G&J Industry Applauds the Union Budget

Mumbai: Gem & Jewellery Export Promotion Council (GJEPC) applauds the pro-reform and export growth-oriented budget by Hon. Finance Minister Smt. Nirmala Sitharaman under the visionary leadership of Hon’ble Prime Minister Shri Narendra Modi. The supreme trade body thanked Hon’ble Minister of Commerce & Industry Mr. Piyush Goyal for his continuous support and guidance to the industry.

In the first Budget of Amritkaal, Hon. Finance Minister has listed 7 priorities as she outlined people-centric agenda of ease of living and doing business to take on global challenges as well as for stimulating exports.

GJEPC also thanked the Government for accepting its recommendation to promote indigenous manufacturing in the emerging Lab-Grown Diamond (LGD) sector by providing Research Grants to IIT for 5 years.

GJEPC welcomed the reduction of Customs Duty on LGD seeds to zero from 5%. It will ensure India’s end-to-end world leadership in rough to finished lab-grown diamond and jewellery manufacturing. In addition to that Govt. has also accepted to have clear segregation Customs (IT HS) codes for Silver and Platinum studded Lab grown jewellery for better differentiation and identification at consumer level.

Another positive pro-growth move is that the conversion of physical gold into digital gold will not attract capital gains tax.

The increase in the allocation for the Interest Equalization Scheme from Rs. 2,376 crore in 2022-23 to Rs. 2,932 crore in 2023-24, up by 23%, will help in supporting exports particularly by MSMEs and may result in increasing the subvention support as demanded by the exporters in view of rising interest rates.

The ₹13.7 lakh crore investment for infrastructure by the Government is a big positive step for the country. This will unleash the potential of Indian Economy.

GJEPC welcomes the move to increase the duty on articles (jewellery) of precious metals such as gold/silver and platinum from 20% to 25% (+Nil AIDC+2 SWS). However we are clarifying on the import duty on findings which are raw material in character for manufacture of jewellery. Union Finance Minister has also rationalised the import duty on silver by proposing to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum. However that will have a net effect of increase of around 5% duty at import level for silver resulting in increase of price for silver products domestically.

The industry had recommended Reduction in Import Duty on Gold/Silver and platinum which has not been considered in the Budget. Council will continue to pursue the same with the Government for the overall welfare of the industry.

The enhancement of Income Tax limit to Rs. 7 lakh will benefit workers in the gem & jewellery industry. Reduction in surcharge in the highest Income Tax slab will reduce maximum tax rate to 39% (from 42.74%) will benefit jewellers.

We hope PM Vishwa Karma Kaushal Samman package of assistance for traditional artisans and craftspeople will be extended to the 5,000 year old indigenous gem & jewellery industry.

The body appreciated emphasis on exports, which are a key growth magnet in growth of the economy. GJEPC welcomes the revamped Credit guarantee scheme for MSMEs and the Government’s assurance of returning 95 per cent of forfeited amount to the enterprises in event of contract failure during covid-19 by MSMEs.

The Union Budget for FY24 reflects its long-term vision to spur the country’s march as a leading global economy all the way till India@100.

Saiyam Mehra, Chairman, GJC:

Saiyam Mehra

“We thank Honourable FM Shri Nirmala Sitharaman ji for presenting a well-balanced Union Budget 2023-24, focused on the spirit of Amrit Kaal. Key announcements such as Income tax- rebate extended on income up to Rs 7 lakhs in new tax regime, increase in outlay of PM Awaas Yojana is a big relief for the middle-income group. However, the Gems & Jewellery Industry’s critical concerns are not addressed in the Union Budget 2023-24. While the Research and Development grant will be provided to one of the IITs for the development of Lab Grown Diamond seeds and machines, the other sectors of the industry have been ignored.

The reduction in Gold Custom Duty in this Budget was our big expectation, which has severely hampered the industry and encouraged smuggling and grey market. GJC has been actively representing the reduction in customs duty of Gold over past many years. However, the Silver Dore Bars Custom Duty has been brought at par with Gold and platinum in this budget. This move will adversely affect the masses. GJC will continue to represent this important issue of the Industry. We are having a meeting with Honourable FM on 4th February at Mumbai, in which we shall once again stress upon the important concerns such as reduction in custom duty, EMI on Jewellery, Relief in Capital Gain tax and Gold Monetisation Scheme etc.”

