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During his recent visit to Gujarat, Prime Minister Narendra Modi greeted the nation for ‘early Diwali’ after the latest GST relaxations for businesses. However, Surat’s diamond industry has no reasons to cheer.
Even as the volume of exports has improved over the past years, the realisations have declined due to appreciating rupee. This, joined with reduced Christmas export orders, have added to the already adverse business scenario post the roll-out of the Goods and Services Tax (GST).
“We had asked the government to relax the GST conditions for B-2-B transactions between the same group company. The nature of our business is such that our manufacturing units are stationed at Surat, while marketing offices are in Mumbai. Diamonds transferred from Surat to Mumbai within same group company attracted 3 per cent GST. This added to the already complex procedures and blocked our funds,” said Babubhai Gujarati, President, Surat Diamond Association (SDA).
Gujarati, however, added that senior government officials had acknowledged the issue as legitimate demand and had also assured to resolve. “But after the latest GST council meeting, nothing we have heard on the matter. We are planning to meet the Finance Ministry officials in this regard,” he said.
The exports have already remained under currency pressure. For the April-August period, India’s cut and polished diamond exports stood at ₹59,493.5 crore — down 3.4 per cent from ₹61,584.5 crore reported in the same period last year. However, the quantity of exports increased from 136.07 lakh carats to 147.80 lakh carats for the period.
“Mostly, we start receiving Christmas orders around Diwali. But this time, the overseas orders are less. Currently, there is a subdued sentiment. We hope things get normal going forward,” said Dinesh Navadia, Regional Chairman, GJEPC.
Navadia further added that the key issue currently hurting the industry is the 3 per cent GST on B2B trade. “Nowhere in the other markets such as Belgium or Israel such tax is imposed. There needs a rethink on this tax,” he said.
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