The Gems and Jewellery Export Promotion Council (GJEPC) has made a significant appeal to the Indian government, urging for a reduction in import duty on gold, silver, and platinum bars to 4 per cent. This request was presented during a pre-budget meeting with Finance Minister Nirmala Sitharaman. The Indian gems and jewellery sector, which contributes around 10 per cent to the nation’s total merchandise exports, faces multiple challenges that have prompted this appeal.
Challenges Facing the Industry
The gems and jewellery industry is grappling with various challenges, including geopolitical tensions, the introduction of the beneficiation scheme, and issues related to sourcing rough diamonds. The GJEPC highlighted these obstacles during their discussions, stressing the need for government intervention to rejuvenate export activities in the sector.
Proposals for Reviving Exports
The council has put forth several proposals aimed at revitalising the industry. Among these are:
- Reduction of Import Duty: The GJEPC has requested the government to lower the import duty on gold bars from 15 per cent to 4 per cent, silver bars from 10 per cent to 4 per cent, and platinum bars from 12.5 percent to 4 per cent. They argue that this reduction would release duty blockages amounting to approximately Rs 982.16 crore, thus increasing the working capital available to industry players.
- Sale of Rough Diamonds in SNZs: Another key proposal includes the introduction of rough diamond sales within Special Notified Zones (SNZs). This move is expected to enhance India’s competitive edge in the global market.
- Duty Drawback on Platinum Jewellery Exports: To leverage the India-UAE Comprehensive Economic Cooperation Agreement, the council has also suggested the introduction of a duty drawback scheme for platinum jewellery exports.
- Inclusion of Global Diamond Trading Houses in SNZs: The GJEPC advocates for the inclusion of internationally recognised diamond broking and trading houses within SNZs to further boost the scope and functionality of these zones.
Potential Impact on the Industry
The proposed measures are anticipated to have a substantial impact on the gems and jewellery sector. By lowering import duties, the industry could see a significant release of blocked capital, enhancing liquidity and enabling further investment in export activities. The council estimates that reducing the import duty on gold bars alone could unlock approximately USD 2 billion of the untapped export potential over a medium period of two years.
Moreover, the introduction of rough diamond sales in SNZs and the inclusion of global diamond trading houses could position India as a more competitive player in the international market, potentially leading to increased employment and economic growth within the sector.