Rajesh Rokde, Vice Chairman, GJC:

“While the Honourable FM has presented a well-balanced budget and revision in Income tax is a welcome move. The Gems & Jewellery Industry is deprived of their key budget recommendations such as Reduction in Gold Custom Duty, EMI on Gold Jewellery, Reduction in credit card commission levied by banks and many more issues are not highlighted in the Union Budget 2023-24. Gems & jewellery industry plays a very pivotal role in our nation’s GDP and we shall continue approaching the Ministry as this industry needs special attention towards our concerns and provide reliefs for the progress of the Industry.”

Somasundaram PR, Regional CEO, India World Gold Council:

Somasundaram PR

“While the reduction in custom duty on gold from 12.5% to 10% is a step in the right direction, the hike in the Agriculture Infrastructure & Development Cess has brought the overall duty to 15%, same as before. High taxes will impede efforts to make gold an asset class, particularly at a time when gold prices have risen globally. Moreover, the thriving grey market has diluted efforts to reduce cash transactions and penalizes organised and compliant players.

On a positive note, the budget also announced that the conversion of physical gold to Electronic Gold Receipt will not attract any capital gains. Thus, providing an overall digital boost to the industry and promoting investments in electronic equivalent of gold. Directionally, this year’s budget can be considered positive for the industry.”

Amit Pratihari, Vice President, De Beers Forevermark

“The overall budget has a positive sentiment. In fact, under the new tax regime, the budget has made room for more disposable income and purchasing power of consumers will increase. For natural diamonds, we’ve seen an encouraging trend over the past few months where consumers are purchasing items which hold meaning and value. Natural diamonds continue to be sought after due to their inherent preciousness. Pricing has also remained steady, and we are optimistic it will become stronger. As customers continue to value what is natural and genuine, diamonds will always be in demand.”

Colin Shah, MD, Kama Jewellery:

Colin Shah

“It was a mixed budget for the Gems and Jewellery industry as the FM did acknowledge the potential of the Lab Grown Diamonds for exports, and to create employment. An R&D grant for five years will help in creating local manufacturing capacities, thereby reducing our dependency on imports of machinery in the years to come.

The move not to impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetization. This announcement may help in reducing the import of gold.

The hike in basic customs duty on articles made from gold bars and import duty on silver will lead to a rise in the final price of locally made jewelry and maybe challenging for the local refineries.
There was no announcement for the natural diamond industry in terms of duties and our SNZs. Not having a repair policy will also be damaging for our DTA Jewellery exporters.”

Dr. Saurabh Gadgil, Chairman & Managing Director, PNG Jewellers:

Saurabh Gadgil

“This year’s budget is as expected a populist budget given the run up to 2024 elections. For the jewellery industry, the biggest disappointment is that the budget did not address the concerns over reduction in import duty on gold and the creation of a level playing field in prices between the regular market and grey market. In fact, silver has been brought on parity with gold and platinum at 15%. The focus of the government continues to focus on supporting new technologies and the nascent lab grown diamond industry is seen as a potential high employment space, hence the grant proposed. The government has also placed impetus on promoting Lab grown diamonds as it is seen as a green initiative through the reduction in basic customs duty on seeds required for lab grown diamonds. What kind of impact this will have on consumers over all as well as the natural diamond industry remains to be seen.

The government has also announced that conversion of physical gold into digital gold will not attract capital gains tax which is likely to promote digital gold initiatives. Besides that, there is nothing major for the jewellery industry.

With the implementation of the revised Income tax slabs, there will be more disposable income for people and will ensure that consumption further increases this year, thereby propelling GDP growth. This budget is laying a foundation for India once again reaching double digit growth again with a little bit of every sector.”

Kalpesh Patel, Director – Corporate Ratings, CareEdge:

“Globally annual sales of Lab Grown Diamond (LGD) jewellery are estimated at around USD 10 billion and the same is expected to reach to about US 20 billion by 2030, reflecting annual CAGR of ~10%. In similar line, export of LGD from India has reported significant jump y-o-y and during 9MFY23 overall LGD exports was ~USD 1.3 billion marking a growth of 44% over 9MFY22.

Growing demand in the global market and impetus for domestic producers in the Union budget 2023 through allocation of funds for research and development and reduction in customs duty for import of seeds for manufacturing of LGD would augur well for increasing the production capacity of LGD in India and LGD exporters.”