GJEPC Chairman Presents Pre-Budget.

                               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.