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#Budget2024: Industry calls for reduced import duty, improved infrastructure and policies to enable competitive business

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GJEPC’s pre-Budget proposals aim to facilitate easy access to raw materials for the industry, especially for MSMEs, while GJC has urged the Government to increase the PAN card transaction limit to Rs 5 lakh from the current limit of Rs 2 lakh, as gold prices have increased. Since the industry contributes to a major portion of the country’s total foreign exchange reserves, jewellers have urged the Government to support manufacturers in terms of cost of capital or capex

Mumbai: With Budget 2024 to be presented by Finance Minister Nirmala Sitharaman on February 1, 2024, the entire gems and jewellery sector is looking forward to several upgrades right from infrastructural improvement to reduced import duties. The Retail Jeweller spoke to a few jewellers and industry associations across the country to understand their expectations from Budget 2024. 

Suvankar Sen, MD & CEO, Senco Gold and Diamonds, Kolkata roots for making gold loans more competitive for the market and skill development. “An infrastructure boost by the Government can ensure that raw materials are available at the most competitive prices. This can be possible if Gujarat International Finance Tec-City (GIFT) allows international gold suppliers to supply to Indian manufacturers at a competitive price. Availability of gold in the form of gold loan at very competitive pricing will allow gold companies to make the business more competitive.”

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Artisans, according to Sen, need to update themselves with the international standards of manufacturing, for which he sought policies to import machinery at lower duties with government support and subsidies. Since the industry contributes to a major portion of the country’s total foreign exchange reserves, Sen urged the Government to support manufacturers in terms of cost of capital or capex. “The Budget can also look into providing special finance to help Indian brands and manufacturers establish businesses outside. That would further help the brand ‘Made in India’ to reach the global stage,” Sen added. 

“We expect the import duty to reduce by 10%, as currently it’s 15%. This would not only spur development and affordability but also inject radiance into the market. Additionally, enabling EMI on gold would pave the way for a radiant future in the world of jewellery craftsmanship,” said Vastupal Ranka, Director, Rare Jewels – A Ranka Legacy, Pune.

Mitesh Khimji, Director of Khimji Jewellers, Bhubaneswar asked for a reduction in the import duty on rough diamonds from 5% to 2.5% to bolster competitiveness in the global market.  “We expect a reduction in the duty on gold bullion, aiming to eradicate the prevalent grey market. The substantial price differences between gold in India and abroad has contributed to the flourishing of the grey market. Lowering the duty on gold would effectively eliminate the grey market, leading to increased revenue collection for the government. Additionally, this would enhance the competitiveness of our gold prices on a global scale, particularly in comparison to nations such as the Middle East,” Khimji added.

“The gem and jewellery industry contributes about 10% to the country’s merchandise exports. We hope to see a reduction in import duty on precious metals such as gold to 4% to compete with global markets. Lowering import duties on gold can help reduce the incentive for illegal smuggling and black-market activities,” Shreyans Gandhi, Executive Director, Gazdar Jewellers. 

Meanwhile, the Gem & Jewellery Export Promotion Council (GJEPC) has made four key recommendations to the Government ahead of Budget 2024. They are: 1. Safe harbour rule for sale of rough diamonds in Special Notified Zones (SNZs). 2. Introduction of Diamond Imprest License and reduction in import duty on cut and polished diamonds to 2.5% 3. Reduction in import duty on gold/silver/platinum bars to 4% and 4. Introduction of a mechanism like “Rates & Taxes Refund” through EDI system similar to GST refund.  

Vipul Shah, Chairman, GJEPC, said, “Gem and Jewellery exports have been facing a challenging time on account of an economic downturn in key export markets, geo-political concerns, supply and demand side constraints in the global diamond industry, unavailability of precious metal in the country among others. GJEPC’s pre-Budget proposals will facilitate easy access to raw materials for the industry, especially for MSMEs. By introducing a safe harbour rule for the sale of rough diamonds in Special Notified Zones (SNZs), India can become a trading hub like Dubai and Belgium and our diamond manufacturers will not have to travel abroad to get access to these trading hubs. Also, it is estimated that a total of 60% of the rough diamonds traded through auctions in the world and bought by Indian manufacturers will come to India for trading.”

“Introduction of Diamond Imprest License or reduction of import duty on cut and polished diamonds from 5% to 2.5% will help to cope up the impact of beneficiation policies undertaken in a number of natural diamond mining countries. 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 gem and jewellery industry, the exports of gold jewellery will increase substantially in these challenging times,” Shah added. 

Saiyam Mehra, Chairman of All India Gem and Jewellery Domestic Council (GJC) urged the withdrawal of hike in Basic Customs Duty (BCD) on import of gold in the coming interim Budget. “We urge the Finance Ministry to withdraw the increase in BCD on gold in the upcoming Union Budget and a rationalised tax structure may be developed to tackle the CAD issue,” Mehra said. Currently, the BCD is at 12.5%, which takes the total tax to 18.45% on the imported gold, he added. He also insisted that the Government increase the PAN card transaction limit to Rs 5 lakh from the current limit of Rs 2 lakh, as gold prices have increased. “With the rising gold rate, there is an urgent need to increase the PAN card transaction limit to Rs 5 lakh from the present Rs 2 lakh. A majority of consumers in rural India buy gold as an investment,” Mehra said. “Consumers also sell gold in case of an emergency. With the cash purchase limit of Rs 10,000 per day under the Income Tax Act, consumers cannot sell gold jewellery to meet their needs. Hence, the daily purchase limit also needs to be increased to Rs 1,00,000 per day.” Additionally, GJC has also recommended the facility of EMI to be restored to the gems and jewellery industry.

India Bullion and Jewellers’ Association (IBJA) Director and PNG Jewellers Chairman and Managing Director Saurabh Gadgil said, “The gems and jewellery industry awaits measures to fortify the IIBX exchange, enhanced liquidity for it, so that India becomes a price maker and not a price taker. Also, reduction in import duties on gold will ensure that unscrupulous grey market players lose their edge and start getting more organized.” 

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