2023 Union Budget: Gem, Jewelry Industry Shows Mixed Reactions

The gems and jewelry industry has given mixed reactions to Union Budget proposed for 2023-2024, announced by Finance Minister Nirmala Sitharaman.

In the budget, while maintaining the customs duty for gold at 10 percent, the finance minister proposed to increase the import duty on silver dore, bars, and articles to 10 percent to align them with that on gold and platinum. In addition, the taxation on silver has increased by 7.5 percent on average, from 7.5 to 15 percent. While the central excise on imitation jewelry has increased by about 50 percent, it has only increased by about 25 percent on precious metals like gold and platinum. This is likely to affect the price of luxury goods and jewelry, as well as their production costs.

All India Gem And Jewellery Domestic Council has been urging for a reduction in customs duty on gold over the past many years, however, the duty on silver dore bars has been increased to be brought at par with the yellow metal and platinum in this budget. Saiyam Mehra, Chairman of All India Gem And Jewellery Domestic Council said, “This move will adversely affect the masses. We will continue to urge the government to reduce import duty.”

However, contrary to the above statement, Suvankar Sen, MD and CEO, Senco Gold & Diamonds stated, “The impact of budget 2023 will have negligible impact on those who are making gold jewelry in India itself. As custom duties on bars of gold and platinum were increased earlier this fiscal so there will be no new impact of the budget on the price of gold bars. Import of dore is a smaller percentage of total gold imports so only dore duty got increased by 2.5 percent, which may impact on the business of local refineries.”

“Tax on jewelry import has been increased which will again have no impact on our business as Senco Gold & Diamonds and most of the jewelry industry members don’t import gold jewelry. We buy gold bars from banks and all our jewelry is made in India. Import duty on silver bars, dore has been increased by 2.5 percent which may have some negligible impact on silver utensils and jewelry industry,” he further explained.

Retailers Welcome Sitharaman’s Announcements on Lab-Grown Diamonds

The finance minister also proposed a cut in import duty on seeds used to make lab-grown diamonds with a view to boosting domestic manufacturing.

Applauding the government’s move, Parag Shah, Director, KISNA Diamond and Gold Jewellery asserted, “This is a step in the right direction. We see the impetus on lab-grown diamonds as an overall positive for the fashion accessories segment and industrial usage. Natural diamonds hold their charm for the jewelry segment given the high resale and emotional values associated with it.”

Similarly, Vatsupal Ranka, Director at Ranka Jewellers noted, “Providing a grant to promote lab-grown diamonds is positive news as it not only generates employment but also proves as an energy-driven sector. Reduced customs tax will help the diamond industry in India.”

Amit Pratihari, Vice President, De Beers Forevermark further said that for natural diamonds, we’ve seen an encouraging trend over the past few months where consumers are purchasing items that hold meaning and value. “Natural diamonds continue to be sought after due to their inherent preciousness. Pricing has also remained steady, and we are optimistic it will become stronger.  As customers continue to value what is natural and genuine, diamonds will always be in demand,” he added.

“The government’s innovation-led and technology-driven approach reflect in its investment towards research on lab-grown diamonds, which will generate new employment opportunities while resonating with the export as well as urban Indian market,” concluded Ramesh Kalyanaraman, Executive Director, Kalyan Jewellers.