Unlocking Growth: Gems and Jewellery Sector's Wishlist for Union Budget 2024-2025

20 Jan 2024 , 09:19 AM

As the anticipation builds for the upcoming Union Budget 2024-2025, scheduled for presentation on February 1, leaders in India’s gems and jewellery sector have outlined their expectations, presenting a wishlist to Finance Minister Nirmala Sitharaman. The sector, a significant contributor to India’s economic landscape, is hopeful for strategic policy measures that will positively impact its growth trajectory.

Reducing Import Duties: A Key Demand

At the forefront of the industry’s expectations is a plea for a reduction in import duties on crucial raw materials such as gold, silver, diamonds, and colored gemstones. India’s gem and jewellery industry heavily relies on imports for these materials. The sector, supporting approximately 4.3 million jobs, contributing about 10% to the country’s merchandise exports, is a vital cog in India’s economic growth engine.

The Gem & Jewellery Export Promotion Council (GJEPC), representing India’s global gem & jewellery trade, has submitted several recommendations to the government ahead of the budget announcement.

Proposed Recommendations by GJEPC:

1. Sale of Rough Diamonds in Special Notified Zones (SNZs): GJEPC urges the government to consider allowing the sale of rough diamonds in SNZs through the Safe Harbour Rule, expanding the entities eligible to operate through SNZs. This move is expected to facilitate easy access to raw materials, especially for Micro, Small, and Medium Enterprises (MSMEs) in the industry.
2. Facilitate Rough Diamond Broking and Trading Companies at SNZ: GJEPC recommends extending and expanding the scope of SNZs to include globally recognized diamond broking or trading houses. This, GJEPC believes, would provide India with more flexible, timely, and cost-efficient access to diamonds from smaller miners globally.
3. Introduction of Diamond Imprest Licence or Import Duty Reduction: GJEPC has requested the introduction of a Diamond Imprest Licence or a reduction in the import duty of cut & polished diamonds from 5% to 2.5%. The industry body suggests that Indian diamond exporters, above a certain export turnover threshold, should be allowed to import a percentage of their average export turnover from the preceding three years.
4. Manufacture & Other Operations in Warehouse (MOOWR): GJEPC advocates for extending MOOWR provisions to include the gems and jewellery industry. This involves the eligibility of precious, semi-precious stone, and diamond manufacturers under this framework.

Addressing Challenges and Fostering Growth:

According to Vipul Shah, Chairman of GJEPC, the industry has been grappling with challenges such as economic downturns in key export markets, geopolitical concerns, and constraints in the global diamond industry. The pre-budget proposals from GJEPC aim to address these challenges and create an environment conducive to growth, particularly for MSMEs in the sector.

As the gems and jewellery sector eagerly awaits the Union Budget, these recommendations signal a collective effort to drive positive changes and unlock the full potential of this vital industry in India. The expectations include not only reducing import duties but also introducing innovative measures to enhance competitiveness, support smaller players, and ensure a level playing field for all stakeholders in the gems and jewellery ecosystem.