The diamond industry's pressing concerns remain unaddressed in the Union Budget 2024-25. To make matters worse, the Budget has hiked the import duty on gold and silver findings — crucial elements in jewellery-crafting — and on precious metal coins, increasing it from 11% to 15%. This change, effective January 22, aligns these components with the duty imposed on gold and silver bars.
Grappling with unmet expectations
The diamond industry had a lot of expectations from this budget, but none were fulfilled. “While the Government has introduced incentives for researching lab-grown diamonds, the intrinsic allure of natural diamonds remains undeniable. The challenge lies in the indistinguishability between the two, underscoring the heightened importance of instilling transparency in the diamond trade,” explains Anil Kataria, Director, D P Abhushan Jewellers, MP.
A section of the industry stakeholders says there are proposals to meet the finance minister once again, and urge her to give some concessions to the gem and jewellery industry. “In the interim budget, the finance minister has talked about incentives for research on lab-grown diamonds, a commendable step forward. It seems the Government aspires for every Indian to possess a diamond, considering them to be timeless treasures. The allure of diamonds is enduring, and it's a universal dream for every woman to own one,” asserts Pratap Kamath of Abaran Timeless Jewellery, Bangalore.
Custom duty on gold needs to be reduced
The industry is also concerned that the customs duty on gold has not been reduced. To address the current account deficit (CAD), it was imperative to formulate a rationalized tax structure. “Being an interim budget, there was no major announcement regarding the diamond sector in Budget 2024-25. Policy continuity bodes well for the country, as of now. But the Government should reduce the import duty on gold, going forward, to boost the sector even more and cut down on illegal imports,” feels Viral Kothari, Kosha Jewels.
Bullion industry stakeholders harboured high expectations from the Government, anticipating a simplification and reduction in the duty structure of gold. “The current budget falls short of addressing the needs of the diamond industry. Our expectations included a reduction in customs duty on gold and other precious metals, which, unfortunately, wasn't realized. We remain hopeful that the forthcoming actual budget will recognize this crucial requirement and implement the necessary changes,” says Ankit Shah, Ankit Gems.
Amidst the thriving economy, the interim budget conveys an overall positive outlook. The current robust economic conditions in the country have led to increased disposable income, thereby directly boosting consumer purchasing power. "This favorable shift is evident in the jewellery industry, where consumers are inclined towards acquiring items that hold meaning and value, such as Natural Diamonds. The government's initiative to promote women entrepreneurship is also poised to inspire numerous women to become self-sufficient, fostering self-purchasing capabilities, creating a brighter future," feels Amit Pratihari, Vice President, De Beers Forevermark.
Incidentally, the wish list of the industry was quite long; it included reducing 15% import duties on precious metals, reducing 3% GST, exempting Capital Gains Tax on gold jewellery sales, GST refunds to NRIs, simplifying TCS and TDS rates, and so forth.
