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Union Budget: ‘Lab-grown’ diamonds our new friends

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Union Budget: Lab grown diamonds our new friends
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India’s lab-grown diamonds (LGDs) have tweaked the tag line ‘A Diamond Is Forever’ to ‘A Diamond Is For Everyone’ with the Budget axing the 5% custom duty (CD) on diamond seeds and making it zero. An LGD solitaire, which is 90% cheaper than a natural diamond, will cost even less.

The seed is what the diamond structure is built on and there was, till date, no uniformity on CD charged by various Indian ports.

“This is a welcome moveas exports, currently at $1. 7 billion, can rise to $4 billion in five years,” said Ashok Gajera, owner of Laxmi Diamonds, one of the country’s largest diamond exporters.

“Research grants to IITs forfive years will encourage indigenous manufacturing here. It will also ensure India’s end-to-end global leadership in rough to finished labgrown diamond and jewellery manufacturing,” said Gems and Jewellery Export Promotion Council’s chairman Vipul Shah.

At the same time, industry players expect gold ETF investments to rise as the conversion of physical gold to electronic gold receipts will not attract any capital gains. Malabar Group’s chairman M PAhammed said : “The move to not impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetisation. ”

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The news isn’t that shiny for metals. The price of silver is expected to rise by at least Rs 2,000 per kg as CD rises from 10. 75% to 15%. Articles made of precious metals including gold, silver and platinum will be dearer as duty has been raised to 25% from 22%.

“With escalating geopolitical tensions, gold and silver prices are expected to rise further in international and domestic markets. This will impact demand and hamper export competitiveness of Indian jewellery makers,” said India Bullion and Jewellers’ Association’s (IBJA’s) director Haresh Acharya.

“High taxes will impede efforts to make gold an asset class, particularly at a time when gold prices have risen globally. Moreover, a thriving grey market has diluted efforts to reduce cash transactions and penalises organised and compliant players,” said World Gold Council’s India chief Somasundaram P R.

Courtesy: Times of India

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