The Indian gem and jewellery community has reacted with disappointment at the increase in the import duty on gold from 10 to 12.5 percent, announced by Finance Minister Nirmala Sitharaman in government’s first national budget proposals after the recently-concluded general elections.
Both the Gem & Jewellery Export Promotion Council (GJEPC) and the All India Gem and Jewellery Domestic Council (GJC) issued statements expressing concern at what they think might be the negative outcome of the increase in duty.
GJEPC Chairman Pramod Agarwal said, “The gem & jewellery industry is going through very tough times with a decline in exports and job losses and the industry expected some positive announcement as encouragement to our sector. The GJEPC had represented for a reduction in import duty on raw material inputs like gold, diamonds and coloured gemstones to get some blocked capital released. “
He added, “Instead the increase of import duty on gold and silver with no decrease in import duty on processed diamonds and gemstones will result in growth of business in neighbouring countries as the foreign tourists will stop buying jewellery from India, and processing of larger diamonds will shift to competing countries such as China and Vietnam.”
Agarwal went to say, “The GJEPC will continue to work with the government to get a favourable environment for the sector in terms of duty and ease of doing business at transaction level.”
Seeking an immediate rollback of the increase and a further reduction in the import duty, the GJC said the increase would have a negative impact on the indigenous gem and jewellery industry, which predominantly comprises hand-crafted and labour intensive production. It added that a skilled labour force of over 5.5 million that is engaged in the manufacturing of jewellery for the domestic sector is likely to be negatively affected.
GJC Chairman Anantha Padmanabhan commented, “This is not in tune with Make in India principles (referring to the Prime Minister’s initiative to increase manufacturing in the country). The increase in customs duty for gold, which is our basic raw material, coupled with the Goods & Services Tax (GST) will make gold more expensive and encourage smuggling. Genuine and law-abiding businessmen will be affected.