Budget 2024 Expectations: In anticipation of the Union Budget, the Gem and Jewellery Export Promotion Council (GJEPC) is urging the government to decrease the import duty on gold and cut and polished diamonds. This move is aimed at enhancing the global competitiveness of the sector.
The gem and jewellery sector in India relies on imported raw materials such as gold, diamonds, silver, and coloured gemstones.
According to a report by news agency PTI, the GJEPC is advocating for a decrease in import duty on precious metals to 4 percent, down from the existing 15 percent. Additionally, it is urging a reduction in customs duty on cut and polished diamonds to 2.5 percent from the current 5 percent.
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The leading industry association indicated that the imposition of elevated import duties on cut and polished gemstones could result in decreased exports and fewer job opportunities within the jewellery sector. This, in turn, would make survival challenging, as it would compromise the competitive edge against other countries such as China and Thailand.
It called on the government to reinstate the Diamond Imprest Licence and reduce import duties.
This will provide a level playing field for Indian MSME diamond exporters with that of their larger peers, stop the flight of investment of Indian diamantaires to diamond mining destinations and give more employment in terms of diamond assorters and processing of semi-finished diamonds in the factories, the exporter’s body added.
The Council has appealed to the government to address its longstanding request for allowing the sale of rough diamonds in Special Notified Zones (SNZs) through the Safe Harbour Rule. Additionally, it has recommended expanding the scope of entities authorized to operate within SNZs. Presently, SNZs only facilitate viewing sessions conducted by mining countries.
The council further advocated for granting permission for Special Notified Zones (SNZs) to operate as Free Trade Warehousing Zones (FTWZs) during periods of inactivity by Foreign Mining Companies and entities. This proposal aims to ensure the optimal utilisation of the facilities established and maintain the financial viability of the centers.
To further extend and expand the scope of SNZs, the GJEPC requested the government to also allow globally recognised diamond broking and trading houses to operate from such SNZs.
Such trading houses are the focal point for the sale of diamonds by smaller miners, which cumulatively comprise close to 35 per cent of the global mining produce, the apex industry body added.
Further, to maximise benefits from the India-UAE CEPA, the Council also recommended the introduction of a mechanism like “Rates and Taxes Refund” through EDI (Electronic Data Interchange) system similar to GST refund and the rate of refund should be aligned with the rates and taxes (that is Import Duty and GST) prevailing as on the day of export.
“Gem and jewellery exports have been facing a challenging time on account of the economic downturn in key export markets, geo-political concerns, supply and demand side constraints in the global diamond industry, and unavailability of precious metal in the country among others. Our pre-budget proposals will facilitate easy access to raw materials for the industry, especially for MSMEs,” GJEPC chairman Vipul Shah told PTI.
He said, by introducing a ‘safe harbour rule’ for the sale of rough diamonds in SNZs, India can become a trading hub like Dubai and Belgium and diamond manufacturers will not have to travel abroad to get access to these trading hubs.
He said the introduction of a Diamond Imprest License to 2.5 per cent will help cope with the impact of beneficiation policies undertaken in several natural diamond mining countries.
“This will give India a level playing field with competing countries like China, Vietnam and Sri Lanka. We are hopeful that with the additional support of the government in terms of reduction in import duty of precious metals and MOOWAR scheme for the gem and jewellery industry, the exports of gold jewellery will increase substantially in these challenging times,” Shah added.
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