National, 23rd July, 2024: The Gem & Jewellery Export Promotion Council (GJEPC), India’s apex trade body for Gems & Jewellery ) hailed the first Union Budget of Prime Minister Shri Narendra Modi 3.0 government presented by Finance Minister Smt. Nirmala Sitharaman for the seventh historic time as a game changer for the indigenous gem & jewellery industry.
Hon. Finance Minister acknowledged that India is a world leader in the diamond cutting and polishing manufacturing, which employs more than a million skilled workers. GJEPC said that the abolition of equalisation levy and announcement of safe harbour tax on rough diamond trading will see the growth of India as the largest rough diamond trading centre as all foreign mining companies will now trade rough diamonds directly to the diamond cutting and manufacturing entities in India. Thus the small manufacturers will get the access of raw materials in India directly from diamond miners without need to travel abroad to take part in diamond auctions.
GJEPC welcomes FM’s decision to exclude the diamond sector from the 2% Equalization Levy (EL) on sales of rough diamonds. This will help to maintain India’s leadership in the diamond industry and ensure operational sustainability. Equalisation Levy at the rate of 2 per cent of consideration received for e-commerce supply of goods or services, shall no longer be applicable on or after 1st August, 2024.
Hon. FM’s acceptance of GJEPC’s long-standing recommendation for simplifying taxation rules on sale of diamonds in Special Notified Zones (SNZs) by foreign miners alongwith abolition of equalization levy for bidding of rough diamonds online by our diamond manufacturers is a game changer. GJEPC welcomes the Government’s proposal to provide for safe harbour rate for foreign mining companies selling rough diamonds in the country and abolition of equalization levy. This will put India on equal footing with global trading centres such as Belgium and Dubai. This will further promote the development of the gem & jewellery sector. As apex trade body, GJEPC has been seeking the same and has made several pre-Budget recommendations on this matter.
FM’s announcement will expand the ambit of entities entitled to operate through SNZs. SNZs were established with the prime objective that there would be easy availability of rough diamonds by creating efficiencies in procurement of rough diamonds by allowing overseas diamond mining companies to sell their produce directly to Indian manufacturers through such SNZs. Sale is allowed in countries like Belgium and Dubai, while there is no direct tax on sale of displayed rough diamonds in Dubai and there is 0.187% turnover tax on sale in Belgium. GJPEC has proposed the establishment of an SNZ for rough gemstones in Jaipur. With these SNZs in Mumbai and Surat, the critical issue of raw material availability would be greatly relieved.
GJEPC applauds Hon. FM’s proposal to reduce custom duties on gold and silver to 6% and that of platinum to 6.4% to enhance domestic value addition in gold and precious metal jewellery in the country. India’s gem and jewellery industry heavily relies on imports for its raw materials, including gold, diamonds, silver, and colored gemstones. These materials are brought into the country and undergo either cutting and polishing or are transformed into finished jewellery before being exported worldwide. As apex body, GJEPC has been seeking this reduction in its pre-Budget recommendations to enhance exports. The reduction in duties of gold, silver and platinum will ensure that duty blockage of around Rs. 982.16 crore can be released resulting in more working capital in hand of the exporters. This will help in growth of manufacturing due to enhanced demand for jewellery at domestic level and realise the untapped export potential for gold jewellery with more working capital (at least US$2 billion of US$ 11 billion in medium period of 2 years).
FM highlighted the Government’s efforts to rationalize the tax structures to promote domestic manufacturing increase exports, enhance global competitiveness. Version 2.0 of the Jan Vishwas Bill will enhance ease of doing business.
MSMEs and artisans/craftsmen in the gem & jewellery industry will benefit from the e-commerce exports hubs, which will be set up in public private participation to facilitate trade and export related services under one roof. To sell their products in international markets, these hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof. Craftsmen and Artisans will benefit from the stepping up of schemes such as PM Vishwakarma, PM SVANidhi, National Livelihood Missions, and Stand-Up India.
The setting up of Industrial Parks in association with the State Government will encourage development of Gem & Jewellery Parks across the country in addition to the one being developed in Navi Mumbai by the Council. FM’s proposal with respect to Rental housing with dorm like accommodation for industrial workers will be facilitated in PPP mode is welcome.
FM stated that rules and recognition for Foreign Direct Investments (FDIs) will be simplified to facilitate their inflow. This move aims to prioritize and promote the use of the Rupee for overseas investments. FM’s Union Budget showed that the Government is aiming to make Indian rupee to become the world’s alternate reserve currency.
The Budget’s emphasis on labour intensive manufacturing by MSMEs – who comprise 80% of the gem & jewellery industry – will help them grow and compete globally. Credit guarantee scheme in the manufacturing sector will give a stimulus to MSMEs for modernising machinery and equipment.
The Government has given a big push on employment-linked skilling and this will benefit the 5-million plus workforce of the indigenous gem & jewellery industry. job creation in the manufacturing sector will be incentivized through a scheme linked to the employment of first-time employees. We hope that the Government’s move for more women in workforce and initiatives announced for women workers will inspire more women to join the gem & jewellery industry.
The Government’s focus on existing and new industrial corridors especially in Eastern India will help GJEPC to promote new gem & jewellery clusters for exports.
The allocation of Rs. 2 lakh crore for facilitating employment and skilling for 4.1 crore youth for a 5-year period will benefit new workers in the 5 million plus labour force of the Indian gem & jewellery industry. The Direct Benefit Scheme for new entrants will encourage more youngsters to join the gem & jewellery industry.
Finance Minister’s Budget primarily focussed on economic reforms for Land, Labour, Capital and Entrepreneurship to increase the employment, especially for the labour intensive sectors in India like gems & jewellery. This coupled with incentives and investment for skill development of the workers and artisans will really give immense boost to our sector.
The 9 priorities including focus on Manufacturing & Services will aid Make in India and Atmanirbhar Bharat.
Vipul Shah, Chairman, GJEPC, reacts to the Union Budget presented by Union Finance Minister Smt. Nirmala Sitharaman on 23rd July 2024
“The Union Budget 2024 is a game-changer for the gems and jewellery sector. The reduction in import duties on gold and silver to 6% and platinum to 6.4% is a major boost for our industry, enhancing affordability for consumers and competitiveness for the manufacturing sector by releasing working capital. The abolition of the 2% Equalization Levy and introduction of the Safe Harbour Rule on sale of rough diamonds at SNZs will firmly establish India as a global rough diamond trading hub. These combined measures will propel the sector’s growth, generate lakhs of employment opportunities by benefitting the small-scale jewellery manufacturers & exporters and diamond cutters and polishers, thus contribute significantly to India’s vision of becoming a Viksit Bharat by 2047.”
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