In anticipation of the upcoming Union Budget, the Gem and Jewellery Export Promotion Council (GJEPC) has called upon the government to consider reducing import duties on gold, cut, and polished diamonds to enhance the global competitiveness of the sector.
India’s gem and jewellery industry heavily relies on imported raw materials, encompassing gold, diamonds, silver, and colored gemstones.
The GJEPC is advocating for a significant reduction in the import duty on precious metals, proposing a decrease from the current 15% to 4%. Additionally, the council urges a reduction in customs duty on cut and polished diamonds from the existing 5% to 2.5%.
Highlighting the potential repercussions, the industry body emphasizes that higher import duties on cut and polished gemstones could result in diminished exports, decreased employment opportunities within the jewellery sector, and a compromised competitive edge compared to rival nations like China and Thailand. The council urges the reinstatement of the Diamond Imprest License and a reduction in import duties to ensure a level playing field for Indian Micro, Small, and Medium Enterprises (MSME) diamond exporters, preventing the outflow of investments to diamond mining destinations.
Moreover, the GJEPC appeals to the government to address its longstanding request for the sale of rough diamonds in Special Notified Zones (SNZs) through the Safe Harbour Rule. Currently limited to viewing sessions, the council proposes expanding the scope of SNZs, allowing them to operate as Free Trade Warehousing Zones (FTWZ) when not utilized by foreign mining companies. The GJEPC also advocates for globally recognized diamond broking and trading houses to operate from SNZs, serving as key hubs for the sale of diamonds from smaller miners, constituting approximately 35% of global mining produce.
In alignment with the India-UAE Comprehensive Economic Partnership Agreement (CEPA), the council recommends the introduction of a “Rates and Taxes Refund” mechanism through Electronic Data Interchange (EDI) similar to GST refunds. The rate of refund should align with prevailing rates and taxes, including import duty and GST, on the day of export.
GJEPC Chairman Vipul Shah underscores the challenges faced by gem and jewellery exports due to economic downturns in key markets, geopolitical concerns, global diamond industry constraints, and the unavailability of precious metals domestically. Shah expresses optimism that the proposed measures, including a ‘safe harbour rule’ for rough diamond sales in SNZs, a reduced Diamond Imprest License, and government support through import duty reductions and the MOOWAR scheme, will substantially boost gold jewellery exports during these challenging times.
