GJEPC Chairman Presents Pre-Budget
Recommendations at Hon'ble FM's Consultation
Meeting
Urges Government to make India a global trading hub for diamond &
coloured gemstones
Introducing a Safe Harbour rule in SNZs
Introduction of Diamond Imprest License
Introducing duty drawback on exports of platinum Jewellery for India
UAE CEPA benefit
Reduction in import duty on gold/silver/platinum bars to 4%
Introduce separate HS code for CVD and HPHT diamonds at 8 digit level
National, 25 th June 2024: GJEPC Chairman Shri Vipul Shah presented
key recommendations for the gem & jewellery trade at today's pre-
budget meeting with Union Finance Minister Smt. Nirmala Sitharaman.
Mr. Vipul Shah, Chairman of GJEPC, said, “The Indian gems and jewellery
industry contributes around 10% to India’s total merchandise exports.
However, the industry is currently facing some challenges due to the
geopolitical scenario, the emergence of the beneficiation scheme, and issues
related to rough diamond sourcing. Against the backdrop of the
macroeconomic scenario, I urge the government to take measures to revive
exports in this sector. I request the Hon’ble Finance Minister to introduce a
Safe Harbour rule in SNZs, introduce the Diamond Imprest License, and reduce
the import duty on gold, silver, and platinum bars to 4%; and introduce duty
drawback on exports of platinum Jewellery to take advantage of India UAE
CEPA. These measures are crucial to give a competitive edge to our players and
boost exports and at the same time generate employment in the sector.”
GJEPC’s pre-budget recommendations include:
Sale of rough diamonds in Special Notified Zones (SNZs):
GJEPC has urged the Government to consider its long pending demand
of sale of rough diamonds in Special Notified Zones (SNZs) through
Safe Harbour Rule and to expand the ambit of entities entitled to operate
through SNZs. Currently only viewing session are held by mining
countries at SNZs. SNZs were established with the prime objective that
there would be easy availability of rough diamonds by creating
efficiencies in procurement of rough diamonds by allowing overseas
diamond mining companies to sell their produce directly to Indian
manufacturers through such SNZs.
Sale is allowed in countries like Belgium and Dubai, while there is no
direct tax on sale of displayed rough diamonds in Dubai and there is
0.187% turnover tax on sale in Belgium. Indian bidders CANNOT
purchase Rough Diamonds from SNZ, as on date, as the waiver under
section 9(1)(i) of the Income-Tax Law to such sale at SNZ by FMCs not
provided.
SNZ for rough gemstones in Jaipur:
GJPEC has proposed the establishment of an SNZ for rough gemstones
in Jaipur. With these SNZs in Mumbai, Surat, and Jaipur, the critical
issue of raw material availability would be greatly relieved.
Facilitate Rough Diamond Broking and Trading Companies at SNZ
With a view to further extend and expand the scope of SNZs, GJEPC
requested the Government to also allow globally recognised diamond
broking/ trading houses such as Bonas and I Hennig to also similarly
operate from such SNZs. Such trading houses are the focal point for
sale of diamonds of smaller miners which cumulatively comprise close to
35% of the global mining produce. Pertinently, such trading houses are
already having a significant presence in other jurisdictions such as
Dubai, Antwerp, etc. Allowing such trading houses to operate from SNZs
with similar facilitation as provided to the diamond mining companies
would ensure that India has a more flexible, timely and cost-efficient
access to such diamonds mined by smaller miners and is thus able to
retain its position on the global roadmap as a leader in cutting and
polishing of diamonds.
Introduction of Diamond Imprest Licence
Under beneficiation scheme, some mining countries do not allow export
of raw/rough diamonds without some value addition (cutting). These
diamonds when imported in India are not considered rough diamonds
but treated as cut & polished diamonds and attract BCD of 5%. This
makes export of polished diamonds from India less competitive as
compared to competing countries like China, Vietnam and Sri Lanka.
Due to beneficiation, the business is shifting to mining countries like
South Africa, Namibia, Tanzania etc.
Diamond Imprest Licence which was there in Foreign Trade policy was
withdrawn after the import duty on CPD was abolished in the year of
2009. With re-introduction of import duty on CPD in the year 2012, the
scheme was not re-introduced. GJEPC is of the opinion that Indian
diamond exporters above a certain export turnover threshold should be
allowed to import at least 5%, of the average export turnover of
preceding three years. This will provide level playing field for Indian
MSME diamond exporters with that of their larger peers. It will stop flight
of investment of Indian diamantaires to diamond mining destinations. It
will give more employment in terms of diamond assorters and
processing of semi-finished diamonds in the factories.
Reduction in import duty on precious metals to 4%:
The Council has also sought reduction in import duty on precious metals
Gold Bar (7108) from 15% to 4%. This will ensure that duty blockage of
around Rs. 982.16 crore can be released resulting in more working
capital in hand for industry. Untapped export potential for gold jewellery
can be realised with more working capital (at least US$2 billion of US$
11 billion in medium period of 2 years). GJEPC has sought reduction in
import duty on Silver Bars (7106) from 10% to 4%; and reduction in
import duty on Platinum Bars (7110) from 12.5% to 4%.
Introducing duty drawback on exports of Platinum Jewellery:
In the absence of tariff rate of platinum combined with high import duties
and non-availability of duty-free platinum from nominated
agencies/banks, this imposes constraints on DTA exporters and
therefore the majority of exports of platinum jewellery is happening
through SEZs. Since duty drawback is not available on platinum,
therefore DTA units are not able to export as they are not competitive in
international market. Also, in absence of tariff rate of platinum, Drawback
department is unable to fix drawback rates for platinum jewellery, since
there is no basis for determining drawback rates.
India’s gem and jewellery industry heavily relies on imports for its raw
materials, including gold, diamonds, silver, and colored gemstones.
These materials are brought into the country and undergo either cutting
and polishing or are transformed into finished jewellery before being
exported worldwide. This thriving industry sustains approximately 4.3
million jobs, contributes about 10% to the country's merchandise
exports, and significantly impacts the overall economic growth.
India has established itself as the leading choice for sourcing gems and
jewellery on a global scale. However, to uphold this position of
prominence, the industry must remain competitive in the international
market. It requires strategic policy interventions that adapt to the
evolving business landscape within the sector.
About The Gem and Jewellery Export Promotion Council (GJEPC)
The Gem & Jewellery Export Promotion Council (GJEPC), set up by the
Ministry of Commerce, Government of India (GoI) in 1966, is one of
several Export Promotion Councils (EPCs) launched by the Indian
Government, to boost the country’s export thrust, when India’s post-
Independence economy began making forays in the international
markets. Since 1998, the GJEPC has been granted autonomous status.
The GJEPC is the apex body of the gems & jewellery industry and today
represents 10000 members in the sector. With headquarters in Mumbai,
GJEPC has Regional Offices in New Delhi, Kolkata, Chennai, Surat and
Jaipur, all of which are major centres for the industry. It thus has a wide
reach and is able to have a closer interaction with members to serve
them in a direct and more meaningful manner. Over the past decades,
GJEPC has emerged as one of the most active EPCs and has
continuously strived to both expand its reach and depth in its
promotional activities as well as widen and increase services to its
members.
.jpeg)
.jpeg)
.jpeg){kind=link}