Gem & Jewellery sector roots for lower import duties

Synopsis

The industry, which contributes about 10% to the country’s merchandise exports and employs nearly 5 million people, has seen a fall in exports recently, and this requires attention of the government.

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The overall exports of gem & jewellery stood at $2,195.23 million in December 2023, showing a decline of 9.04% over $2,413.46 million in the year-ago period, according to data released by GJEPC.

To be in sync with the competitive demands of the global market, the gem and jewellery sector is looking for strategic policy interventions that can give the industry a forward thrust.

Experts want an infrastructure boost, reduction in import duties and skill development that can help give a leg up to the sector which has been witness to a decline in exports in recent times.

The overall exports of gem & jewellery stood at $2,195.23 million in December 2023, showing a decline of 9.04% over $2,413.46 million in the year-ago period, according to data released by the Gem and Jewellery Export Promotion Council (GJEPC).

Vipul Shah, Chairman, GJEPC, says that gem and jewellery exports have been facing a challenging time on account of economic downturn in key export markets, geopolitical concerns, supply and demand side constraints in global diamond industry and unavailability of precious metal in the country among others. “GJEPC’s pre-budget proposals will facilitate easy access to raw materials for the industry, especially for MSMEs. By introducing safe harbour rule for sale of rough diamonds in special notified zones (SNZs), India can become a trading hub like Dubai and Belgium and our diamond manufacturers will not have to travel abroad to get access to these trading hubs,” he stated.

Shah also rooted for the introduction of Diamond Imprest License or reduction of import duty on cut and polished diamond from 5% to 2.5% which can help to cope up with the impact of beneficiation policies undertaken in a number of natural diamond mining countries. “This will give India a level playing field with competing countries like China, Vietnam and Sri Lanka,” he stated, adding that such measures could help to increase exports of gold jewellery substantially in these challenging times.

On similar lines, Vishnusharan Bhatt, Managing Director, Bhima Gold, says the prospect of a reduction in the import duty on precious metals would be a promising development for the gem & jewellery industry. “As the industry relies on the import of raw materials, a decrease in import duty from the current 15% to 4%, could provide a significant impetus to the sector by enhancing accessibility to raw materials. This potential change aligns with our vision of fostering innovation, ensuring competitive pricing, and ultimately benefiting both businesses and consumers,” he says.

Other experts in the industry spoke about an infrastructure boost by the budget which can ensure that raw materials are available at the most competitive prices. Suvankar Sen, MD & CEO of Senco Gold & Diamonds, states that this can be possible if Gift City allows the international gold suppliers to supply to the Indian manufacturers at a competitive price. “More importantly, availability of gold in the form of gold loan at very competitive pricing is the need of the hour. This move will allow gold companies to make the business more competitive,” he adds.

Talking about how skill development is imperative for the industry to grow, Sen says that artisans need to update themselves continually with the international standards of manufacturing. “While we have the inherent ability to manufacture for the world, the budget needs to ensure a continuous focus on skill upgradation,” he says.

He further notes that since the industry is contributing to a major portion of the country’s total foreign exchange reserves, support to manufacturers in terms of cost of capital or capex can play a big role to provide a boost for various players. “This will help to take steps to improve their reach across the world. Brands can thus reach out not only to the Indian diaspora but also across other communities. The government via budgetary steps must support the industry with new technologies — be it AI, lab-grown diamonds or latest machinery,” he states.

The sector has been facing challenges amid recessionary trends and inflationary pressures wreaking havoc in global markets. The industry is significant in its overall potential for the economy, contributing about 10% to the country’s merchandise exports and employing nearly 5 million people.

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Harry Byrne

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