GJEPC Chairman Presents Pre-Budget Recommendations !
GJEPC
Chairman Presents Pre-Budget Recommendations!
GJEPC Chairman Vipul Shah presented key recommendations for the gem & jewellery trade at the pre-budget meeting with Union Finance Minister Smt. Nirmala Sitharaman.
Vipul Shah, Chairman of GJEPC, said, “The Indian gems and jewellery industry contributes around 10% to India’s total merchandise exports. However, the industry is currently facing some challenges due to the geopolitical scenario, the emergence of the beneficiation scheme, and issues related to rough diamond sourcing.
Against the backdrop of the macroeconomic scenario, I urge the government to take measures to revive exports in this sector. I request the Hon’ble Finance Minister to introduce a Safe Harbour rule in SNZs, introduce the Diamond Imprest License, and reduce the import duty on gold, silver, and platinum bars to 4%; and introduce duty drawback on exports of platinum Jewellery to take advantage of India UAE CEPA. These measures are crucial to give a competitive edge to our players and boost exports and at the same time generate employment in the sector.”
GJEPC’s pre-budget recommendations
include,
1:
Sale of rough diamonds in Special Notified Zones (SNZs):
GJEPC has urged the Government to consider its long pending demand of sale of rough diamonds in Special Notified Zones (SNZs) through Safe Harbour Rule and to expand the ambit of entities entitled to operate through SNZs. Currently only viewing session are held by mining countries at SNZs.
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. Indian
bidders cannot purchase Rough Diamonds from SNZ, as on date, as the waiver
under section 9(1) (i) of the Income-Tax Law to such sale at SNZ by FMCs not
provided.
2:
SNZ for rough gemstones in Jaipur:
GJPEC has proposed the establishment of
an SNZ for rough gemstones in Jaipur. With these SNZs in Mumbai, Surat, and
Jaipur, the critical issue of raw material availability would be greatly
relieved.
3:
Facilitate Rough Diamond Broking and Trading Companies at SNZ:
With a view to further extend and expand
the scope of SNZs, GJEPC requested the Government to also allow globally
recognised diamond broking/ trading houses such as Bonas and I Hennig to also
similarly operate from such SNZs.
Such trading houses are the focal point
for sale of diamonds of smaller miners which cumulatively comprise close to 35%
of the global mining produce.
Pertinently, such trading houses are already having a significant
presence in other jurisdictions such as Dubai, Antwerp, etc.
Allowing such trading houses to operate
from SNZs with similar facilitation as provided to the diamond mining companies
would ensure that India has a more flexible, timely and cost-efficient access
to such diamonds mined by smaller miners and is thus able to retain its
position on the global roadmap as a leader in cutting and polishing of diamonds.
4: Introduction
of Diamond Imprest Licence:
Under beneficiation scheme, some mining
countries do not allow export of raw/rough diamonds without some value addition
(cutting). These diamonds when imported in India are not considered rough
diamonds but treated as cut & polished diamonds and attract BCD of 5%. This
makes export of polished diamonds from India less competitive as compared to
competing countries like China, Vietnam and Sri Lanka. Due to beneficiation,
the business is shifting to mining countries like South Africa, Namibia &
Tanzania etc.
Diamond Imprest License which was there
in Foreign Trade policy was withdrawn after the import duty on CPD was
abolished in the year of 2009. With re-introduction of import duty on CPD in
the year 2012, the scheme was not re-introduced. GJEPC is of the opinion that
Indian diamond exporters above a certain export turnover threshold should be
allowed to import at least 5%, of the average export turnover of preceding
three years.
This will provide level playing field
for Indian MSME diamond exporters with that of their larger peers. It will stop
flight of investment of Indian diamantaires to diamond mining destinations. It
will give more employment in terms of diamond assorters and processing of
semi-finished diamonds in the factories.
5:
Reduction in import duty on precious metals to 4%:
The Council has also sought reduction in
import duty on precious metals Gold Bar (7108) from 15% to 4%. This will ensure
that duty blockage of around Rs. 982.16 crore can be released resulting in more
working capital in hand for industry.
Untapped export potential for gold
jewellery can be realised with more working capital (at least US$2 billion of
US$ 11 billion in medium period of 2 years). GJEPC has sought reduction in import
duty on Silver Bars (7106) from 10% to 4%; and reduction in import duty on
Platinum Bars (7110) from 12.5% to 4%.
6:
Introducing duty drawback on exports of Platinum Jewellery:
In the absence of tariff rate of
platinum combined with high import duties and non-availability of duty-free
platinum from nominated agencies/banks, this imposes constraints on DTA
exporters and therefore the majority of exports of platinum jewellery is happening
through SEZs.
Since duty drawback is not available on platinum, therefore DTA units are not able to export as they are not competitive in international market. Also, in absence of tariff rate of platinum, Drawback department is unable to fix drawback rates for platinum jewellery, since there is no basis for determining drawback rates.
India’s gem and jewellery industry heavily relies on imports for its raw materials, including gold, diamonds, silver, and colored gemstones. These materials are brought into the country and undergo either cutting and polishing or are transformed into finished jewellery before being exported worldwide. This thriving industry sustains approximately 4.3 million jobs, contributes about 10% to the country's merchandise exports, and significantly impacts the overall economic growth.
India has established itself as the
leading choice for sourcing gems and jewellery on a global scale. However, to
uphold this position of prominence, the industry must remain competitive in the
international market. It requires strategic policy interventions that adapt to
the evolving business landscape within the sector.
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