The gems and jewellery sector is not only a major employment generator but also makes a major contribution to India's export earnings. As per a White Paper issued by the Ficci Gems and Jewellery Group, the total size of the gems and jewellery sector (both domestic and exports) is about Rs 4,15,000 crore. The significant increase in growth of the export sector has been primarily because of a strong domestic consumption base and pragmatic government policies.
With increasing competition from China, the government should encourage the development and promotion of branded jewellery in the international market, for the long term sustainable growth of the gems and jewellery sector.
The levy of excise duty on jewellery should not only be immediately abolished but an “Indian brands” promotion corpus should be made available to promote Indian jewellery brands in the international market.
Further, gold jewellery is also a form of savings and investments, especially for the rural population. Thus, levying an excise duty on such savings is not appropriate.
The government has recently increased the Customs duty on polished diamond imports. However, with this introduction, the Government should also allow duty free imports of cut and polished diamonds in private bonded warehouses so that the trade's efforts to shift a part of the diamond trading business form Belgium, Israel and Dubai is encouraged. The government should provide a boost to the development of the modern, organised segment of the Indian jewellery industry by implementing the following measures:
Abolish Excise Duty on Jewellery
Create an “Indian Brand” development fund to promote exports
Ensure that VAT is capped at 1 per cent under the GST regime
Allow duty-free imports of cut and polished diamonds in bonded warehouses for value-add and re-export