The Gem & Jewellery Export Promotion Council (GJEPC) has welcomed the latest budget presented by India’s Finance Minister, Nirmala Sitharaman, under the Prime Minister Narendra Modi administration. This budget introduces measures aimed at improving the Indian gem and jewellery industry’s global standing.
Key Budget Highlights for the Gem and Jewellery Industry
The Finance Minister announced a series of measures in the 2024 Union Budget designed to stimulate growth and streamline operations within the gem and jewellery sector. These include the reduction of customs duties on gold and silver to 6%, and on platinum to 6.4%. This move is intended to boost domestic value addition and improve the global competitiveness of Indian jewellery manufacturers.
Enhancing Diamond Trading and Taxation Reforms
A notable announcement is the exclusion of the diamond sector from the 2% Equalisation Levy (EL) on rough diamond sales, effective from 1st August 2024. This levy, which applies to the e-commerce supply of goods or services, will no longer affect diamond traders. Additionally, the government has simplified taxation rules in Special Notified Zones (SNZs), facilitating easier transactions for foreign miners and improving raw material availability for Indian manufacturers.
Vipul Shah, Chairman of GJEPC, commented, “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 the 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.”
Economic Impact on Gold and Precious Metals Sector
The reduction in customs duties on gold, silver, and platinum is expected to release approximately Rs. 982.16 crore in blocked duties, providing additional working capital to exporters. This capital could stimulate manufacturing and domestic demand, potentially unlocking an additional US$2 billion in export potential over the next two years.
India’s gem and jewellery industry, which relies heavily on imported raw materials, is set to benefit from these budgetary measures. Lowering costs and increasing the availability of raw materials can improve the sector’s global competitiveness and expand export opportunities.
Implications for Diamond Manufacturing and Trade
The abolition of the Equalisation Levy and the introduction of a safe harbour tax for rough diamond trading are expected to enhance India’s status as a global diamond trading hub. These measures should attract more foreign mining companies to conduct business directly with Indian diamond manufacturers, reducing the need for international travel for raw material procurement and potentially lowering costs.
GJEPC has long supported these changes, noting their potential to align India with global diamond trading centres like Belgium and Dubai. The establishment of SNZs in Mumbai, Surat, and a proposed zone in Jaipur aims to streamline rough diamond sales, ensuring steady raw material availability for local manufacturers.
