The Gold and jewellery industry received the attention of the finance minister in the Union Budget 2010-11 but the Gem & Jewellery Export Promotion Council (GJEPC) felt that the announcement did not evoke much cheer as it did not contain much, which is specific to the Industry, on the whole. ``Keeping in mind the challenges faced by the industry, including threat from the growing influence of highly competitive markets across the world, the Union Budget was an exact medium to address the various requirements for the Gem & Jewellery Industry. With the tide of trade now experiencing an upward trend, exports have entered a positive territory. The Budget thus is of crucial importance to sustain this trend,” said the GJEPC.
In the Budget, the import duty on gold and platinum has been increased from Rs 200 per 10 gram to Rs 300 per 10 gram and on silver from Rs 1000 per kg to Rs 1,500 per kg. However, the basic custom duty on rhodium (used for white gold) has been reduced from 10 per cent to 2 per cent. To encourage domestic gold refining capacity, basic customs duty on gold ore and concentrate has been reduced from 2 per cent ad valorem to a specific duty of Rs 140 per 10 gram of gold content with exemption from Special additional duty. The excise duty on refined gold from such ore/concentrate has been reduced from 8 per cent to a specific duty of Rs 280 per 10 gram.
Reacting to the proposals, Mr. Vasant Mehta, Chairman of the GJEPC said, “With unprecedented recession faced by the industry in recent past, the Industry needs constant support and aid from the Ministry. This industry, which is on a recovery mode has posted $ 25 billion of exports in 2008-09. One area where the Budget could have helped the Industry was by lowering down the rate of presumptive profit under benign tax procedure, which has been our demand for a while now; as it would have helped India to truly establish itself as an international hub for diamonds, Gems & Jewellery.”
The 2 per cent of subvention not being extended to the industry would hurt the sector as the cost of manufacturing would increase as compared to the competitive countries thus affecting the exports of the country. Also, Mr. Mehta felt the local consumption of Gold & silver jewellery may go down owing to the increase in excise duty and this in turn may affect the skilled workers from this sector.
The Gems and Jewellery sector welcomed the measures announced to ensure continued growth of Special Economic Zones (SEZs) to draw investments and boost exports and employment. Continuance with SEZ promotion will help the G&J units in the SEZs. Also, the announcement of the finance minister to develop skilled manpower in the country as the sector will benefit from the recently sanctioned funds for Indian Institute of Gems & jewellery (IIGJ), Jaipur under this scheme by the National Skill Development Council
C. Vinod Hayagriv, Chairman, All India Gems & Jewellery Trade Federation, said the increase in duty on gold, silver and platinum is detrimental to the industry as it increases smuggling of gold in the country at a time when the same was almost eliminated. ``However, the measure of duty reduction in gold ores and concentrates and reduction in duty for rhodium are commendable measures.”
The industry was disappointed that the government has not commented on several issues like allowing the gold import under open general license (OGL). ``We believe that Indian trade could have benefited from such measures and could have shifted the global centre of gold trading to India. Hallmarking and many aspects were untouched which needs dire attention,” said Mr. Hayagriv.
Sanjay Kothari, former Chairman, Gems & Jewellery Export Promotion Council, felt that the increase and change in duty structure on gold would not impact exporters significantly. ``It could impact local demand, but gold prices have moved up so much that it may not be a significant impact. It is also good that there are measures to encourage gold refining in India because it is currently done on a very small scale.”