and again? There is no clarity on this issue,’ said Dhawal Jain of Unialmaz.

Participating in international shows is expensive as it is as exhibitors have to incur a number of expenditures and jewellery is also a high value commodity. The imposing of 3 per cent GST on unsold goods puts a crimp in the industry’s performance. ‘Say I have goods worth of $ 2 million that means I have to pay a duty of $60,000 which is a lot of money and I may not sell of my goods,’ says Ashish Kotahwala of GDK Jewels. Typically, jewellers only tend to sell 5-20 per cent of the goods they take. This definitely works against the government’s agenda of promoting exports and as a matter of fact levying this additional GST is burdening the jewellers further. ‘I am sure the council is taking all the efforts but things need to move more quickly. The goods were already stuck in the airport and as it takes more time, we lose out on more business,’ added Ashish.

Ashish Kotahwala, GDK Jewels

Excessive regulation in this industry has been affecting the ease of doing business and any major transaction involving jewellery has to go through multiple clearances by various regulatory bodies. ‘The government by implementing IGST on shipments that have clearly gone on a temporary basis out of the country is completely irrational. This does not happen anywhere else in the world. It also creates a big cash flow issue for an already distressed industry. There are about a thousand shows that happen across the world and if one were to take more goods out of India every month, then one needs to deposit a huge amount of capital and the government still hasn’t cleared GST dues for one year and this is really affecting the industry adversely. Mr. Pramod Derawala is definitely putting in all the efforts but unfortunately the government is turning a deaf ear,’ said Rishabh Tongya of Diacolor.

The Ministry of Commerce gives the industry assurance at every jewellery event, but whether or not the council’s concerns are being taken seriously by the government is still a matter of debate. The gem and jewellery industry contributes about 14 per cent to the country’s overall exports. High incidence of tax and excessive regulation are definitely going to take the shine off the exports market for the gems and jewellery industry.  

Rishabh Tongya, Diacolor