India’s Budget Disappoints G&J Industry

India’s interim budget, which was presented on Monday, the 17th February by the Finance Minister (FM) Mr. P. Chidambaram has failed to provide even the ‘smallest booster dose’ to the country’s so called ‘unwell’ gem & jewellery industry.
India’s gem & jewellery industry was quite hopeful that the budget might bring some solace in form of duty-relaxation on gold imports but the prime goal of FM was, it seems, was to bring down the Current Account Deficit (CAD) and to add to the country’s foreign exchange reserves which he felt was more important for the overall betterment of the economy (even at the cost of the gem & jewellery industry). So Mr. Chidamabaram has left the present duty structure of the country’s gem & jewellery industry untouched which has upset the industry circles here very much.
The FM, while presenting the budget in Loksabha said, “I am glad to inform members of the House that we would be able to add about $15 billion to the country’s foreign exchange reserves by the end of the financial year.”
In the first six months of 2013-14, CAD has narrowed down to $26.9 billion (3.1% of GDP) from $37.9 billion (4.5% of GDP) in the first six months of 2012-13. Both the government and the Reserve Bank of India (RBI) had introduced measures to bring down gold imports which are major causes for the widening of the country’s CAD in 2012-13. Indian government had increased customs duty on gold thrice in 2013 to 10% and the RBI had imposed a series of curbs on inward shipments of the yellow metal.
The All India Gems and Jewellery Trade Federation (GJF) has expressed deep disappointment and shock at the budget proposals declaring them as ‘anti jewellery sector, depriving livelihood of millions of people engaged in the sector’.
Chairman of GJF Mr. Haresh Soni said, “This is an anti-people budget impacting over three crores people as the FM has ignored the quandary of millions of jewellery artisans and craftsmen. The entire G&J Industry is highly disappointed and shocked at the indifferent treatment meted out to it by the FM. The Government has also turned a blind eye to the increasing gold smuggling which is not only forming a parallel economy but also bullying the security of the country.”
GJF has restated once again that Indian government’s recent 80:20 scheme has generated high gold premium and monopolized the business environment. Besides, it has destroyed the organized G&J industry and led to unemployment and starvation amongst the workforce.
The industry circles here believe that the G&J industry is being discriminated against (by the government) because relief in excise duty has been given to luxury items such as large and mid-sized cars & SUVs under the excuse that the Indian automobile industry is registering negative growth but the same was not extended to the G&J industry.
Maintaining that gold cannot be considered as the only factor responsible for the growing CAD, the industry leaders here feel that the Indian Government must recognize people’s sentiments to consider gold jewellery as their best social security and also preserve the country’s centuries old jewellery design legacy.
The recent policies have decisively established in the minds of industry people that the Indian government seems to be firm over controlling fiscal deficit even at the cost of the country’s indigenous G&J industry.Posted by Suresh Chotai