Despite the challenges faced by various sectors last year like that of consumer demand, the gem and jewelry sector overall saw various positives. From April 2021 to December 2021, the overall gem and jewelry exports grew 5.76 percent to $29,084 million as compared to $ 27,500 million for the same period in 2019.
However, domestic consumption in the sector has recently gone down owing to the curbs in retail outlets in metro cities and the fear of the rising of Coronavirus cases. Consequently, the jewelry businesses continue to face sustained challenges because of the pandemic.
Keeping that in mind, All India Gem & Jewellery Domestic Council (GJC), the apex body of the gems and jewelry industry, has sought to reduce the GST rate on jewelry to 1.25 percent from 3 percent now in the upcoming budget. GJC has also urged FM to raise the PAN card limit from Rs 2 lakh to Rs 5 lakh citing that many households in rural India do not hold PAN cards and face difficulty in arranging minimum required jewelry in times of need especially post-pandemic.
However, over the past year, the industry bounced back and performed well due to multiple positive steps taken by the government including reducing the import duty on gold and silver as well as ensuring there were no drastic increases in personal taxes. For instance, the government’s move to reduce import duty for gold and silver (from 12.5 to 7.5 percent) and platinum and pallidum (from 12.5 to 10 percent) to bring down the prices of precious metals in the local market.
Organized Market Is The Future
India’s gems and jewelry export sector - which is one of the largest in the world - contributed ~27 percent to the global jewelry consumption in 2019. Also, the market size of the global gems and jewelry sector is likely to expand to $103.06 billion between 2019 and 2023. Given the possibility of growth in the sector, in the coming years, it is to be led by the development of large retailers or brands.
"Established brands are guiding the organized market and are opening opportunities to grow. Increasing penetration of organized players provides variety in terms of products and designs," according to IBEF.
Consequently, Budget 2022 will do a lot of good to the sector if it facilitated the regulation of the online jewelry market.
“A revised budget for the regulation of the online jewelry market is also needed. Monitoring of authentic transactions and data security are the key in the digital world,” said Pankaj Khanna, Chairman, Khanna Gems.
In fact, online sales are expected to account for 1-2 percent of the fine jewelry segment by 2021–22. And, increasing penetration of organized players provides variety in terms of products and designs, according to IBEF.
Specific Demands To Foster Growth
Also, given the gem and jewelry sector contributes to a wholesome 7 percent of India’s GDP with a huge contribution towards employment and exports, the players expect a lot from the government in order to foster their growth in return.
"Until February 2021, the gem and jewelry sector contributed 7.5 percent to India's GDP and almost double to the country's total merchandise exports. So, we clearly can see the sector growing and proving to be more beneficial for the country's economy. We think the government should look into the budget allocation and tax reduction in our sector as not only do we add to the economy of our country but also, we are working towards generating more and more employment for the youth. We hope that with the right budget allocated to us, we would be able to better in the coming fiscal year," said Dishi Somani, Founder, Dishis Designer Jewellery.
"The budget 2022-23 needs to emphasize on import duty being incurred for the import of raw diamond and other precious elements such as gold. This will help the jewelry industry in managing the high demand for gold and diamond jewelry," Khanna further added.
Sachin Jain, Managing Director, De Beers India, said, “The gems and jewelry sector contributes to 7 percent of India’s GDP and forms around 12 percent of our export basket and plays a critical role in terms of employment generation. We look forward to the forthcoming budget in view that the gems and jewelry sector plays a pivotal role in the growth of the economy.”
On a similar note, Ishendra Agarwal, Founder of GIVA said, "The Government should introduce some favorable announcements for the silver jewellery sector in our forthcoming budget. It should consider relaxing the silver jewellery export policy and make it seamless for MSMEs by removing all the export charges, which can proliferate jewellery exports to new highs in the global market and also can be rewarding for the brands aligned with the Make in India initiatives. Also, the Government should incentivise the MSMEs and soften the process by swapping the valuation certificate requirement with mandatory BIS hallmarking to bolster the ecosystem."
Moreover, GJC has requested that the government issue appropriate clarification on the minimum amount of gold that an individual can deposit under the Gold Monetization Scheme (GMS) without being questioned by any departmental authorities. GJC has also requested that the gems and jewelry industry be allowed an EMI facility for the purchase of 22K gold jewelry, which will result in a significant increase in the industry’s business following the pandemic.
As the situation becomes normal and with the right measures from the government, the sector is likely to boom a lot going forward, given the sector is already in a better position relatively.