NaMo Budget Betrays Gem & Jewellery Industry

The Indian gem & jewellery industry is totally unimpressed with the Union Budget 2014-15. Arun Jaitley, Finance Minister today in his budget speech announced that semi processed and half cut, polish, gemstones, diamonds will attract a custom duty of 2.5 per cent, while pre forms of precious and semi-precious stones have been totally exempted from the customs duty.

The entire gem and jewellery fraternity is not very happy with the outcome of the budget. However, GJEPC has welcomed the Government’s decision to renewed focus on promotion of exports and reviving the SEZs in the country. The GJEPC is in the process of presenting its recommendations for reviving the gem and jewellery SEZs in the country and will submit the same to the Government shortly. Vipul Shah, Chairman, GJEPC said, “The budget is almost industry neutral without any of the sector’s demands like introduction of benign tax at practical rates, decrease of import duty on gold bullion and introduction of procedurals for creation of SEZ for rough diamonds finding any mention in the budget. However, we believe that this budget shows the intent of the Government is positive which will improve the fiscal position of the country.”

However the jewellery sector is largely disappointed as the import duty on gold has not been reduced even by 2-3 per cent; which will continue the occurrence of gold smuggling. Recently, even the All India Gems and Jewellery Trade Federation (GJF) had urged the Finance Ministry to consider abolishing 80:20 scheme, cut import duty to 2 per cent immediately. “The entire industry was waiting for a positive turn of events but was let down by the Government in its maiden budget”, said Haresh Soni, Chairman, GJF.

The increase in customs duty on polished diamonds will benefit only the DTC sight holders and other diamond manufacturers. Also, the exemption on customs duty on their pre forms will be making precious and semi precious stone cheaper.