India’s Gem & Jewellery Export Promotion Council (GJEPC) has been pressing hard for its demands from government since last many years but hardly a few of them may have been met by the previous government with many of them still remaining unfulfilled.
It is now time for the new government to present its first (interim) budget, so the GJEPC has once again submitted a list of its (pending) demands to the new Finance Minister (FM) Mr. Arun Jaitely last week with a hope that many of its demands would certainly be met this time.
One of the prime goals of the GJEPC is to achieve the status of a global diamond trading hub for India. India is already a world leader in diamond manufacturing sector contributing 60% of business in terms of value, 85% in terms of volume and 92% in terms of pieces. It is also enjoying the world leadership in cutting and polishing of Emerald & Tanzanite.
But the country is lagging far behind as far as diamond trading is concerned. The GJEPC along with Bharat Diamond Bourse (BDB) had recommended the government two years back to create Special Notified Zones (SNZs) where mining companies could set up their trading offices and bring their rough diamond supplies for direct trading with Indian companies.
But the recommendation again went to the dustbin with the previous government remaining inactive over the issue. The GJEPC, in its memorandum submitted to the FM has argued that the complicated procedures and potential taxation disputes which can arise make big producers hesitant to set up auctions in India. So creating a notified zone for import and trading of rough diamonds in India would help companies bring their rough supplies directly for trading in India.
GJEPC along with BDB has proposed to set up rough diamond viewing facility in Mumbai. The main objective of setting up this facility would be to provide their members direct access to rough diamonds which are otherwise brought to India via foreign trading centers.
Mr. Vipul Shah, Chairman of the GJEPC says, “Indian diamond industry would be largely benefitted if the government allows setting up SNZs. Global miners would directly be able to bring their rough supplies and sell it to the Indian companies. India is the world’s largest consumer of rough diamonds with annual consumption pegged between $14 billion to $15 billion.”
Another important demand by the GJEPC is introduction of Presumptive/Turnover Tax. The measure which has been pending for many years would bring India at par with prime manufacturing centers like Israel, Thailand and China. At the same time, argues the GJEPC that the Govt. revenue would thus increase and simplify the procedure and litigation involved in collection of income tax.
Mr. Shah maintained, “There is an urgent need to review the existing gold policy also. Smaller jewelers are not getting regular supply of gold and India’s gold jewellery exports have come down by almost 40% because of the unavailability of gold. The new government should also reduce import duty on gold from 10% to 2% and it should also abolish the imposition of 80:20 scheme.”
The GJEPC and BDB feel that creation of a world class SNZ would certainly transform India into one of the largest rough diamond trading centers, akin to Belgium, Antwerp and Dubai. India processes 14 out of 15 rough diamonds today mined globally. But, it is yet to be acclaimed as a trading center due to clumsy duty structure and absence of a world class assorting, display and distribution center.
Posted by Suresh Chotai
