Imports under OGL, Hallmarking not touched upon in budget
MUMBAI: 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 of the gem and jewellery industry. With the tide of trade now experiencing an upward trend, exports have entered the positive territory. The budget thus is of crucial importance to sustain this trend,” said the GJEPC.
In the budget, import duty on gold and platinum has been increased from Rs. 200 to Rs. 300 per 10 gram and on silver from Rs. 1,000 to Rs, 1,500 a kg.
However, the basic customs duty on rhodium (used for white gold) has been cut 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, Vasant Mehta, Chairman, GJEPC, said, “With unprecedented recession faced by the industry in the recent past, constant support and aid from the Ministry is needed. This industry, which is on a recovery mode has achieved $25 billion in exports in 2008-09. One area where the budget could have helped the industry was by lowering 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 and 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 competitors in other countries, thus affecting exports. Also, Mr. Mehta felt that domestic consumption of gold and silver jewellery might go down owing to the increase in excise duty.
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.
C. Vinod Hayagriv, Chairman, All India Gems & Jewellery Trade Federation, said the increase in duty on gold, silver and platinum was detrimental to the industry as it increased smuggling of gold into 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 had not touched upon issues such as allowing gold import under open general licence (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.