GJEPC seeks sale of rough diamonds at special notified zone

Suresh P Iyengar Mumbai | Updated on July 07, 2020

The gems and jewellery industry has urged the Finance Ministry to allow sale of rough diamonds at the special notified zone for higher tax collection and promoting AatmaNirbhar in the industry.

Currently, rough diamonds are sent to the SNZ by miners for viewing but it cannot be sold as the sellers would be considered as permanent entities and levied income tax. To avoid this, sellers take back the rough diamond to Antwerp or Dubai and ship them back to India, increasing the cost for the importers.

In a presentation to the Finance Minister Nirmala Sitharaman the Gem and Jewellery Export Promotion Council has suggested a turnover tax not exceeding 0.16 per cent as levied in Belgium (Antwerp) so that miners can log their sales in India without the hassle of maintaining separate accounts.

If this is implemented, the industry assured that it will not only result in incremental tax collection which is currently going to Belgium but also lower logistic and foreign office costs for Indian firms, said industry sources.

The interaction with Sitharaman comes when the government is planning a special relief package for the jewellery industry hit by the Covid-19 pandemic and lockdown.

With banks reluctant to lend to the industry due to risk aversion, GJEPC has suggested to make it mandatory for all borrowers to register with MyKYCbank, an online platform developed by the Council.

India processes 80 per cent of the rough diamond and the rest is processed by Indian companies in the mining countries as part of their local beneficiation programme.

In 2018, government increased the duty on polished diamond imports to 7.5 per cent from 2.5 per cent.

Following this, diamonds manufactured abroad are not imported to India, but routed to Hong Kong and Dubai. In fact, the duty collected from polished diamond imports have fallen to ₹26 crore a month against ₹31 crore logged before the duty was hiked.

Reduction in duty, the industry said will draw distributors to India making alternative centres such as Hong Kong and Dubai irrelevant besides increasing duty collections due to higher volumes.

Jewellery exports from SEZ has been on a declining trend and has fallen to $3.8 billion from $5.8 billion logged in 2014-15.

Exports of jewellery being seasonal business lasting for six months in a year, GJEPC has suggested the government to allow units in SEZ to undertake job work for domestic tariff area (DTA) units with certain safeguards. This will improve the utilisation of capacity and save jobs in lean period, it said.

Published on July 07, 2020

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