The Gem & Jewellery Export Promotion Council (GJEPC), India’s apex trade body for Gems & Jewellery hailed the first Union Budget of Prime Minister Narendra Modi 3.0 government presented by the Finance Minister. Nirmala Sitharaman for the seventh historic time as a game changer for the indigenous gem & jewellery industry.
The Finance Minister acknowledged that India is a world leader in diamond cutting and polishing manufacturing, which employs more than a million skilled workers. GJEPC said that the abolition of equalisation levy and announcement of safe harbour tax on rough diamond trading will see the growth of India as the largest rough diamond trading centre as all foreign mining companies will now trade rough diamonds directly to the diamond cutting and manufacturing entities in India. Thus the small manufacturers will get access to raw materials in India directly from diamond miners without need to travel abroad to take part in diamond auctions.
“I want to applaud and congratulate the Central Government for their three-point game changing decisions for the gems and jewellery industry. The reduction of customs duty on gold and silver, exclusion of diamond sector from 2% equalisation level and simplifying taxation rules in Special Notified Zones (SNZ) for rough diamonds will provide a leadership position to the Indian gems and jewellery industry” said Vipul Shah, chairman of GJEPC.
FM’s decision to exclude the diamond sector from the 2% Equalization Levy (EL) on sales of rough diamonds will help to maintain India’s leadership in the diamond industry and ensure operational sustainability. Equalisation Levy at the rate of 2 percent of consideration received for e-commerce supply of goods or services, shall no longer be applicable on or after 1st August, 2024.
GJEPC’s long-standing recommendation for simplifying taxation rules on sale of diamonds in Special Notified Zones (SNZs) by foreign miners alongwith abolition of equalisation levy for bidding of rough diamonds online by our diamond manufacturers is a game changer. GJEPC welcome Government’s proposal to provide for a safe harbour rate for foreign mining companies selling rough diamonds in the country and abolition of equalisation levy. This will put India on equal footing with global trading centres such as Belgium and Dubai. This will further promote the development of the gem & jewellery sector. As apex trade body, GJEPC has been seeking the same and has made several pre-Budget recommendations on this matter.
SNZs were established with the prime objective that there would be easy availability of rough diamonds by creating efficiencies in procurement of rough diamonds by allowing overseas diamond mining companies to sell their produce directly to Indian manufacturers through such SNZs. Sale is allowed in countries like Belgium and Dubai, while there is no direct tax on sale of displayed rough diamonds in Dubai and there is 0.187% turnover tax on sale in Belgium. GJPEC has proposed the establishment of an SNZ for rough gemstones in Jaipur. With these SNZs in Mumbai and Surat, the critical issue of raw material availability would be greatly relieved.
GJEPC applauded FM's proposal to reduce custom duties on gold and silver to 6% and that of platinum to 6.4% to enhance domestic value addition in gold and precious metal jewellery in the country. India’s gem and jewellery industry heavily relies on imports for its raw materials, including gold, diamonds, silver, and coloured gemstones. These materials are brought into the country and undergo either cutting and polishing or are transformed into finished jewellery before being exported worldwide.
As apex body, GJEPC has been seeking this reduction in its pre-Budget recommendations to enhance exports. The reduction in duties of gold, silver and platinum will ensure that duty blockage of around Rs. 982.16 crore can be released resulting in more working capital in hand of the exporters. This will help in growth of manufacturing due to enhanced demand for jewellery at domestic level and realise the untapped export potential for gold jewellery with more working capital (at least US$2 billion of US$ 11 billion in the medium period of 2 years).
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