Review Jewellery Incentives: India's CAG

Indian-GovtNew Delhi: India’s Comptroller and Auditor General (CAG) has asked the government to review export incentives to the gems and jewellery sector to safeguard revenues and prevent round-tripping.

The CAG also asked the department of commerce to undertake an outcome analysis of the important schemes implemented to boost the sector from an economic, trading, and revenue perspective.  All inverted duty structures, transaction costs, related-party transactions, re-export transactions, and facilitation measures need to be carefully reviewed before designing an effective promotional scheme, it said.

CAG asked the Central Board of Excise and Customs (CBEC) to consider rationalizing the duty structure so that foreign exchange earnings could at least be on a par with duty foregone under the Foreign Trade Policy (FTP).

The sector contributes 15 per cent to the export basket. The major product categories are gold and diamond jewellery. India’s diamond manufacturing sector employs about 10 lakh people across the country.

The CAG report on customs on gold, precious metals and jewellery points at its performance audit has a revenue implication of Rs 1,003.37 crore in addition to systemic issues worth Rs 19,522.67 crore and internal control matters which could not be quantified.

The import of gold, jewellery and related items increased from Rs 3.50 lakh crore in 2010-11 to Rs 3.81 lakh crore in 2014-15. Export of similar goods also increased from Rs 1.98 lakh crore in 2010-11 to Rs 2.53 lakh crore in 2014-15.

“The export growth in 2014-15 was much below the rate of 25 per cent envisaged in the Department of Commerce (DoC) strategy, affecting employment generation and other economic indicators,” the report said.