Pre-Budget Recommendations by GJF

gjf-logoMumbai: The All India Gems and Jewellery Trade Federation (GJF), the national trade federation for the promotion and growth of trade in Gems and Jewellery (G&J) sector across India, has urged Union Finance Minister Shri Arun Jaitley to abolish 80:20 rule for gold import, which allows only the nominated agencies to import gold on the condition that 20 per cent of the imported shipment will be exported.

GJF claims that 80:20 rule is the biggest impediment for smooth operations of imports and development of premiums on gold as the export relation to imports has no relevance and has built a big parallel economy. GJF also urged the Government to bring down the import duty on gold imports to 2% from current level of 10%. Bringing down customs duty will eliminate smuggling and remove involvement of any black money.

In a 10-point pre-budget recommendation, Mr. Haresh Soni, Chairman, GJF, said, “As per government slogan- ‘Acche Din Aane Wale Hai’, we expect the new government to bring good days for the gems & jewellery industry by acting on GJF’s recommendations. Over the past one year the jewellery trade has suffered a lot because of 80:20 rule and 10% import duty on gold. These restrictions have been deterrent for gold imports and distribution. GJF demands that the 80:20 must be withdrawn and duty must be brought down to 2%. This would help curb the growing black marketing activities in the trade, gold smuggling and high premium on gold and put an end to monopolized business environment.”

Making specific recommendations for the development of the Indian jewellery sector, Mr. Soni further said, “We recommend the government to earmark funds for development and expansion of the gem & jewellery sector. GJF will help in utilizing this Budget to develop education, technology transfer, marketing, building quality and R&D. Also allocation of budgetary support to the tune of Rs. 350 crore would go a long way to provide education and develop infrastructure facility for jewellery parks to re-habilitate craftsman working in unhygienic environments, and bring them into organized ambit.”

Mr. C. Vinod Hayagriv, Past Chairman, GJF, said, “We expect the government to be business friendly. We have requested for reducing import duty on gold, relaxation of 80:20 rule, enhancement of TCS to help growth of more organized business in our sector, to help unlock idle gold through the Rashtriya Swarn Nivesh (RSN) programme. We recommend that the levy of 1% TCS for cash transactions of over Rs. 5 lakh should be abolished as it is hurting retail transactions. As there is already a VAT and we suggest that only a PAN card requirement be required rather than 1% additional levy. We recommend that the limit for PAN card be raised to Rs. 10 lakh.”

With favorable expectations from the Government, Mr. Ashok Minawala, Director, GJF, said, “This Budget may be turning point for the jewellery industry as we strongly believe that this government is empathetic to the cause of the industry. At present, the industry is suffering from several irrational taxes such as excise duty; tax collected at source, GST, wealth tax and high premium charges on gold from banks. We recommend that banks be allowed to freely issue gold loans capital requirement for industry and such gold loans be permitted to be paid back in ‘gold metal or in cash’. Presently, loans must be paid back only in rupees. This will help rotate the gold better in case of sluggish market conditions.”

GJF also recommended maintenance of 10% difference between import duties on finished gold/silver jewellery compared with raw material to discourage cheap low quality jewellery entering into Indian market. While suggesting rationalization of VAT across all states, Federation’s demand is to abolish the wealth tax with immediate effect.

To incentivize the jewellery sector for enhancing sales and increase foreign exchange earnings, GJF recommended a series of measures which include providing low cost loans and allocation of land/ building to set up jewellery parks (accommodating manufacture, shared services, testing, banking, logistic support, etc.) so as to move the sector into organized environments, for old and new jewellery manufacturing/exporting projects. Further, the Federation made specific suggestions like providing subsidized finance for technology upgradation and exemptions of capital gains for investment in jewellery to encourage and positive growth for the Gems & Jewellery Sector and more importantly unlock idle gold reserves in India. GJF also requested the Government to instruct to remove & roll back and close erroneous pending cases of Excise duty on ‘articles’ of precious metals which has been pending for a long time.

“We do see big possibility to unlock a great deal of idle gold in India through jewelers and banks. We wish to make a presentation of the gold deposit scheme “Suvarna Nivesh Yojna” programme, which the previous regime was happy but could not decide upon, as this will help us unlock idle gold lying with public and institutions,” GJF’s Board proposed to the Government.