The Gem & Jewellery Export Promotion Council ( GJEPC) has urged the Government to reconsider its decision to tax rough diamond imports under GST, stating that such a move was a "retrograde" step and would have "severe repercussions".

It is difficult for gems and jewellery exporters to pay 0.25 percent and then initiate process for refunds etc, Praveenshankar Pandya, Chairman, GJEPC said.

Taxing diamonds is a retrograde step and not in sync with equivalence policy, he said.

Diamonds are the key raw materials for gem and jewellery export business. Rough diamonds have been kept out of the purview of taxes even in various Asian countries which are globally competitive, according to Pandya.

For a segment wherein 95 percent of the output is exported, and, whose global footprint is under constant stress from other competitive economies, an upfront levy of GST on rough imports, which was hitherto exempted, would invariably cause a major setback to the trade and impact India's significance in the global markets.

Owing to the thin margins in this segment, each business will have to 're-graduate the viability of conducting the cutting and polishing activity in India, in light of the extent of strain GST would bring on its working capital, and, eventually this may lead to significant volume of flight of capital and employment to other jurisdictions, Pandya said.

However, GJEPC welcomed the Government's move of keeping GST rate of 3 percent on gold and jewellery and added that this was in line with its representations and recommendations.

Srivats.Kr@thehindu.co.in

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