As the Indian government readies to present its annual budget for fiscal 2019-20, the Gem & Jewellery Export Promotion Council (GJEPC) has presented an industry wish-list for fiscal policy.
As a preamble, GJEPC Chairman Pramod Agarwal observed, “The gems and jewellery sector constitutes 7 percent of the country’s GDP, 13.52 percent of India’s merchandise exports and directly employs around 5 million people, thus making a significant contribution to the country’s economy while maintaining a global leadership in cutting and processing of diamonds and some categories of gemstones. The GJEPC has sought government support in ensuring the ease of doing business and thus helping exporters to enhance exports in 2019-20.”
The wish-list includes:
- A reduction in import duty on cut and polished diamonds as well as on cut and polished gemstones from 7.5 percent to its earlier of 2.5 percent.
- The duty-free reimport for exporters, of 5 percent of the FOB value of exports of cut & polished diamonds in the preceding licensing year.
- As part of the planned comprehensive gold policy, a reduction in the import duty on gold from 10 to 4 percent.
- A change in the Income Tax regulations to allow foreign mining companies to sell rough diamonds through Special Notified Zones (SNZs) — a measure that will increase the country’s share of global trade.
- The introduction of a presumptive taxation system for diamonds and gemstones in India. This would not only increase the ease of doing business for diamantaires, it would also encourage diamantaires from across the world to start operations in India as against other currently preferred destinations such as Belgium, the UAE and Hong Kong. A level playing field in India is absolutely essential for making India a global hub for gems and jewellery.
- Separate Harmonised System (HS) codes for natural and lab-grown diamonds as well as other gemstones under the Indian Trade Clarification (ITC) system.
- The introduction of a job-work policy in the gem and jewellery industry as is the practiced norm in developed markets. Such a policy is available to other sectors and is needed for the diamond industry.
- The exemption from payment of Integrated Goods & Services Tax (IGST) on the re-import of goods exported overseas on consignment or for exhibitions or export promotion tours. The exemption is sought retrospectively in order to protect exporters from official harassment.
- The notification of a 2.5 percent Goods & Services Tax (GST) rate on input services (or at least job-work services and grading and certification services) and the extension of the benefit of the inverted duty structure to such services also.
- The adoption of standard operating procedures for the value apprising by Customs authorities of exports and imports of diamonds, a process that is subjective and has not changed much over the last few decades. Such standard operating procedures also contain risk management parameters for the Customs apprising process.
- The relaxing of credit norms by the banking sector in order to provide an environment more conducive to business. Additionally, an interest subvention of 5 percent on export finance for the gem and jewellery sector is sought.
The GJEPC said that addressing all these concerns would allow Indian gem and jewellery exporters to maximise their output and achieve the target of $60 billion in exports by 2022.