Gold & Silver

Budget memorandum: Exporters’ body urges Centre to slash import duty on cut, polished diamonds to 2.5%

Our Bureau Mumbai | Updated on January 22, 2020

Also wants duty on precious metals to be reduced to 4%

The Gem and Jewellery Export Promotion Council (GJEPC) has urged the Centre to slash the import duty on cut and polished diamonds and gemstones to 2.5 per cent from 7.5 per cent, and that on precious metals such as gold, silver and platinum to 4 per cent from the current 12.5 per cent to revive exports.

In its pre-Budget memorandum submitted to Finance Minister Nirmala Sitharaman, the Council said there has been a 10 per cent decline in diamond-studded jewellery exports in the last financial year, ever since the import duty on cut and polished diamond jewellery was increased. This has also impacted the processing of diamond of 2 carat and above besides hampering trade in small-sized diamonds, making the domestic diamond industry uncompetitive in the global market, it said.

Bank guarantees

Exporters, who are usually exempted from import duty, are being told to submit bank guarantees of over 100 per cent of the Customs duty on metals as security to procure precious metals through nominated agencies and banks. This has resulted in undue blockage of working capital for small and medium jewellery exporters, it said.

Amid a sharp rise in smuggling, the import duty hike is indirectly creating a disincentive to the organised players in the industry, it added.

Quoting a NITI Aayog report titled ‘Transforming India’s Gold Market’, the GJEPC said multiple increases in import duty have resulted in gold being shipped in duty-free from countries such as South Korea and Malaysia, with whom India has signed Free Trade Agreements. This has increased the price arbitrage in the domestic markets. Cheaper imports in the grey market encourage ‘unofficial’ gold business in a big way, it said.

Sale of roughs

Currently, the government allows foreign mining companies to display rough diamonds duty-free at specified notified zones in India but they are not allowed to sell the same. After viewing the roughs in India, potential buyers can procure them abroad. The GJEPC has proposed that the government allow the sale of roughs and levy a presumptive turnover tax at 0.125 per cent in line with that is being charged in the UAE, Belgium and Israel.

To boost e-commerce, the GJEPC has demanded a waiver of filing of shipping bills by the exporter for e-commerce shipment up to a value of $800 on the basis of invoices and self-declaration.

Published on January 22, 2020

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