Gold, Gem & Jewelry Industries Left Frustrated by 1% Excise Duty in Budget

(IDEX Online News) – The gem and jewelry sector, which had hoped that the government would cut import duty from 10 percent to percent, faced up to a 1 percent excise duty instead, according to a report in The Economic Times.

The India Bullion and Jewelry Association expressed fears that the imposition of the excise duty will lead to job losses in the gem and jewelry sectors.

In an interview with The Economic Times, Bachhraj Bamalwa, director of the All India Gem & Jewelry Trade Federation said, "The Modi government has disappointed us in this year's budget. While the cost of jewellery will go up it will be very difficult for the government to implement the excise duty. Jewelry in India is not machine made and are mostly handcrafted. Therefore, to implement the excise duty the government will face a lot of problem. Some jewelers will absorb the excise while a large section of them will pass it on to the consumers." 

GJEPC chairman Praveenshankar Pandya was also critical of the excise duty, reiterating that the SMEs that dominate the Indian gem and jewelry industry, could severely impact both production and jobs.

“We find that our existing concerns have not been addressed in this Budget. We are apprehensive of the introduction of excise duty on jewellery products for the first time in several decades,” he said.

More widely, according to a statement on the GJEPC website, Pandya reflected the concerns of the entire industry when he said that the government had not seemed to pay any heed to facilitating the ease of doing business. He even went as far as calling on Finance Minister Arun Jaitley to reconsider the withdrawal of levy of excise on jewelry products.

There were sections of the budget, however, that the GJEPC welcomed. It said that focusing on socio-economic development, impetus to infrastructure, simplification of tax norms and the rationalization of Central Government plans were positive moves.

The gem and jewelry trade body enthusiastically greeted the creation of a separate code for lab-grown diamonds, which will attempt to curb the incidence of mixing with natural diamonds.

The creation of a Special Notified Zone, which has facilitated the shifting of operations by foreign mining companies to the country, and permitting the trade of rough diamonds in India, also received the support of the GJEPC.