Finance Minister Nirmala Sitharaman has announced significant cuts in customs duties on precious metals in a move aimed at boosting the gems and jewellery sector. The duty on gold and silver has been reduced from 15% to 6%, while platinum will now carry a 6.4% duty, down from 15.4%.
In another key development, the Finance Minister introduced safe harbour rates for foreign mining companies selling raw diamonds in India. This initiative is designed to attract more imports of raw diamonds, supporting the local diamond cutting and polishing industry and bolstering the economy.
Reacting to the Budget, Vipul Shah, chairman of GJEPC, praised the government’s decision, stating, “The FM’s acceptance of GJEPC’s demand for sale of rough diamonds through the Safe Harbour Rule is a game-changer, positioning India alongside global centres like Belgium and Dubai.”
Shah elaborated on the benefits of this move, explaining, “Previously, foreign mining companies faced complex tax regulations as permanent establishments, deterring them from selling in India. The Safe Harbour Rule simplifies these tax implications, encouraging foreign mining firms to operate in India without the risk of being considered permanent entities. This change is expected to attract more investment and foster a competitive market, improving access to rough diamonds for Indian buyers.”
He also welcomed the equalization of duty across all segments, including online portals, noting, “Previously, high duties on online transactions forced industry players to collaborate with foreign firms. The equalization of duty levels the playing field, enabling domestic companies to utilize online platforms effectively, driving digital transformation and expanding market reach.”
The duty reduction forms part of the government’s broader strategy to promote domestic value addition by making raw materials more affordable, thus encouraging local production. These measures are expected to benefit the jewellery and manufacturing industries by reducing import costs and making Indian products more competitive globally.
Overall, the revised customs duties and the introduction of safe harbour rates are anticipated to lower prices and broaden product availability, stimulating growth in the jewellery sector and creating employment opportunities. The government aims to curb smuggling by narrowing the price gap between official and unofficial import channels.
